Devolved finance and governance of climate change adaptation

Since the Paris Agreement in 2015, debates around climate change adaptation have increasingly shifted from focusing on access to finance to focus on governance. The COP26 in Glasgow largely agreed on a common rulebook and on ensured Global South access to finance for climate change action. This DIIS Report presents an overview of the state of climate change adaptation finance, with focus on devolved governance and use in Least Developed Countries (LDC). The report contributes to a better understanding of how and at what scale climate change actions take place and are governed.

The study illustrates the highly skewed character of how finance is shared between mitigation and adaptation and between middle-income countries and LDCs. It further addresses where finance for climate change adaptation is spent, who decides what type of adaptive action is financed and points to the challenge of devolved finance and governance of climate change adaptation in LDCs. The report further identifies and discusses four categories of actors that each in their own way advances the agenda for devolved finance and governance of climate change adaptation.

Few systematic empirical studies have focused on the political economy of climate change adaptation at the local government level and fieldwork-based research is needed to fill this knowledge gap. Drawing on development literature and inspired by the local led adaptation principles, the study identifies and discusses seven governance aspects that are important for successful climate change adaptation at sub-national levels. The report uses these governance aspects to assess four promising models supported by international development agencies that aim to lay the foundation for devolved finance and governance of climate change adaptation and seeks to draw conclusions and perspectives regarding the strengths and shortcomings of the models. Finally, this report examines devolution within Danish adaptation financing as a case of how donors might approach decentralisation in their adaptation commitments and programmes.

This DIIS Report has received financial support from the Ministry of Foreign Affairs of Denmark. It reflects the views of the authors alone. The report forms part of a broader study conducted by DIIS on climate change adaptation. It complements an earlier DIIS Report, addressing climate change adaptation and development (Funder, Lindegaard, Friis-Hansen and Gravesen 2020) and a forthcoming policy brief.