{"id":71800,"date":"2026-02-26T16:20:34","date_gmt":"2026-02-26T15:20:34","guid":{"rendered":"https:\/\/www.i4ce.org\/?post_type=publication&#038;p=71800"},"modified":"2026-03-02T16:14:39","modified_gmt":"2026-03-02T15:14:39","slug":"unlocking-capital-climate-adaptation-financing-costs-exacerbate-needs-ways-address-emdes","status":"publish","type":"publication","link":"https:\/\/www.i4ce.org\/en\/publication\/unlocking-capital-climate-adaptation-financing-costs-exacerbate-needs-ways-address-emdes\/","title":{"rendered":"Unlocking Capital for Climate Adaptation: how financing costs exacerbate needs, and ways to address them in EMDEs"},"content":{"rendered":"<h2><span style=\"font-size: 24px;\"><span class=\"NormalTextRun SCXW54950243 BCX8\">Key insights and comparative analysis from adaptation project case studies<\/span><\/span><\/h2>\n<p><span data-contrast=\"auto\">Adaptation needs in emerging markets and developing economies (EMDEs) are rising rapidly, yet current financing assessments systematically underestimate the scale of the challenge.\u00a0<\/span><b><span data-contrast=\"auto\">The cost of capital is a critical, but largely invisible, driver of adaptation outcomes in EMDEs<\/span><\/b><span data-contrast=\"auto\">. It shapes which projects are implemented, at what pace, and at what ultimate cost \u2013 especially for capital-intensive infrastructure projects. While international assessments focus on investment needs, they rarely account for financing costs, even though high debt and equity costs can more than double total project costs and prevent technically sound, socially essential adaptation projects from reaching financial close.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b><span data-contrast=\"auto\">Grants, concessional loans and risk-mitigation instruments significantly reduce financing costs\u00a0<\/span><\/b><span data-contrast=\"auto\">by lowering interest rates, limiting reliance on expensive equity, and de-risking projects for private investors. Based on an analysis of\u00a0<\/span><b><span data-contrast=\"auto\">12 adaptation projects across six EMDEs<\/span><\/b><span data-contrast=\"auto\">, we highlight how heavily these projects rely on concessional finance to be financially viable. On average, public and concessional sources account for nearly 90% of project financing, above the levels observed for mitigation. In practice, concessional finance can reduce lifetime financing costs by several hundred million dollars for large infrastructure projects. However, this model faces hard limits: international concessional resources are declining, while domestic public budgets in EMDEs are increasingly constrained by debt and fiscal pressures.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-contrast=\"auto\">Against this backdrop,\u00a0<\/span><b><span data-contrast=\"auto\">scaling up adaptation finance cannot rely on concessional finance alone<\/span><\/b><span data-contrast=\"auto\">. It requires improving project fundamentals by strengthening and diversifying revenue models, which in practice, comes with several challenges. Adaptation generates substantial economic and social value, often far exceeding its costs, but these benefits are rarely translated into predictable cash flows. The report highlights\u00a0<\/span><b><span data-contrast=\"auto\">cost recovery models\u00a0<\/span><\/b><span data-contrast=\"auto\">including public funding, user-based revenues, and public capture of private value as key tools to align who pays with who benefits, improve bankability, reduce the cost of capital, and mobilise private finance where appropriate. Nevertheless, the capacity of households and firms to absorb higher charges, which are still poorly quantified, also raises important concerns regarding affordability and social acceptability, all the more in least developed countries.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-contrast=\"auto\">Overall, this paper calls for a shift from headline finance targets towards\u00a0<\/span><b><span data-contrast=\"auto\">strategies that fully integrate cost of capital considerations<\/span><\/b><span data-contrast=\"auto\">, combining concessional finance, revenue mobilisation, and structural reforms to unlock durable and scalable investment in climate adaptation in EMDEs.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Adaptation needs in emerging markets and developing economies (EMDEs) are rising rapidly, yet current financing assessments systematically underestimate the scale of the challenge.\u00a0This paper calls for a shift from headline finance targets towards strategies that fully integrate cost of capital considerations, combining concessional finance, revenue mobilisation, and structural reforms to unlock durable and scalable investment in climate adaptation in EMDEs.<\/p>\n","protected":false},"featured_media":71828,"template":"","meta":{"_acf_changed":false,"inline_featured_image":false},"type_publication":[49],"class_list":["post-71800","publication","type-publication","status-publish","has-post-thumbnail","hentry","type_publication-climate-report"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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