Still unfair: international climate change adaptation financing

For the second year in a row, the Climate Adaptation Finance Index (CAFI) reveals alarming results with regard to the equitable distribution of international climate adaptation finance. The index shows how risk-appropriate and therefore climate-just international adaptation finance is distributed among the countries of the Global South. The result for CAFI 2024 is that 90 per cent of the countries assessed received less funding than they would have been entitled to if it had been distributed fairly according to their specific climate risk.

The Climate Adaptation Finance Index (CAFI 2024) measures the distribution of available funds in relation to country-specific climate risks. This creates transparency about how successfully the climate policy goal of prioritising financial support for the most vulnerable countries is being implemented. The index is therefore an important assessment criterion for adaptation financing, even if further criteria would have to be used for a complete assessment, such as the absolute amounts that would be required to make a country climate-resilient.

The index was calculated for 129 countries for the period 2015-2021 (previous year’s index: 2014-2020). Two factors are taken into account: the country-specific climate risk, based on adjusted data from the EU Inform Risk Index, and the OEDC-DAC database for international adaptation finance. During this period, a total of almost USD 173 billion was provided to support climate adaptation in the 129 recipient countries analysed.

The comparison with the results of the previous year’s index now makes it possible to measure changes and visualise whether there has been progress in distributive justice and whether the most vulnerable countries are receiving the special financial support provided for in the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. At the same time, it shows which countries are rising or falling in the ranking of risk-adjusted access to climate adaptation finance and how the proportion of the population in the Global South with adequately fair access to adaptation finance has developed.

90 per cent of all developing countries are underfunded in relation to their own climate risk

The index shows highly sobering results: 90 per cent of the countries assessed received less funding from international adaptation financing than they would have been entitled to in a fair distribution (per capita assessment) based on their climate risk. 37 recipient countries even received less than half of their risk-adjusted share (extremely underfunded), 50 countries received a maximum of 64 per cent (severely underfunded), 29 countries received a maximum of 80 per cent (moderately underfunded), 10 between 81 and 100 per cent (adequately funded) and three island states received more than this: Palau, Nauru and Tuvalu (see also Figure 1).

Figure 1: Committed per capita adaptation financing of countries in the period 2015-2021 (source: Bread for the World 2024)

On a per capita basis, Central and East Africa and South Asia in particular are extremely underfunded. According to CAFI 2024, the ten most underfunded countries in this order are Afghanistan, Chad, South Sudan, Somalia, Niger, Mali, Yemen, Ethiopia, Uganda and Iraq. Compared to the previous year, nine countries have remained on the list and Chad has been added. On a per capita basis, the biggest decliners in terms of adequate funding compared to last year’s index are Chad, Brazil and São Tomé and Príncipe, while the biggest climbers are Palau, Jordan and Sudan.

Overall, there is a growing lack of climate justice in international adaptation finance compared to last year’s assessment. The number of people in countries that fall into one of the two categories of extreme and severe underfunding has increased by around 230 million compared to the 2023 Index and now totals over six billion people. That is 96.7 per cent of the population of all countries surveyed.

The higher the climate risk, the greater the gap

Another finding is that the higher the climate risk, the greater the gap. All seven countries in the highest climate risk category (Afghanistan, Chad, South Sudan, Somalia, Niger, Mali and Yemen) are categorised as extremely underfunded. Similarly, all 37 countries in the second-highest category are categorised as either extremely or severely underfunded. The majority of countries with a high climate risk belong to the least developed countries (LDCs), low-income countries (LICs) or fragile states.

The analysis shows that many of these countries are characterised by multidimensional vulnerability and therefore urgently need special support. In reality, however, they are particularly disadvantaged when it comes to access to funding. There is an urgent need to find solutions to this situation. Stable states with higher incomes and states with political clout benefit most from adaptation financing. This turns the goal of prioritising support for vulnerable countries on its head.

Sobering results for Germany too

This year, the CAFI Index was also calculated for Germany’s financial support for the 129 countries of the Global South. For the first time, the index calculates how fairly Germany’s support for climate adaptation is distributed among the recipient countries. This also enables a comparison between Germany and the international donor community in the distribution of climate adaptation funding – and where Germany may differ.

Germany provided USD 14.7 billion in adaptation financing in 2015-2021 (7% more than in the previous period 2014-2020). However, the distribution of German adaptation financing for the Global South shows a similar picture to the international results. Although its distributional equity for Africa and the LDCs is slightly higher than the international comparison, Germany is lower than the group of international donor countries for the Pacific island states. And the countries with the highest climate risk, fragile states, African states and the LDCs also perform particularly poorly in German adaptation financing, i.e. they are particularly severely underfunded.

Need for action: Ten recommendations for fair adjustment financing

The results of CAFI 2024 make it clear that the distribution of international climate adaptation financing urgently needs to become fairer. Countries with high climate risk that are most affected by the consequences of the climate crisis must no longer be penalised. It is time for the international community to take concrete steps to create real climate justice – for a world in which the most vulnerable are no longer left behind.

CAFI 2024 concludes with ten key recommendations to improve the equity of climate adaptation finance:

1. All donor countries should find ways to improve fair and risk-appropriate access to climate change adaptation related funding.
2. Countries with the highest climate risks must be given better access to adaptation financing. A special summit on this topic would be a first step.
3. All small island developing states (SIDS) should have fair access to climate adaptation finance. LICs and lower middle-income countries (UMICs) also need priority.
4. Fragile states must be better supported through the involvement of international and non-governmental organisations.
5. Cooperation with the African Union is necessary to improve access to financing for underfunded African countries.
6. A specific contingent for adaptation financing for the LDCs, similar to the Green Climate Fund (GCF), would be necessary.
7. Similar mechanisms should apply to the new Fund for Loss & Damage so that particularly vulnerable countries are not penalised again.
8. Distributive justice must be given greater consideration in the negotiations on the new climate finance target.
9. Germany should reserve a fixed quota of its adaptation funding for a defined group of countries, as is already the case with climate protection projects.

Sabine Minninger / Bread for the World and Thomas Hirsch / Climate & Development Advice