Scaling Climate Finance for Locally-Led Adaptation: Lessons and Strategies from the Global South

Keywords: climate finance, locally-led adaptation, Global South, adaptation finance gap, G20, institutional capacity

As climate events become more frequent and intense, the need for effective adaptation at the local level in developing regions has grown increasingly urgent. Despite this need, adaptation finance received by developing and least-developed countries remains under $25 billion per year—far short of the estimated $215 billion required annually. Moreover, less than 10% of global climate finance reaches the local level, highlighting a stark gap. Local communities in the Global South often face barriers such as complex application processes, limited funding access, and inadequate institutional support, which prevent them from securing the necessary adaptation financing.

Locally-Led Adaptation (LLA) offers a promising solution to bridge this gap by empowering sub-national and local actors to make adaptation decisions and fostering partnerships with funders, governments, and multilateral agencies. This model not only addresses structural inequalities in climate finance distribution but also has the potential to attract the scale of funding needed for effective adaptation across vulnerable communities. G20 countries, with their influential role, have a significant opportunity to support LLA initiatives, leveraging international cooperation to promote inclusive and scalable climate action across climate-vulnerable regions in the Global South.

A Five-Pronged Strategy for Scaling LLA Finance

This policy brief proposes a five-pronged strategy to facilitate access to climate adaptation funds for local communities, including:

1. Innovative Finance Mechanisms: Encouraging diversified finance channels such as blended finance, green bonds, and community-driven funds to increase funding flows to local adaptation projects.
2. Institutional Capacity Building: Enhancing the financial literacy, infrastructure, and management capacities of local entities to enable them to secure and manage climate adaptation funds effectively.
3. Simplified Access Processes: Streamlining application and reporting requirements to reduce the complexity and administrative burden faced by local applicants.
4. Partnership and Knowledge Networks: Building collaborations between governments, private sectors, and civil society to share resources, technical expertise, annd civil society to share resources, technical expertise, and best practices in climate adaptation.
5. Social Inclusion and Equity: Ensuring that marginalized and climate-vulnerable groups are at the forefront of decision-making and receive tailored support for their unique adaptation needs.

The Path Forward

Implementing these recommendations can help G20 countries unlock the transformative potential of climate finance, empowering local communities to drive sustainable adaptation and resilience-building efforts. An integrated approach rooted in local priorities will be key to closing the adaptation finance gap and supporting the Global South in charting a resilient future amid escalating climate risks.

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