Innovative Financial Instruments for Climate Adaptation

Closing the gap between available financing for climate change adaptation and the needs of developing countries requires looking beyond traditional sources of finance—i.e., grants and (concessional) loans—to innovative financial instruments and mechanisms that can unlock (private) investment. These instruments are increasingly viewed as a means to scale up the investment needed for countries to achieve their climate adaptation goals.

Innovative financial instruments for adaptation” include mechanisms and approaches that can be used to acquire, structure, govern, and allocate financial resources towards adaptation priorities. They can enable access to financial resources from financial institutions, private investors, institutional investors (such as pension funds), impact investors, foundations, and other philanthropists, and may be blended with traditional sources of financing.

This inventory provides information on a range of innovative financial instruments that have been used, or potentially could be used, to finance the implementation of climate adaptation measures.