Finance adaptation to address climate change and bridge the fiscal gap

A recent report underlines the need for coordinated planning in privatepublic investments at the national and State levels

Climate change is a universal problem that all nations of the world are grappling with. It is an issue that requires planning as well as focussed financing.

Given the impact of climate change on development, society and livelihoods, India too requires investments towards climate adaptation and building resilience among populations towards mitigating climate change. Such investments must necessarily be anchored in projects and schemes that fall within the ambit of India’s wider developmental goals without impeding them.

CHALLENGES & GAPS

So, what are the challenges and gaps when it comes to climate adaptation investment needs, and how can these shortfalls be bridged? A recent report, ‘Financing adaptation in India’ by the Delhibased Centre for Sustainable Finance (CSF) at the Climate Policy Initiative (CPI) India, examines a wide range of concerns and the potential ways in which adaptation finance can be scaled up at the national and subnational level.

The report in its findings notes that India has a common national framework for climate vulnerability assessments but has not established one for climate risk, which “focuses on future climate projections and the dynamic interplay between hazards, exposure, and vulnerability.” Multiple assessments, the report found, had been conducted but the findings were not collated and harmonised to facilitate a consistent approach to climate risk and adaptation investment decisions.

Also, State governments are primarily responsible for adaptationrelated interventions at the local level. But they need substantial financial inputs to achieve their goals. It was found that six States — Orissa, Tamil Nadu, Kerala, Haryana, Himachal Pradesh and Goa – which updated their financial needs required as much $5.5 billion from 2021 to 2031.

POLICY CHANGES

Mobilising funds on that scale requires, among other things, policy changes at the national and the State level. The report recommends the intervention of the Financial Commission vis-à-vis allocation of adaptationrelated funds to State governments.

As Dhruba Purkayastha, India Director, CPI, rightly pointed out: “Bridging investment gaps requires mainstreaming of adaptation investments through Budget allocations and leveraging public finance for attracting commercial investments. Assessing adaptation investment needs at both national and subnational levels is the first step to enabling informed policy and financing decisions.”