The world will face a shortage of financing for climate change adaptation by 2030

The world faces a shortfall of up to $87 billion annually for climate adaptation efforts by 2030, according to Lord Livermore, Financial Secretary to the UK Treasury. Speaking at the panel discussion titled "Mobilizing for Climate Action: Countries, Multilateral Financial Organizations, and the Private Sector Implementing the Paris Agreement," Livermore highlighted the urgent need for increased investment in adaptation measures.

“While financing plays a critical and catalytic role, it will never fully meet the demand. In 2022, funding for adaptation amounted to $63 billion, a mere 5% of total climate financing. The largest needs are for resilient infrastructure, including disaster protection, and for agriculture in developing economies,” Livermore stated.

He noted that the majority of adaptation funding currently comes from public sources, primarily in the form of sovereign debt. In Africa, only 3% of adaptation funding is provided by institutional investors. Livermore emphasized the need for additional steps to mobilize private investment in climate adaptation, particularly in developing regions.

“Evidence showing the economic rationale for climate-resilient investments is clear, and in most cases, initial costs — even for more capital-intensive assets like infrastructure — are minimal. More consistent assessment of climate and nature-related risks can help drive sustainable investments. In turn, these investments can yield assets with more predictable cash flows and competitive returns throughout their lifecycle. The evidence supporting the profitability of new technologies and adaptation services is also increasing,” Livermore remarked.

The Treasury Secretary also highlighted the potential for significant development opportunities through investments in supply chains, which can enhance both local adaptation and international resilience. He warned of the risks posed by inaction, citing the UK’s Third Climate Risk Assessment, which indicated that disruptions to international trade routes could cost the UK billions of pounds annually by the end of the century.