Most Vulnerable Nations Bear Brunt Amid Slumping Climate Finance

Arabian Post

6 hours ago

Greenlogue/AP
A newly released global analysis reveals that funding for climate adaptation in the world's most hazard-prone nations has dropped sharply, leaving them dangerously exposed to floods, heatwaves and storms.
The Climate Risk Index 2025, based on data spanning 1993 to 2022 from EM-DAT, the World Bank and IMF, found that more than 765,000 people died and nearly US$4.2 trillion was lost in direct economic damage due to more than 9,400 extreme weather events. It highlights the double jeopardy faced by vulnerable countries: they suffer more intense weather impacts while having little financial leeway to adapt.
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Analysis of finance flows shows a steep decline in support. According to the United Nations Environment Programme's Adaptation Gap Report, international public climate finance to developing nations fell by roughly 15%, resting at US$21.3 billion in 2021—just a fraction of annual needs estimated between US$194 billion and US$366 billion. Regions like Africa face an even starker shortfall. Despite rising flows—up to US$43.7 billion in 2021/22—they remain only around 20–25% of what is required to meet national climate targets.
Asia-Pacific is similarly under‑funded, with the Asian Development Bank warning that US$34 billion committed in 2022 falls far short of the US$102–431 billion needed annually to adapt infrastructure and shield vulnerable communities. The bank warns that failure to close this gap could shave off as much as 17% from the region's GDP by 2070 under high‑emissions scenarios.
Aggregate indices measure the gap between need and support. Columbia University's Climate Finance Vulnerability Index classifies countries by their combined risk exposure and lack of financial access. The Vulnerable Twenty alliance of 68 low‑emitting but hard-hit nations advocates for strengthened public and private finance and debt relief measures that would enable climate action without undermining fiscal stability.
On the ground, this lack of finance has real-world consequences. In 2024, Hurricane Beryl inflicted losses equivalent to 22% of GDP in St Vincent and the Grenadines. Only about one third of the required US$57 billion in humanitarian assistance reached those in need. The remainder fell short, forcing governments to prioritise disaster recovery over healthcare, education and infrastructure.
Pre-arranged financial instruments offer a promising route to enhance resilience. Regional risk pools such as ARC and CCRIF reached US$9.8 billion in coverage in 2023, up 27% year‑on‑year. Yet, aid‑supported pre‑arranged financing only accounts for 1.1% of total crisis aid, and low‑income countries receive merely 3.1% of that amount. Experts warn that reliance on post-disaster appeal models leads to delayed funds that reach affected populations too late.
Ahead of COP29, fragile, conflict-affected nations formed a new 'Network of Climate‑vulnerable Countries,' demanding an annual US$20 billion for adaptation by 2026. These nations received just US$8.4 billion in 2022. They urge reforms to channel grants—not loans—to avoid exacerbating sovereign debt crises.
The newly capitalised US$700 million loss and damage fund, hosted in Manila, is intended to support recovery in smaller nations. However, concerns persist that bureaucracy and unequal access will delay payouts to those who need it most.
The scientific and policy evidence is clear: extreme events such as floods, storms and heatwaves account for most fatalities and economic losses—storms cause 56% of financial loss, floods 32%, and heatwaves contribute significantly to mortality. At the same time, studies show that well‑targeted climate finance can substantially reduce welfare costs associated with heatwaves. Investments in adaptation, early warning systems and resilient infrastructure are cost‑effective insurance for societies under climate pressure.
Despite these findings, the trajectory of climate finance remains far below the scale required. Developing nations, especially least‑developed and conflict‑affected states, are being left behind. Financing mechanisms are evolving, and pledges are growing, but a profound imbalance remains between exposure to climate risk and access to the capital needed for resilience.