A version of this article was first prepared as a contribution to a compendium paper produced by the International Platform on Adaptation Metrics (IPAM).
At COP27/CMA4 in Sharm el-Sheikh in 2022, it was agreed that the Global Goal on Adaptation (GGA), first agreed upon in 2015 under the Paris Agreement, would be operationalized via a framework that could take into consideration all dimensions of the adaptation cycle, from assessment through to planning, implementation, and monitoring, evaluation, and learning, with finance support explicitly recognized as a cross-cutting consideration for each.
Of course, finance is central to adaptation goals, as maintained in the summary report of the 2023 Global Stocktake under the Paris Agreement, in section C on "adaptation, including loss and damage". It highlights certain clear gaps in the planning and implementation of adaptation and identifies the availability of and access to means of implementation (MOI) and support as major challenges. Nevertheless, the report lacks coverage of adaptation finance needs, gaps, and progress made in the backward-looking narrative.
The prime significance of finance to adaptation is further stressed and explored by the 2023 UNEP Adaptation Gap Report, itself pointedly titled “Underfinanced. Underprepared. Inadequate investment and planning on climate adaptation leaves world exposed”. UNEP finds that over 85 % of countries have at least one national adaptation planning instrument in place, but funding to turn planning into action is lacking. Developing countries are estimated to need an annual sum of between $215 billion and $387 billion, while the financing gap is between $194 billion and $366 billion per year. The report holds “that the global goal on adaptation and the global stocktake serve as frameworks to accelerate action and support (especially for developing countries)”.
The mandate from Sharm el-Sheikh was to develop a framework for the GGA, which will “guide the achievement of the global goal on adaptation and the review of overall progress in achieving it” and “enhance adaptation action and support”. Of course, enhancing support for adaptation does mean, inter alia, increasing adaptation finance.
However, discussions as part of the Glasgow-Sharm el Sheikh (“GlaSS”) work programme on the Global Goal on Adaptation have shown notable divisions between developed and developing countries on whether the GGA framework should include targets for finance. To quote the official Summary of the most recent GlaSS workshop, some participants “suggested specific targets in relation to means of implementation, including in the form of outcome-based overarching targets (such as USD 400 billion grant-based finance for adaptation per year by 2030)”, while “some other participants, however, highlighted that although they take note of MoI as an important issue, they do not see targets relating to means of implementation as being part of the GGA framework and that it should be reflected in other ways”.
Essentially, many developing countries have been advocating for an adaptation finance target as part of the GGA, but this has been opposed by some developed countries who call for such discussions to happen in other processes. In plainer terms, according to recent news coverage, one developed country negotiator said they “cannot live” with “the GGA framework as the space to talk about a new climate finance target for adaptation… Adaptation finance will be addressed somewhere else and will enable the framework to be effective.” This is a reference to the separate work programme on the New Collective Quantified Goal (NCQG), initiated at COP26, to agree the successor finance goal replacing the $100 billion per year.
Nevertheless, the relationship between the two parallel negotiations and decision-making processes, on the one hand on the GGA and on the other hand the NCQG, remains unclear and yet to be clarified. The NCQG work programme, which includes a Technical Expert Dialogue process, is set to conclude at COP29, and is not in a position to offer any conclusions regarding quantitative targets for adaptation finance for COP28. An adaptation finance subgoal for the NCQG may be agreed by COP29, but there is no guarantee of this so far from developed countries.
Despite such political ambiguities, a few technical observations may be drawn on targets and indicators for bettering assessing and achieving increases in adaptation finance — in the context of an overall need to improve transparency around adaptation finance, especially in the Biennial Transparency Reports (BTR) of the Enhanced Transparency Framework (ETF):
Improving transparency of adaptation finance, notably in terms of metrics and indicators for additionality and concessionality, with contributors enhancing their reporting under standardized formats.
Tracking the additionality of adaptation finance is inherently challenging, given there is no single metric for measuring additionality. Several indicators, however, may be used, to provide the necessary benchmarks from which current financial flows may be assessed as being additional or non-additional to. Two different approaches used by practitioners include: (i) firstly, calculating climate finance that is additional to total Official Development Assistance (ODA) levels in 2009, when the $100 billion per annum commitment was first agreed; and (ii) secondly, calculating climate finance that is additional to the total Official Development Assistance (ODA) targeted agreed in 1972, i.e. based on the 0.7% of countries’ Gross National Income.
Tracking the concessionality of adaptation finance is crucial, and it is possible to do so by using metrics of grant equivalence and of proportions of a grant-equivalent sum delivered in the form of grants. However, current transparency requirements for climate finance contributors, under the common tabular formats, do not even make grant-equivalent reporting something mandatory — it remains optional, and would be a clear area requiring improvement, especially for those areas of adaptation requiring grant finance.
Improving transparency of adaptation finance recipient needs via enhanced needs assessment, notably with specificity on concessionality and instrument types.
The current state of adaptation finance needs reporting, as captured in the UNFCCC SCF’s Needs Determination Report, remains rudimentary and requires improvement. One of the recurring issues is how different finance needs are simply summed together despite being fundamentally not alike, e.g. grant needs summed together with debt financing needs measured in nominal terms. Requiring more detail on concessionality and distinguishing instrument types would be a good improvement, generally, for needs reporting; and reporting in grant-equivalent terms would be one particularly key improvement. Of course, enhancing reporting burdens for developing countries should not be prescribed lightly, and it is therefore highly advisable to enhance financial support for technical assistance in this respect, to alleviate the reporting burden.
Lastly, a political observation — that if, during the discussions around targets and indicators for the GGA, the debate on adaptation finance targets does take up considerable time and space, to the detriment of other topics, this is simply a reflection of broader political realities regarding promises unfulfilled and metrics unspecified. It is not to say that adaptation finance metrics, targets and indicators should not be an area of focus, but rather, the opposite. It is to conclude that, if the developed countries had fulfilled their $100 billion per annum pledge and shown more commitment to their pledge to double adaptation finance, today’s political emphasis on finance targets would likely not be so strong. It is, moreover, to conclude, somewhat soberingly, that if the above technical lessons are not learned with respect to the design of new finance targets, the ongoing focus on finance will remain politically challenging.
Evidently, it will be crucial to reconcile discussions on adaptation finance subgoals as part of the New Collective Quantified Goal with those on any finance targets under the GGA framework, improving coherence across UNFCCC processes. In one context or another, clear, time-bound targets for additional and grant-equivalent adaptation finance provision will, of course, be ultimately required.