Developing nations at risk as climate adaptation finance lags

As global temperatures rise and climate impacts intensify, developing countries are being left dangerously exposed, with finance to build climate resilience falling hundreds of billions short of what is needed to protect lives, livelihoods and economies.

This stark warning comes from the UN Environment Programme’s Adaptation Gap report 2025: Running on Empty, released ahead of the COP30 climate summit in Belém, Brazil, next month. It paints a sobering picture: while most nations have developed adaptation plans, the money to implement them is still nowhere near sufficient.

Unep estimates that by 2035, developing countries will require between $310 billion and $365 billion annually to cope with climate impacts. Yet in 2023, international public flows for adaptation totalled only $26 billion — less than one-twelfth of what’s needed. This leaves a “yawning adaptation finance gap” of between $284 billion and $339 billion a year.

Although adaptation funding from multilateral climate funds grew in 2024, reaching nearly $920 million (an 86% increase on the previous five-year average), Unep cautions that this may prove a temporary spike, not a sustained trend. 

“A global effort is needed to implement ambitious climate action in view of accelerating climate impacts,” the report said, noting that action on adaptation is still inadequate. 

“Although there is clear evidence of accelerating climate impacts, changing geopolitical priorities and increasing fiscal constraints are making it more challenging to mobilise the resources needed for climate mitigation — preventing or reducing the emission of greenhouse gases, adaptation and loss and damage.” 

The lack of resources, action, and global attention will result in higher long-term global temperatures and associated climate impacts and risks. Yet investments in climate action far outweigh the costs of inaction, the report said.

Investments in adaptation pay for themselves: every $1 spent on coastal protection, for example, can prevent $14 in damages. Urban nature-based solutions can lower temperatures by more than 1°C, while health-focused adaptation measures reduce heat stress and save lives.

Missed goals, rising risks

If these trends persist, the report finds that the Glasgow Climate Pact target — doubling adaptation finance from 2019 levels by 2025 to about $40 billion — will not be met.

At the same time, the New Collective Quantified Goal adopted at the climate negotiations in Baku last year, which calls for $300 billion a year by 2035 for climate action in developing countries, is also deemed insufficient. 

That financing target includes both mitigation and adaptation and is not adjusted for inflation — meaning that real adaptation needs could reach $440 billion to $520 billion a year by 2035.

In its report, Unep welcomes the Baku to Belém Roadmap to US$1.3 trillion, established to scale up climate finance for low-carbon, climate-resilient development. 

But it stresses that this must be achieved through grants and concessional, non-debt-creating instruments — not through loans that worsen the debt burden of vulnerable nations. 

Otherwise, countries risk falling into what Unep calls an “adaptation investment trap,” where climate disasters deepen indebtedness and block further adaptation spending.

“The Baku to Belém Roadmap to raise US$1.3 trillion in climate finance could make a huge difference, but care must be taken not to increase the vulnerabilities of developing nations.” 

Care, too, must be taken not to increase the proportion of non-concessionary debt instruments, the report outlined, warning that 58% of adaptation finance in 2022 and 2023 took the form of debt, with non-concessional loans now outpacing concessional ones.

Uneven progress in planning and implementation

There is, however, progress in planning, which is critical to effectively minimise and address current and future climate risks. Of 197 countries, 172 now have at least one national adaptation policy, strategy, or plan. However, 36 have not been updated in more than a decade, which is a risk factor for maladaptation (failed adaptation). Of the 25 countries still lacking a plan, 21 are developing one.

Many Small Island Developing States (Sids) have gone further, integrating adaptation across national development strategies. Nearly 60% of countries also report embedding adaptation into non-climate policies, according to biennial transparency reports (BTRs) submitted under the Paris Agreement to outline their progress in meeting climate pledges.

Unep’s analysis of more than 1 600 adaptation actions reported in the BTRs shows that most focus on biodiversity, agriculture, water and infrastructure. 

Yet few countries report on outcomes – such as uptake of adaptation-relevant technologies and practices, improved access to basic services, or reforestation – and impacts that describe greater resilience, including changes in biodiversity from restoration and ecosystem protection, sufficient water availability, or improved agricultural production. 

SA hailed for climate reporting

South Africa’s BTR offers a clear example of what strong climate reporting can look like. It links observed and projected threats — from droughts and heatwaves to shifting rainfall patterns — with the country’s most vulnerable sectors, including water and agriculture.

The report then shows how adaptation measures are addressing these risks. Investments in monitoring systems, climate-smart agriculture, and water management go hand in hand with educational campaigns. In contrast, outcomes like improved water security, healthier soils, and more resilient farmers illustrate the tangible results of these efforts.

Unep highlights South Africa’s approach as a model because it demonstrates consistency: hazards, impacts, adaptation actions and results are clearly connected. 

Notably, the report shows that high-quality reporting does not require lengthy chapters or a flood of data. Even shorter sections can score highly if the narrative clearly traces how climate risks are being addressed.

Globally, consistency remains a challenge. On average, BTRs score just 0.44 out of 1, with many countries struggling to link climate risks, priorities, and outcomes. 

South Africa, along with a few others such as Egypt and Gabon, stands out for demonstrating how clear, structured reporting can strengthen both transparency and adaptation planning.

While public finance remains the backbone of adaptation funding, Unep stresses that private investment must increase substantially. Private sector adaptation flows are estimated at $5 billion per year. 

The report suggests that, with targeted policy support and “blended finance” mechanisms to reduce investor risk, this could rise to about $50 billion annually, meeting up to 20% of the adaptation needs for developing countries. But even that would leave a vast gap that only public finance can bridge.

There is a need to distinguish between financing (who provides the money) and funding (who ultimately pays). Unep found that many so-called “innovative” financing models still transfer costs back to developing countries or households, easing donor budgets without reducing their financial burden. Fairness and transparency must be central to any future finance architecture, it noted.