Editing IPCC:AR6/SR15/Chapter-4 (section)

== 4.4.5.5 Financial challenge for basic needs and adaptation finance ==

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Adaptation finance is difficult to quantify for two reasons. The first is that it is very difficult to isolate specific investment needs to enhance climate resilience from the provision of basic infrastructure that are currently underinvested (IMF, 2014; Gurara et al., 2017) <sup>[[#fn:r1442|1442]]</sup> . The UNEP (2016) <sup>[[#fn:r1443|1443]]</sup> estimate of investment needs on adaptation in developing countries between 140–300 billion USD yr <sup>−</sup> <sup>1</sup> in 2030, a major part being investment expenditures that are complementary with SDG-related investments focused on universal access to infrastructure and services and meeting basic needs. Many climate-adaptation-centric financial incentives are relevant to non-market services, offering fewer opportunities for market revenues while they contribute to creating resilience to climate impacts.

Hence, adaptation investments and the provision of basic needs would typically have to be supported by national and sub-national government budgets together with support from overseas development assistance and multilateral development banks (Fankhauser and Schmidt-Traub, 2011; Adenle et al., 2017; Robinson and Dornan, 2017) <sup>[[#fn:r1444|1444]]</sup> , and a slow increase of dedicated NGO and private climate funds (Nakhooda and Watson, 2016) <sup>[[#fn:r1445|1445]]</sup> . Even though the UNEP estimates of the costs of adaptation might be lower in a 1.5°C world (UNEP/Climate Analytics, 2015) <sup>[[#fn:r1446|1446]]</sup> they would be higher than the UNEP estimate of 22.5 billion USD of bilateral and multilateral funding for climate change adaptation in 2014. Currently, 18–25% of climate finance flows to adaptation in developing countries (OECD, 2015b, 2016; Shine and Campillo, 2016) <sup>[[#fn:r1447|1447]]</sup> . It remains fragmented, with small proportions flowing through UNFCCC channels (AdaptationWatch, 2015; Roberts and Weikmans, 2017) <sup>[[#fn:r1448|1448]]</sup> .

Means of raising resources for adaptation, achieving the SDGs and meeting basic needs (Durand et al., 2016; Roberts et al., 2017) <sup>[[#fn:r1449|1449]]</sup> include the reduction of fossil fuel subsidies (Jakob et al., 2016) <sup>[[#fn:r1450|1450]]</sup> , increasing revenues from carbon taxes (Jakob et al., 2016) <sup>[[#fn:r1451|1451]]</sup> , levies on international aviation and maritime transport, and sharing of the proceeds of financial arrangements supporting mitigation activities (Keen et al., 2013) <sup>[[#fn:r1452|1452]]</sup> . Each have different redistribution implications. Challenges, however, include the efficient use of resources, the emergence of long-term assets using infrastructure as collateral and the capacity to implement small-scale adaptation and the mainstreaming of adaptation in overall development policies. There is thus a need for greater policy coordination (Fankhauser and McDermott, 2014; Morita and Matsumoto, 2015; Sovacool et al., 2015, 2017; Lemos et al., 2016; Adenle et al., 2017; Peake and Ekins, 2017) <sup>[[#fn:r1453|1453]]</sup> that includes robust mechanisms for tracking, reporting and ensuring transparency of adaptation finance (Donner et al., 2016; Pauw et al., 2016a; Roberts and Weikmans, 2017; Trabacchi and Buchner, 2017) <sup>[[#fn:r1454|1454]]</sup> and its consistency with the provision of basic needs (Hallegatte et al., 2016) <sup>[[#fn:r1455|1455]]</sup> .

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