Mobilizing Private Sector Funds for Climate Change Adaptation: Nordic Climate Facility (NCF) as a Case Study

Abstract

Although estimates of the global climate finance flows vary, bulk of the funding has been targeted at climate change mitigation and only a fraction to adaptation to the impacts of climate change. Mitigation actions have also received more private sector funds as compared to adaptation. The current financial flows targeted at adaptation fall short of the current estimates for funding needs and call for increased private sector involvement and finance. This article discusses the mobilisation of private sector funds for climate change adaptation using experiences from the Nordic Climate Facility (NCF), a competitive partial grant facility, as a case study. Since its launch in 2009 NCF has approved financing for 49 climate change mitigation and adaptation projects in selected developing countries in Asia, Africa and Latin America. The aim of this paper is to showcase, using selected NCF projects as examples, how adapting to climate change can also have business linkages, especially when combined with mitigation activities, and how public sector funding can be used to leverage private sector funds through local business development for climate change adaptation.