The Effectiveness of Climate Adaptation Finance and Readiness on Vulnerability in African Economies

Abstract

Addressing climate vulnerability remains a priority for economies globally. This study used the panel-corrected standard error (PCSE) methodology to investigate the impact of adaptation financing on climate vulnerability. This analysis examined 52 African countries from 2012 to 2021 while considering their climate adaptation readiness. The impact was also assessed based on the Human Development Index (HDI) categories to reflect different levels of development. The findings showed that adaptation finance considerably influenced climate vulnerability reduction in Africa, particularly in nations with a moderate HDI. However, most countries still need higher levels of adaptation financing, resulting in a small impact on vulnerability reduction. Furthermore, the impact of readiness measures differed by HDI category. Economic and social climate readiness strongly impacted climate vulnerability in high-HDI nations, but governance preparedness was more critical in low-HDI countries. Based on the empirical facts, two policy proposals emerge. First, it is critical to reconsider the distribution of adaptation financing to reduce disparities and effectively alleviate climate vulnerability. Moreover, African economies should consider implementing innovative localized financing mechanisms to mobilize extra adaptation finance. Second, African governments should customize climate readiness interventions based on their HDI levels to improve the achievement of a positive impact on climate vulnerability.