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Unlocking Adaptation Finance in Emerging Market and Developing Economies
Author:
Deepali Gautam https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Ekaterina Gratcheva
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,
Fabio M Natalucci
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https://orcid.org/0000-0002-1621-8819
, and
Ananthakrishnan Prasad
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Series:
Staff Climate Notes
Volume/Issue:
Volume 2024: Issue 007
Language:
English
Publication Date:
19 Nov 2024
DOI:
https://doi.org/10.5089/9798400293290.066
ISBN:
9798400293290
ISSN:
2789-0600
Pages:
36
Keywords:
climate finance; climate adaptation; climate resilience; climate finance architecture; adaptation finance; emerging markets and developing countries; private finance mobilization; sustainability; IMF Resilience and Sustainability Trust.; IMF staff climate note; IMF resilience; IMF staff climate Note 2024/007; Climate change; Financial sector; Climate policy; Global
Legal-disclaimer:
The IMF Notes Series aims to quickly disseminate succinct IMF analysis on critical economic issues to member countries and the broader policy community. The IMF Staff Climate Notes provide analysis related to the impact of climate change on macroeconomic and financial stability, including on mitigation, adaptation, and transition. The views expressed in IMF Staff Climate Notes are those of the author(s), although they do not necessarily represent the views of the IMF, or its Executive Board, or its management.
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Mitigation and decarbonization efforts are falling short of the 1.5°C goal, making adaptation critical. Developing economies are affected the most, despite having contributed the least to the problem. Nearly 98 percent of adaptation finance comes from public actors, with highly fragmented flows from the private sector. As financing needs increase, bringing private sector finance becomes critical and requires reframing adaptation investments from being seen not just as a risk exposure but also as an investment opportunity. This requires addressing real and perceived investment barriers, public-private collaboration and risk sharing, as well as financial incentives and innovation to unlock scalable, inclusive solutions. Adaptation is more complex than mitigation, with challenges in defining, evaluating, pricing, and scaling investments. Progress on adaptation requires policy reforms, incentives, and partnerships between governments, businesses, and communities and public-private risk sharing.
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Cover Staff Climate Notes
Staff Climate Notes
Publisher:
International Monetary Fund