As climate-related disasters increase in frequency and severity across Asia, adaptation measures are more crucial than ever. But how do these projects get funded? Why is adaptation financing so hard to obtain? And how can you get involved? Read below to find out! ⬇️

With climate-related disasters such as typhoons, floods, heatwaves, and droughts on the rise through the Asia-Pacific region, communities in high-risk areas need to be protected. Southeast and South Asian countries are particularly vulnerable to long-term social and economic damage from climate disasters, especially because we are not covered by the same insurance schemes as many countries in the global North. In comes adaptation financing as a solution!

What is adaptation financing?

Adaptation financing involves investing in resilient infrastructure and systems to address climate risks. Adaptation measures cover a wide range of solutions: examples include disaster response systems, decentralized renewable energy systems, mangrove flood barriers, and passive cooling design – just to name a few! Climate adaptation is often the counterpart to climate mitigation, which focuses on reducing or preventing greenhouse gas emissions to slow climate change

One success story is the use of stupas in Pakistan: after experiencing water shortages, the village of Paari adopted an indigenous solution: ice stupas. Stupas are pipe structures that accumulate glacier water melt that freeze over the winter, allowing farmers to store clean water for crop irrigation until the spring (1).

Ice Stupas in Pakistan. Image source: UNEP, 2023.

Another example of climate adaptation: disaster risk management systems. Out of 193 countries, the Philippines ranked the highest in disaster risk (2); a study from Swiss Re estimated that the Philippines loses 12 billion USD (3% of their GDP) each year to extreme weather events (3). In January, the Asian Development Bank provided $500 million in loans to the Philippines to enhance the delivery of disaster response mechanisms – which can come in the form of emergency texts, radio broadcasts, etc – and provide monetary support such as disaster insurance schemes that can compensate cities for damages from disasters (4).

The Gaps in Adaptation Financing

However, the current volume of financing for adaptation solutions in Asia is still far below what is needed.

Only 20 billion USD in adaptation financing went to all countries in 2023 (5).
A 2024 ADB study suggested that developing Asian countries need $102 billion to $431 billion a year for climate adaptation (6).
Asia typically receives a disproportionately small amount of funding: for example, out of the global green bonds for adaptation that were issued from 2021 to 2023, only 3% of funds went towards the Asia-Pacific region (a total of ~4.7 billion USD over two years) (7).

Why is delivering adaptation financing such a challenge?

For one, most financing is in the form of debt or equity instead of grants, and it’s hard to show returns from adaptation projects – most adaptation infrastructure (e.g. seawalls) don’t generate clear revenue streams, which makes the business case for these projects less appealing than mitigation projects (e.g. solar power plants that can generate electricity for sale). Accurately quantifying the economic benefits of adaptation interventions, such as dollars saved or increased productivity hours, is also difficult to do compared to mitigation projects. The countries that need adaptation financing the most usually have lower credit ratings, which can scare away investors (8). Hence, most funding still comes from public and multilateral organizations, like the Asian Development Bank and the UN, which can provide lower interest rates and longer repayment periods, but these organizations are just a small drop in the bucket compared to larger private investors

So, how can youth improve the situation?

Youth can advocate for more financing and for adaptation solutions that make sense in their local context:

Especially for projects funded by large international organizations, community input is critical to developing contextually appropriate solutions! Adaptation funders such as Climate Investment Funds, Green Climate Fund, and ADB have lists of stakeholder groups they consult regularly; join one of these groups to provide your input!

Youth can also push for inclusivity:

Many adaptation solutions, particularly early warning systems, tend to be less accessible for marginalized populations (such as indigenous communities) who face language barriers or lack technological infrastructure. These barriers cause certain communities to be disproportionately affected by disasters even when warning systems are available (9).

Lastly, youth can support creative adaptation finance structures, like:

Decentralized grant delivery: the Green Climate Fund experimented with decentralised adaptation finance in Namibia, where funds were broken into 31 small grants for community-based organisations; results showed that more funding reached frontline communities (10)
Tying investment returns to metrics such as job creation, agricultural productivity or improved public health outcomes: this is especially relevant for impact-linked bonds (11)
Using remittance-based financing platforms: international diasporas send a lot of money back to their home countries; remittance platforms could channel some of the remittances received into dedicated climate funds (11)

To get involved and learn more, check out groups focused on this issue such as: