Mobilising private adaptation finance: developed country perspectives

Abstract

The private sector is one of the sources of finance included in developed countries' pledge in the UN climate negotiations to mobilise $100 billion annually by 2020 to support developing countries' efforts to address climate change. For adaptation in particular, it remains unclear what mobilised private finance is. Research so far has focused on its potential and experiences in developing countries, but not on the arguments of those who introduced and continue to advocate private adaptation finance: developed countries. This paper investigates the positions of developed countries and development banks and agencies. In particular, it aims to identify whether those actors can reach a common understanding of private adaptation finance that minimises norm conflicts in a fragmented climate finance system. Empirically, the paper examines the Biennial Reports and submissions on Strategies and Approaches for Mobilising Scaled-up Finance of six developed country parties, as well as data from interviews with experts from development banks and agencies. The analysis finds a number of discrepancies between these sets of actors, for example on motivations for and modes of private sector involvement. This discrepancy is the result of ambiguity around the concept of private adaptation finance in a highly fragmented climate finance architecture. This ambiguity is problematic when the aim of mobilising private adaptation finance is to contribute to the $100 billion commitment. However, if the aim is adaptation in practice, both ambiguity and fragmentation might actually make the climate finance system more inclusive and innovative.

Special issue: managing fragmentation and complexity in the emerging system of international climate finance

“…Yet the articles also find some evidence for synergies and shared norms. While developing and developed countries differ regarding the role for private climate finance in meeting global financing targets, they seem agree on the vital role of the private sector in implementing adaptation measures at the local level (Pauw 2017). Meanwhile, Betzold and Weiler (2017) find that allocation patterns reflect to some extent broad agreement among countries about the importance of vulnerability in distributing adaptation finance.…”

“…In this sense, we may speak of a narrow understanding of the climate finance system-one bounded primarily by the finance that counts as having been mobilized by parties to the UNFCCC-and a broader understanding that encompasses all global investment to address climate change. Most contributions to this special issue focus primarily on the narrower understanding of climate finance, while some also look to the broader understanding (see Delina 2017;Pauw 2017). Importantly, the line between the narrower and broader understandings of the system is often hard to ascertain due to difficulties in assessing which flows of private investment have been mobilized by developed country governments (and therefore should count toward multilateral targets) and which flows would have occurred regardless (Pauw et al 2016).…”

“…the OECD) or specific regions (the regional development banks). The involvement of private actors in climate finance adds further complexity to the system (Stadelmann et al 2013; see also Pauw 2017).…”

“…Thus, it comes as no surprise that there are norm conflicts, for instance between developing and developed countries on the role of private finance (Pauw 2017), among finance ministries on the rationales for climate finance (Skovgaard 2017), or among political parties on the level of climate finance that contributor countries should provide (Pickering and Mitchell 2017). Yet the articles also find some evidence for synergies and shared norms.…”

“…What are adaptation and adaptation finance (Hall 2017;Pauw 2017)? How is development different from adaptation or mitigation (Delina 2017;Hall 2017)?…”