Climate funding: Developing countries need at least twice as much money as promised

Climate change is hitting developing countries particularly hard: droughts, floods and heatwaves are on the rise, while many of these countries have hardly any resources for countermeasures. In international climate negotiations, wealthy countries have therefore promised to provide financial support to poorer countries. A new target was agreed at the last climate conference: by 2035 at the latest, affluent countries are to provide USD 300 billion a year. This amount is currently only about USD 100 billion a year, meaning it needs to triple by 2035.
A new study in which HSG participated shows that the actual need is at least twice as high as the annual target of USD 300 billion.

Climate plans of 133 developing countries analysed

A research team from ETH Zurich and HSG analysed the climate plans of 133 developing countries. These so-called Nationally Determined Contributions (NDCs) are a central instrument of the Paris Climate Agreement. They contain the countries’ voluntary commitments to limit global warming and are updated every five years. The NDCs include both measures to reduce greenhouse gas emissions and strategies to adapt to climate change.

Developing countries also communicate their funding needs in their NDCs. Part of the costs are borne by the individual countries, while the rest is to be co-financed by international support. This is because many developing countries lack more than just financial resources. They also bear minimal responsibility for climate change, as their emissions are extremely low compared to those of industrialised countries.
The researchers systematically analysed these funding data. They also held discussions with climate experts to contextualise the results. The conclusion: the discrepancy between the funds required and those promised is enormous.

Adaptation to climate change requires more resources than assumed

The study shows that developing countries are increasingly aware of how much money they need for climate protection. In the updated climate plans, 74 per cent of the countries have already stated their funding requirements. The information provided reveals a significant increase compared to the first submissions. Particularly striking is the fact that while the need to reduce emissions has dropped slightly, the costs of adaptation measures have increased significantly. Increasing extreme weather events and more frequent natural disasters are making the protection of infrastructure and agriculture more expensive.

Another surprising result: while African countries present very detailed funding plans, many South American countries remain vague in this regard. There are also major differences between countries with similar levels of economic development: South Africa, for example, provides comprehensive calculations for individual sectors, while Indonesia provides hardly any information. The research team suspects that various factors are behind these differences, such as the authorities, ministries and other players involved in drawing up the funding plans, the availability of data and experts to determine requirements and the different negotiating tactics of individual countries. The team is currently investigating these differences in more detail in a follow-up project.

Wake-up call to the global community

According to the researchers, the current study is already a wake-up call: “Climate funding must be further increased. Many developing countries and representatives of civil society already called for this at the last climate conference. Therefore, many did not consider the target of USD 300 billion to be a successful negotiation result”, says Dr. Anna Stünzi from HSG, who was involved in the study.

Switzerland would also have a duty

In addition to the insufficient contributions from donor countries under the Paris Agreement, there are also other current cuts in development cooperation, says Anna Stünzi: “The cutbacks at USAID and, for example, the cancellation of US contributions to the Green Climate Fund drastically reduce the financial resources available for climate protection.” Moreover, the Swiss parliament also recently decided to cut the budget for international development cooperation. Although contributions to international climate financing are still planned in Switzerland, it is feared that the reduced support will also have an impact on climate protection and the resilience of developing countries, says Anna Stünzi, pointing out that with the tripling of international climate funding, Switzerland’s fair contribution should actually also at least triple.

Further difficult negotiations on the organisation of climate funding can therefore be expected at the upcoming climate conference in Brazil in late 2025. Systematic analyses of needs and cash flows, such as those provided by the current study, can create an important basis for these discussions.