Climate finance illustration./PHOTO ; AI
As the world faces rising temperatures and worsening climate disasters, the UN Environment Programme (UNEP) is warning that private finance must urgently scale up to help developing nations cope with mounting losses and damages.
In its Adaptation Gap Report 2025: Running on Empty, released ahead of COP30 in Belém, Brazil, UNEP reveals that adaptation finance needs in developing countries could reach US$310–365 billion annually by 2035, more than 12 times current international public flows.
Yet, funding from both public and private sources continues to fall short.
“Adaptation is not a cost, it is a lifeline,” said UN Secretary-General António Guterres in his message on the report.
“Closing the adaptation gap is how we protect lives, deliver climate justice, and build a safer, more sustainable world. Let us not waste another moment.”
Private finance: the missing piece
While governments have made strides in developing national adaptation plans, UNEP stresses that the private sector’s contribution remains dangerously low.
Current private finance flows stand at only US$5 billion per year, despite a realistic potential of up to US$50 billion with the right policy incentives.
Achieving that tenfold increase, the report notes, would require targeted policy action and blended finance approaches, where concessional public funds help de-risk investments for private actors.
This could unlock capital for key sectors such as climate-resilient agriculture, infrastructure, and water systems areas already suffering the brunt of climate shocks.
“We need a global push to increase adaptation finance from both public and private sources without adding to the debt burdens of vulnerable nations,” said Inger Andersen, UNEP’s Executive Director.
“If we do not invest in adaptation now, we will face escalating costs every year.”
A growing crisis of climate vulnerability
In 2023, international public adaptation finance to developing countries dropped to US$26 billion, down from US$28 billion the year before.
That leaves a staggering US$284–339 billion gap between what is needed and what is currently available.
Even if the Glasgow Climate Pact goal of doubling adaptation finance to US$40 billion by 2025 were met, the target would still fall far short of the growing need.
And while 172 countries now have at least one national adaptation policy or plan in place, over a fifth of these plans are outdated, leaving millions vulnerable to maladaptation.
“Every person on this planet is living with the impacts of climate change: wildfires, heatwaves, desertification, floods, rising costs, and more,” Andersen said.
“As action to cut greenhouse gas emissions continues to lag, these impacts will only get worse, harming more people and causing significant economic damage.”
Planning advances, but implementation lags
UNEP finds that adaptation planning and implementation are advancing globally, with countries reporting over 1,600 adaptation actions across sectors such as agriculture, biodiversity, water, and infrastructure.
However, few countries track the actual outcomes or effectiveness of these actions, making it difficult to assess progress.
Some encouraging signs exist. Support from the Adaptation Fund, Global Environment Facility, and Green Climate Fund rose to nearly US$920 million in 2024, an 86 percent increase over the five-year average between 2019 and 2023.
Still, UNEP warns that this may represent a short-term spike rather than a sustained upward trend, given emerging fiscal constraints in donor countries.
The challenge ahead: running on empty
The report’s title, Running on Empty, reflects a growing sense of urgency and the danger that global adaptation finance could stall altogether if new strategies are not adopted.
The New Collective Quantified Goal agreed at COP29 calls for US$300 billion per year in climate finance by 2035.
But because that figure includes both mitigation and adaptation funding, the share available for adaptation will be insufficient.
Inflation projections could also push developing countries’ adaptation needs up to US$440–520 billion annually in real terms.
To address this, UNEP points to the Baku to Belém Roadmap, a plan to raise US$1.3 trillion by 2035 for climate action.
However, the agency cautions that these funds must be delivered through grants and concessional instruments rather than debt-creating mechanisms that would worsen vulnerabilities in the Global South.
For the roadmap to succeed, the report calls for three priorities:
- Containing the adaptation finance gap through stronger mitigation and by avoiding maladaptation;
- Expanding the pool of funders, including new public and private actors, and
- Integrating climate resilience into financial systems, ensuring that both banks and investors embed adaptation into their decision-making.
From words to action
Despite persistent shortfalls, UNEP underscores that adaptation remains one of the smartest economic investments available.
The cost of inaction, it warns, will far exceed the price of preparedness in both financial and human terms.
With COP30 on the horizon, the report urges negotiators, financiers, and governments to take a pragmatic approach: one that recognises the private sector not as a bystander but as a central actor in building global resilience.
“The reality is simple,” Andersen reiterated.
“If we do not invest in adaptation now, we will face escalating costs every year.”
About UNEP
The UN Environment Programme (UNEP) is the leading global voice on the environment.
It provides leadership and encourages partnership in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations.
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