Public international funding of nature-based solutions for adaptation: a landscape assessment

This working paper from the World Resources Institute is the first assessment of current public international funding for nature-based solutions for climate change adaptation. It aims to help donor countries and institutions, and receivers of NbS finance, understand the current funding landscape. Through assessment of international funding flows (not domestic budgets) and interviews with key stakeholders, the authors find that funding for NbS for adaptation totalled USD3.8–8.7 billion in 2018, which was just 0.6-1.4% of total climate finance flows. These funds came primarily in the form of grants, from just a few donors, including Germany, the UK, Japan, Sweden, the EU, the Asian Development Bank, the Green Climate Fund, and the International Fund for Agricultural Development.

Barriers to funding highlighted are:

• Lack of a common definition of NbS for adaptation.
• Lack of clear metrics to value NbS for adaptation.
• Donor funding sources are too small to meet the NbS for adaptation needs.
• Climate finance channels lack guidance on how funding can be used to support NbS for adaptation.
• Developing countries often lack technical capacity to integrate NbS for adaptation into adaptation planning, or to sufficiently develop projects or a pipeline.

Recommendations for donors are:

• Scale up and better track official development assistance (ODA) funding for NbS for adaptation.
• Better align ODA funding with NbS for adaptation project needs.
• Develop a common method of quantifying and valuing benefits for NbS for adaptation.
• Support efforts by developing countries to mainstream NbS for adaptation into national policies, budgets and investment plans, and build national pipelines for NbS for adaptation investments by capacity building, project preparation and technical assistance.

Using a broader range of funding instruments, beyond grants, may be valuable for mobilising private finance with public concessional finance. The report summarises a set of innovative methods for mobilizing private finance: results-based finance options (payments for ecosystem services, ‘feebate’ concept for forestry, and monetizing water savings), green bonds, climate impact bonds, debt-for-nature swaps, carbon offsets and taxes, parametric insurance for natural capital, and the Restoration Insurance Service Company.

Read the full working paper here.