A new policy brief by the UN Development Programme (UNDP) highlights the urgent need for massive investment in climate change adaptation in Small Island Developing States (SIDS).
The aim is to help these countries break the costly cycles of disaster and recovery. The report acknowledges that the current international financial architecture is not equipped to support the needs of economies suffering the worst effects of climate change. It highlights a number of challenges faced by SIDS countries as they attempt to respond to climate change-related crises. These include high costs and significant debt vulnerabilities, which make it difficult to secure the upfront funding required for adaptation projects. The UNDP is calling for a more equitable and effective global financial system to support climate-vulnerable economies.
This includes better access to climate-sensitive debt treatments, the deployment of innovative financial instruments, and access to long-term affordable funding from the official development sector. The policy brief also recommends that the official development sector increase its lending capacity to deliver long-term and affordable financing for the climate transition.
The UNDP’s policy brief “Breaking through the disaster-response cycle in SIDS: aligning financing to urgent climate action” argues that investing in adaptation pays off many times over with cost-benefit ratios ranging between 1:2-1:10 depending on country and resilience measure. It concludes that investing in adaptation will not only save on costly recovery spending and reduce development tradeoffs, but will also help keep borrowing costs down as financial markets are increasingly pricing in countries’ climate-change exposure and preparedness.