Domestic public

• Domestic public finance is central to climate adaptation (UNFCCC). It provides stable, predictable, and nationally owned resources. It allows governments to integrate adaptation into core development planning.
• Domestic public finance can take the form of budget allocations for resilient infrastructure, national climate funds, targeted subsidies for climate-smart agriculture, or safety nets, f.e through adaptive social protection systems, or vulnerable groups. By anchoring adaptation in domestic budgets, governments not only ensure long-term sustainability but also create the basis to leverage private and international finance.

Bilateral

• Bilateral adaptation finance refers to funding provided directly by one country to another to support efforts to strengthen climate resilience. This type of finance is typically delivered through development cooperation agencies or government-to-government agreements.
• Most bilateral support is provided in the form of grants, concessional loans, or equity. It is usually channelled through two main mechanisms: targeted climate funds (such as International Climate Initiative) or bilateral climate finance commitments reported under the UNFCCC.
• Bilateral commitments are generally based on negotiations between partner governments and are aligned with the priorities and strategies of the recipient country. Through instruments such as targeted budget support or basket funding, support can extend beyond individual projects to sector-wide approaches. These instruments can facilitate the integration of adaptation considerations into sector planning, programming, and budgeting processes and help mainstream climate resilience across development cooperation portfolios.

Multilateral

• A range of multilateral sources are available for adaptation finance. Multilateral climate funds have been established outside and under the United Nations Framework Convention on Climate Change (UNFCCC), such as the Green Climate Fund (GCF), the Adaptation Fund, the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF), and the Climate Investment Funds (CIF).
• In addition, countries can access finance from multilateral development banks (MDBs) to support the implementation of adaptation actions. They can also act to catalyze additional resources from the public and private sector. Countries should have a clear understanding of the funding modalities of the different multilateral climate funds and multilateral development banks to better align their needs to suitable resources.

Private

• The private sector plays an important role in adaptation finance and includes a wide range of actors, from smallholder farmers and small and medium-sized enterprises (SMEs) to multinational companies, insurers, reinsurers, banks, and other financial institutions operating at national and international levels.Private sector investment in adaptation typically originates from two main groups of actors. The first group consists of private enterprises, which develop and provide goods and services that enhance climate resilience while also investing in measures to protect their own assets, operations, and supply chains from climate risks. The second group comprises private financial institutions, which channel capital to public or private actors through financial instruments such as loans, equity, guarantees, or grants to support the implementation of adaptation measures. (UNFCCC).
• Governments can encourage private sector participation in adaptation by creating enabling environments and by establishing public–private partnerships. However, research indicates that about only 25% of adaptation needs in developing countries up to 2035 could theoretically be financed by the private sector. The remaining 75% are public goods or actions that typically fall within the domain of the public sector. The realistic potential for private sector financing of adaptation measures is estimated to be much lower, namely 10% in SIDS and 5% in LDCs (Watkiss and England, 2025).

Financial support for adaptation is provided through different public and private sources. Multilateral climate funds, especially those established under UNFCCC, play a crucial role as they allow countries to access adaptation specific funding. The most important multilateral funds that support adaptation action are the Green Climate Fund (GCF), the Adaptation Fund, the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF) and the Climate Investment Funds (CIF).

• Green Climate Fund (GCF): The GCF is the largest multilateral climate fund. The GCF aims for a 50:50 balance in allocating its resources between mitigation and adaptation over time and for a floor of 50% for LDCs, SIDS and African States. Support is provided in the form of grants, concessional loans, equity, guarantees, result-based payments and other types of financial instruments. The GCF offers direct access through national and regional accredited entities. In addition to project funding, the GCF provides support through the Readiness and Preparatory Support Programme (RPSP). Under the current Readiness Strategy (2024-2027), countries can access a total envelope of up to USD 7 million per country over 4 years for the integrated planning and implementation of adaptation and mitigation measures. This includes previously available support for National Adaptation Plan (NAP) formulation (NAP.1) for countries that have not yet fully utilised it. Additionally, countries can submit an additional request for up to USD 3 million for NAP implementation (NAP.2).
• Adaptation Fund: The Adaptation Fund is the largest fund focusing solely on supporting adaptation action. The fund was the first multilateral fund to allow for direct access, allowing countries to access the fund through national and regional implementing entities accredited to the Adaptation Fund. Support is provided in the form of grants. Additional support is provided through the Adaptation Fund’s Readiness Programme using a range of instruments that include financial and non-financial activities.
• Least Developed Countries Fund (LDCF): The LDCF is managed by the Global Environment Facility (GEF) and provides support to Least Developed Countries for the implementation of their National Adaptation Programs of Action (NAPAs) and National Adaptation Plans (NAPs) as well as other components of the LDC work programme under the UNFCCC. All LDCF funds are provided in the form of grants and implementation is through one of the GEF Agencies.
• Special Climate Change Fund (SCCF): The SCCF is managed by the Global Environment Facility (GEF) and provides support through two windows: A specific window for the support of adaptation needs of Small Island Developing States (SIDS) and a window for strengthening technology transfer, innovation, and private sector engagement. All SCCF funds are provided in the form of grants and implementation is through one of the GEF Agencies.
• Climate Investment Funds (CIF): The Climate Investment Funds (CIF) consist of the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF). Through specific programmes, the funds support the design of multi-project investment plans that work across multiple interfacing sectors. While their main focus is on mitigation, they have specific funding programs for adaptation. Access to the CIF is exclusively through six MDBs (ADB, AfDB, EBRD, IBRD, IDB and IFC).