Only a fraction of international climate adaptation finance for least developed countries found to also support nature

Next week, officials will meet in Geneva for the next round of negotiations for the global biodiversity framework. High on the agenda is the need to connect climate change and nature, including mobilising finance that delivers outcomes for both. Yet, as Nora Nisi and Ebony Holland explain, there is still a long way to go to achieve this.

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10 March 2022

Nora Nisi is a coordinator in IIED's Climate Change research group, and Ebony Holland is nature-climate policy lead in IIED's Natural Resources and Climate Change research groups

Two men bend down with their hands on a small tree.

Reforestation activities in Mandjou, East Cameroon (Photo: Emily Pinna/CIFOR via FlickrCC BY-NC-ND 2.0)

Despite growing recognition of the links between climate change and nature, our preliminary research shows that less than 10% of verified climate adaptation funding from OECD countries between 2014 and 2018 also supported outcomes for nature in the 46 least developed countries (LDCs).

Delivering on commitments to link finance for climate change and nature still has a long way to go. 

This is the latest in a series of blogs raising the profile of locally-led action on the road to the COP15 global biodiversity conference in Kunming

Financing climate change and nature together makes sense

The recent report from the Intergovernmental Panel on Climate Change (IPCC) is the latest of many reports reinforcing the inextricable links between climate change and nature.

Last year, a joint report from the IPCC and the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) noted that limiting global warming to ensure a habitable climate and protecting biodiversity are mutually supporting goals. It is not possible to address one without the other – climate change and nature are inseparable.  

That is why approaches such as nature- and culture-based solutions have gained traction – they offer ways to tackle climate change and other societal challenges while also delivering benefits for biodiversity.

But as we highlighted in a report co-authored with 15 environment and development organisations last year, these interventions must be high quality and contextualised to the local environment to deliver outcomes for people, nature and climate change. 

LDCs at the forefront of linking climate and nature

The LDCs are leading the way in addressing the loss of nature alongside climate change. Their economies are heavily reliant on natural resources and highly impacted by climate change. In their '2050 Vision' (PDF) launched in 2020, LDCs committed to advance "climate-resilient landscapes and ecosystems that are sustainably managed, less vulnerable to climate shocks and stresses, and use nature-based solutions". 

LDCs are putting this commitment into practice. Our 2021 analysis found that nature-related measures are embedded across 45 of their 46 Nationally Determined Contributions (NDCs) – the climate change plans from countries outlining how they will honour their commitments under the Paris Agreement.  

But importantly, most of these joint nature-climate activities are currently not funded. There is a risk that LDCs won't get the resources they need to deliver joined up action on climate and nature – and that they may deprioritise these efforts as a result. This would be a worrying development.  

Putting the data under the microscope – what we did

We have done a preliminary analysis to identify just how much of adaptation-related development finance also supported outcomes for nature in the LDCs.  

To do this, we analysed the climate-related development finance flows reported to the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD DAC). We used the OECD DAC Common Reporting Standard, a global dataset for tracking climate-related development finance flows – largely made up of mandatory self-reporting of official development assistance (ODA) by OECD bilateral and multilateral governments and institutions. 

Those reporting to DAC provided US$126 billion in total for climate adaptation-related development finance in the four years we chose to review. Building from our 2021 analysis of climate finance flows in our 'Follow the money' report, we applied an almost identical methodology to identify a more concise dataset for this study, as follows: 

First, we narrowed the $126 billion dataset down to only include climate adaptation finance projects that targeted LDCs.  

Second, we used an international system of policymarkers (the Rio Markers) to track development finance flows that only focus on projects where ‘climate adaptation’ was the primary objective.  

Finally, we manually applied our own adaptation coding to verify the remaining projects and removed duplicate entries. This left us with $7bn of finance data covering more than 1,500 projects where it was verified that adaptation finance was the primary objective. 

We then applied a 52 keyword search to our dataset to discover the climate adaptation projects that were simultaneously providing benefits for nature and people. After then manually analysing the projects descriptions of more than 240 projects we had our final result: between 2014 and 2018, less than 10% of verified climate adaptation finance projects funded by OECD countries also supported outcomes for nature in LDCs.

Transparency of data – a continuing challenge

Doing this analysis was challenging: there were many consistencies and duplicates in the data, raising concerns about transparency and accountability, a point echoed by the LDCs.

It should be much easier to see how climate finance is being used; this is vital for building trust in the system. We are continuing our analysis and will report further later this year. 

Why is this finding so important?

This research shows that most international climate finance for adaptation in LDCs is not being maximised to deliver co-benefits and outcomes for nature – a major missed opportunity, especially as this has been prioritised by the LDCs themselves.

With upcoming significant announcements and milestones – including the UK's new International Development Strategy and its 2030 Strategic Framework for International Climate and Nature Action, as well as meetings of leaders at COP15, COP27, G7 and G20 – this preliminary analysis exposes the shortfalls in supporting joint investments in nature and climate change. 

Finance mobilisation is fundamental to the delivery of the Glasgow Climate Pact and the global biodiversity framework.

OECD countries must step up efforts to streamline funding and make the best use of combined action to tackle the climate and nature crisis. There has been some good progress, but our data shows that not enough of the commitments are translating into action.

Will we see OECD leaders address this issue in coming months? Lower-income countries don’t have time to wait.

About the author

Nora Nisi (nora.nisi@iied.org) is a coordinator in IIED's Climate Change research group

Ebony Holland (ebony.holland@iied.org) is nature-climate policy lead in IIED's Natural Resources and Climate Change research groups

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