The 2015 Paris Agreement elevates the goal of climate adaptation to the same level of importance as the goal of climate mitigation, and emphasizes the need to mobilize finance for climate adaptation in developing countries. As of February 2017, however, the financial gap for climate adaptation remained monumental. With the administration of US President Donald Trump threatening to interrupt American financial flows to the climate regime, developing countries are expressing growing concern about the ability of developed country parties to mobilize enough finance to meet the sizeable costs of their climate adaptation needs.
In this context, the question of how to equitably allocate scarce adaptation finance among competing developing countries has gained renewed relevance. The operating entities serving the financial mechanism of the United Nations Framework Convention on Climate Change, such as the Global Environment Facility, the Adaptation Fund and the Green Climate Fund (GCF), have granted two groups of countries — the small island developing states (SIDS) and the least developed countries (LDCs) — priority access to adaptation resources. Adaptation funds do not clearly differentiate among developing countries beyond these two priority group categories.
The primary criterion for allocation of adaptation finance among developing countries outside the LDCs or SIDS groups has been “vulnerability to the adverse effects of climate change.” However, political agreement on the concept of climate vulnerability has proven elusive, and therefore operating entities have considerable discretion in deciding which countries are considered particularly vulnerable. In practice, high-income developing countries such as Chile, with higher capacity to mobilize private finance and domestic public finance for climate adaptation than lower-middle-income countries such as Guatemala, have been able to access a sizeable share of scarce adaptation finance.
The current formula has proven insufficient to address important equity concerns in the allocation of adaptation finance among developing countries. This paper argues that the operating entities of the financial mechanism serving the Paris Agreement, especially the GCF, should incorporate an objective, income-based criterion based on gross national income per capita to complement the subjective criterion of vulnerability as primary guidance, ensuring a more equitable allocation of scarce climate adaptation finance to those countries with lower financial capabilities.