Climate finance allocations and vulnerability

How should climate finance be allocated to meet the needs of the “particularly vulnerable”? Both
multilateral and bilateral development agencies are raising that question as they consider the
allocation of their climate finance commitments, and their aid resources more generally. Many
of the climate-specific funds are also posing the same question, including, for example, the Fund
for responding to Loss and Damage (FRLD), which is developing its operating model for raising,
allocating, and disbursing funds.
This paper seeks to inform this debate by first reviewing some of the arguments and existing
evidence on which countries are particularly vulnerable to climate change, second, presenting some
new analysis of how specific groups of countries feature in selected vulnerability indices, third,
summarising information on the actual allocations of climate finance, and finally setting out some
conclusions and proposals for a way forward. I focus in particular on the situation of least developed
countries (LDCs) and small island developing states (SIDS) but also consider Africa, low-income
countries (LICs), and the V20 group of vulnerable countries.
The main findings are that existing vulnerability indices (whether focused on overall risk,
vulnerability, or exposure to climate change) give wildly different results, with at most four
countries (out of a possible 35) consistently appearing in the top quartile across the four (five in the
case of exposure) indices reviewed. This poses significant challenges for identifying countries that
are particularly vulnerable to climate change. The SIDS category in particular may not in fact be a
good proxy for vulnerability when looking across a range of indices, notwithstanding the unique
challenges that many SIDS face. LDCs and LICs appear to be the country groups most vulnerable
to climate change. The paper also finds that adaptation finance varies widely across countries,
with per capita levels ranging from less than a dollar to more than $2,400 each year over the
period 2016–2023. Adaptation finance is concentrated in relatively few countries, with many SIDS
receiving exceptionally high levels per capita. Moreover, there is virtually no correlation between
adaptation finance per head and either the level of vulnerability or per capita income across all
country groups.
I suggest therefore that there should be more of a focus on LDCs and LICs when it comes to
prioritising adaptation finance, that further technical work on measures of vulnerability is
needed, that this needs to be tied into a political process probably led by the United Nations
Framework Convention on Climate Change (UNFCCC), and that differences between adaptation
and loss and damage (L&D) need to be more clearly recognised when talking about the allocation
of funds.

source:

https://www.cgdev.org/publication/climate-finance-allocations-and-vulnerability