Closing the Gap: Trends in Adaptation Finance for Fragile and Conflict-affected Settings

Overview

Global funds to support climate adaptation are a lifeline for low-income countries, and nowhere is this more evident than in settings facing fragility and conflict. While there is little question that countries on the World Bank's Fragile and Conflict-affected Situations (FCS) list are underserved in terms of adaptation finance received from international funders, the scale and nature of the financing gap are less clear. Even less is known about how adaptation finance is allocated across different fragile and conflict-affected settings, and whether the financing gap is growing or shrinking. Understanding these trends is crucial given the potential for adaptation investments in FCS to help countries respond to the impacts of climate change, address the root causes of conflict and fragility, and tackle poverty.

This report, Closing the Gap: Trends in Adaptation Finance in Fragile Environments, examines global financial to FCS settings by consolidating a decade's worth of climate finance data from international funders.Using publicly available financial data, it highlights to the scale of the adaptation finance gap in FCS settings and goes further than existing studies by comparing flows by comparing financial flows to different types of FCS settings, helping determine whether adaptation finance is targeting the most vulnerable countries.

Highlights

• Countries affected by fragility and conflict receive less financial support for adaptation compared to other low-income countries. Despite greater vulnerability and lower capacity to respond to climate change impacts, in 2020, FCS countries received less than two-thirds of the funding per capita that other low-income countries received.
• Adaptation commitments vary considerable across different type of FCS settings. In 2020, countries affected by high-intensity conflict received $2.74 in spending per person, compared to $5.06 for settings facing medium-intensity conflict and $5.25 for those affected by social and institutional fragility.
• There is little to no correlation between the size of an FCS country's per capita adaptation commitments and its level of vulnerability. Higher commitments are more strongly associated with countries that have a higher readiness to absorb and manage adaptation finance.
• The gap in FCS financing is not reflected in per capita commitments towards wider development financing. Financing for various development objectives appears to be relatively equal between FCS and non-FCS groups, suggesting that the adaptation finance gap is unlikely to be due to broader trends in development financing.
• Much more needs to be done to address barriers to accessing climate finance in FCS. However, there are recent signs of progress. For example, World Bank's International Development Association's (IDA) contribution saw an eightfold increase in just 5 years, based on publicly available data.

Recommendations

The report recommends efforts to increase financial access and enhance the ability of governments and key local stakeholders to use the financing in FCS, tailor provision of financing to different FCS contexts, leverage entry points of different funders, and better coordinate and share knowledge among funders and FCS recipients.