Building sustained momentum to finance adaptation has proven difficult. International public adaptation finance fell from US$28 billion in 2022 to US$26 billion in 2023, while developing countries’ adaptation needs are estimated to reach US$310-365 billion per year by 2035. Unless current trends are reversed, global adaptation finance will continue to fall short of both international targets and real-world needs.
Despite these challenges, the adaptation finance landscape is evolving and offers growing opportunities for innovation and collaboration. Concessional loans and grants remain the backbone of adaptation finance, comprising 70% of adaptation flows in 2022-2023. These instruments are critical for meeting growing needs and enabling vulnerable economies to access finance without exacerbating debt burdens. Multilateral development banks (MDBs) continue to play a leading role in delivering this support, providing 57% of international public adaptation finance. By leveraging concessional resources and blending them with other instruments, MDBs help de-risk and scale adaptation investments and attract additional partners.
Meanwhile, private sector contributions remain limited, at US$5 billion per year. With targeted policy action and risk-sharing mechanisms such as blended finance, the AGR 2025 suggests that private investment could rise tenfold to over US$50 billion annually by 2035, potentially meeting up to 20% of global adaptation needs. However, private sector contributions are expected to remain concentrated in upper-middle-income countries and commercially-attractive sectors, potentially widening disparities in access to adaptation finance.
Encouragingly, innovative financial mechanisms are emerging to expand investment in adaptation. Yet, even as opportunities to mobilise new sources of finance grow, access remains highly uneven, with persistent structural and social barriers preventing many vulnerable countries and communities from securing the resources they need.
