Closing The Adaptation Finance Gap in Fragile and Conflict-Affected Settings

Climate change affects all countries – with those affected by fragility and conflict facing a double burden. Not only are settings affected by fragility, conflict and violence (FCV) among the most vulnerable to climate impacts – the interplay between climate change and instability further amplifies the risks and undermines their ability to respond.

In fragile contexts, international climate finance can provide a crucial lifeline. Investments in adaptation not only help fragile and conflict-affected settings (FCS) to weather future climate-related shocks; they also help to ensure the long-term effectiveness of efforts to eradicate poverty and promote sustainable development.

Sadly, a new World Bank report reveals a troubling trend: despite their urgent need, countries affected by fragility and conflict receive significantly less climate adaptation commitments compared to other low-income nations. The “Closing the Gap”¹ report, part of the World Bank’s Scaling Adaptation Finance in Fragile Environments (SAFFE) initiative, analyzed a decade of publicly available climate finance data across all major funders to see whether adaptation commitments are reaching those that need it most.

Below we highlight four key figures from the report that paint a clearer picture of the complex landscape of climate finance flows to fragile and conflict-affected situations.

1.     A substantial adaptation finance gap exists in fragile and conflict-affected settings

Comparing climate finance across countries presents several methodological hurdles, particularly when accounting for population differences across countries. The SAFFE report proposes a fairer assessment by applying population weights to calculate per capita commitments for each group.

Using this method, our analysis reveals that in 2020, countries affected by fragility and conflict received roughly two-thirds of the adaptation finance committed to other low-income countries across all major funders. This gap has widened in recent years, despite the general increase in adaptation funding since 2012. Notably, this disparity is not reflected in broader development financing, suggesting a specific challenge in channeling climate adaptation funds to fragile contexts.

Figure 1: Population-weighted per capita commitments to IDA-eligible fragile and conflict-affected situations (FCS) & non-FCS groups across major funders²

2. Not all FCV countries are equal: High intensity conflict settings fare worst of all

Insights from the SAFFE report reveal significant differences in the levels of adaptation commitments going to different fragile and conflict-affected situations (FCS) countries. Those experiencing high-intensity conflict fare the worst, receiving roughly half the adaptation finance per capita compared to countries facing institutional fragility or medium-intensity conflict.

While these disparities reflect the operational challenges in high-conflict settings, they also highlight a critical issue: conflict-affected countries, often home to the most climate-vulnerable populations, are receiving the least support.

Figure 2: Population-weighted per capita adaptation commitments to IDA-eligible FCS & non-FCS groups across major funders in 2020²

3. Adaptation finance isn’t going to the most vulnerable – it’s going to places where it’s easiest to spend.

One of the report’s most concerning trend is that there is little correlation between a country’s climate vulnerability and the adaptation finance it receives. Instead, a very strong link exists between a country’s “financial readiness” – its ability to absorb and manage climate finance – and the amount of funding it attracts. Higher financial readiness is one of the reasons why many Small Island Development States (SIDS) receive higher commitments per capita than other FCS countries.

This creates a challenging cycle where the countries most in need of support may be the least equipped to access it. The analysis shows that a modest increase in a country’s financial readiness can lead to a substantial increase in per capita adaptation spending.

Figure 3: Comparing climate vulnerability (left-hand side) and financial readiness (right-hand side) to population-weighted per capita adaptation finance commitments from major international funders amongst FCS countries.²

4. Progress Amidst a Persistent Gap

Despite the overall gap, the report highlights encouraging progress in recent years. Multilateral development banks, particularly the World Bank’s International Development Association (IDA) portfolio, have significantly increased their adaptation finance to FCS. IDA’s contribution saw an eightfold increase in just five years, from $216 million in 2016 to $1.8 billion in 2020, based on information in the publicly available AidAtlas database.

This progress is similarly reflected in the Bank’s efforts to promote FCV considerations at the heart of its planning and operations. Notably, initiatives like the Climate Change Action Plan (CCAP) and the FCV Strategy have elevated adaptation in FCS to a strategic priority for the World Bank. The Bank has also developed tools to embed FCV sensitivity into core diagnostics like the Country Climate and Development Reports (CCDR) that are increasingly being rolled out in fragile and conflict-affected settings.

But it’s clear that the World Bank is not acting alone. Other significant contributors include the African Development Bank, France, and the European Investment Bank, alongside other multilateral and bilateral donors. Despite this progress, however, significant work remains in tackling the persistent adaptation finance gap in FCS.

Figure 4: Major providers of adaptation finance commitments to FCS from 2015 to 2020²

Scaling access to adaptation finance in fragile and conflict-affected settings

There is a dire need to scale up adaptation financing in all FCS, particularly in those most vulnerable to climate change. Delaying support for adaptation until these countries transition out of fragility or conflict is not an option, and may only worsen the situation. The SAFFE research points to three key priorities:

i.       Increase financial access and absorptive capacity amongst FCS recipients: Support efforts to improve financial access and readiness of governments and key local stakeholders in FCS. This includes providing technical assistance to navigate complex financing landscapes and strengthening public financial management (PFM) systems associated with accessing international climate finance.

ii.      Tailor the provision of adaptation finance and support to different fragile and conflict-affected contexts: Scaling access to climate finance in FCS is not just a demand-side issue and requires funders  to tailor their support and investments to the diverse needs, capacities and contexts of different FCV settings. It also requires leveraging the strengths, mandates and risk tolerance of different funding sources, along with improved guidance on entry points for engaging across the spectrum of FCV-affected contexts.

iii.     Strengthen coordination and knowledge sharing: Efforts are needed to promote knowledge sharing, overcome sectoral silos, and strengthen coordination between funders and recipients of adaptation finance in FCS. Valuable lessons can be drawn from sectors with extensive experience in fragile contexts, such as disaster risk financing and peace-building. Funders can also do more to streamline the complex and diverse landscape of different climate finance instruments.

The findings from the SAFFE research underscore the importance of ensuring that financial support for adaptation reaches those most vulnerable, especially in the most challenging contexts. They also build on growing international efforts to raise the profile of this topic, including the Relief, Recovery and Peace (RRP) Declaration launched at COP28. The Declaration places heavy emphasis on the need to address the climate finance gap in fragile settings and was endorsed by over 93 countries and 43 organizations, including the World Bank.

Ambitious initiatives like these are needed to continue making progress in closing the adaptation finance gap and must be matched by tangible results on the ground – with concrete action from funders and FCS recipients alike. Doing so is not just a matter of equity, it’s an imperative for continuing efforts promote a world free from poverty on a livable planet.

¹ The research and analysis in the Closing the Gap report is supported by the World Bank’s Scaling Adaptation Finance in Fragile Environments (SAFFE) initiative. SAFFE is funded by the State and Peacebuilding Umbrella Trust Fund (SPF), a global multi-donor fund administered by the World Bank that works with partners to address the drivers and impacts of fragility, conflict, and violence (FCV) and strengthen the resilience of countries and affected populations, communities, and institutions. The SPF is kindly supported by: Denmark, France, Germany, Netherlands, Norway, Sweden, Switzerland, and IBRD.

² Note: For details on methodology and technical specifications of graphs included in the Executive Summary refer to the main report and Annex Section 1.