Financial Support Mechanisms and Financing Instruments for Climate Change Adaptation

Abstract

Extreme weather has been having an increase in frequency and severity because of global warming. Heavy financial burden on governments has been increasing as reconstruction of natural disaster and prevention of public construction spending. Unlike the climate mitigation activities, the main purpose of climate adaptation is to establish climate risk management system. We discuss several types of financing instruments and collect several cases in both developed and developing countries internationally. We find that budget reallocation or government bonds are regularly used for losses from natural disaster in developing countries while both government bonds and insurance penetration are used to against catastrophe risks in the developed countries. Finally, we also find that insurance-related instruments are feasible and have been applied in some middleincome countries with assistance from the World Bank.

Global progress on financing for adaptation

“…The diversity and heterogeneity of NbS financing needs requires a similarly wide-ranging portfolio of financing mechanisms that can be tailored to different situations, sectors and stakeholders. Yet, while a large volume of literature now exists on financing mechanisms for conservation and adaptation more generally (see, for example, Climate Finance Advisors 2019; Lo, Wu and Lin 2016;Meyers et al 2020;Tonkonogy, Mazza and Micale 2018), there is as yet little guidance that looks specifically at NbS (see, for example, Droste et al 2017;Somarakis et al 2019;TNC 2018). This literature suggests that there is a wide range of financing mechanisms with potential application to NbS, some of which are already widely used and others that are still emerging (table 6.4).…”

Framing the Adaptation Gap Report

“…The diversity and heterogeneity of NbS financing needs requires a similarly wide-ranging portfolio of financing mechanisms that can be tailored to different situations, sectors and stakeholders. Yet, while a large volume of literature now exists on financing mechanisms for conservation and adaptation more generally (see, for example, Climate Finance Advisors 2019; Lo, Wu and Lin 2016;Meyers et al 2020;Tonkonogy, Mazza and Micale 2018), there is as yet little guidance that looks specifically at NbS (see, for example, Droste et al 2017;Somarakis et al 2019;TNC 2018). This literature suggests that there is a wide range of financing mechanisms with potential application to NbS, some of which are already widely used and others that are still emerging (table 6.4).…”