Plenary: Risky Business: Attracting Private Finance for Adaptation
The speakers discussed the pressing need for mobilizing private finance for climate adaptation, highlighting the significant gap between adaptation and mitigation funding. As of 2022, adaptation investments accounted for less than 10% of the nearly $1.3 trillion in climate finance flows, indicating a critical shortfall in resources dedicated to adapting to climate change impacts. This situation is exacerbated by the increasing limitations on public finance, as governments prioritize immediate needs such as basic public services and economic growth. The discussions emphasized the importance of partnerships between the public and private sectors to effectively address these challenges. It is crucial to clarify the roles of each sector, determining where public investment should be minimal and where it can help reduce transaction costs and manage risks. The integration of resilience into investment strategies is essential, and technical assistance is highlighted as a key component in supporting emerging markets and developing economies (EMDEs) in incorporating resilience considerations from the outset of project planning. The discussion also underscored the necessity of transparency in climate finance, advocating for clear metrics and the use of monitoring, reporting, and verification (MRV) systems. These systems should be integrated with national public investment frameworks to ensure accountability and effectiveness in climate finance allocation. Early planning is deemed fundamental for adaptation, with examples provided of how technical assistance has successfully supported EMDEs in structuring projects that incorporate climate resilience. A significant focus is placed on the role of insurance in adaptation strategies. Insurance can absorb residual financial risks and incentivize physical resilience measures, making it a valuable tool in the financial toolkit for governments. Innovative insurance products, such as a parametric insurance scheme developed in India, provides payouts based on extreme heat events, thereby protecting vulnerable populations and their livelihoods. The discussions also touch on the challenges of translating upstream enabling environments into actionable projects. The need for transactional advisory support is emphasized, as many governments may overlook this critical phase in project preparation. The Global Infrastructure Facility can assist governments in mainstreaming adaptation and resilience into their infrastructure projects. The importance of understanding the perspectives of both public and private actors is highlighted, as is the need for comprehensive strategies that encompass various sectors and communities.
“…where we really see the gap in business models is around how we get the private sector to invest in infrastructure for adaptation, like coastal protection, flood management. We’re trying to look for business models around that. We really need to get those solutions to emerging markets and to go to scale.” Jane Jameson, QII partnership, World Bank “What I found really interesting is the importance of the partnerships, the technical assistance to also work not only with governments, but also bring in the views of the private sector because I feel sometimes we talk to one, but we may not fully understand the other side.” Zoe Trohanis, GFDRR
Organized by: 1899-12-31
