Financing Climate Change Adaptation and Mitigation in Developing Countries

Abstract:

The provision of international financial assistance to help developing countries undertake measures for climate change mitigation and adaptation is a fundamental element in the UN Framework Convention on Climate Change (UNFCCC) under which the negotiations on climate change are being conducted. This paper attempts to quantify the scale and possible composition of international financial assistance that might be required to help developing countries fulfil the commitments undertaken in COP26.

The paper is in four parts. Section I provides a brief historical review of how the commitment to provide financial assistance evolved since the start of the negotiations in 1992. Section II reviews estimates emerging from different studies of the additional investment that developing countries will have to make to meet the challenge of containing global warming to 1.5°C above preindustrial levels. Section III provides an assessment of the potential scale of international financial assistance that might be needed to make this investment possible. Section IV examines the role of multilateral development (MDBs) banks in raising the amount of financial flows to the required level.