India tackles growth and climate challenges by blending public funds, green bonds, and private capital. With tools like blended finance and taxonomy, it prioritizes adaptation in agriculture and water, ensuring resilience for vulnerable populations and sustainable development.
Copyright infringement not intended
Picture Courtesy: DOWNTOEARTH
Climate finance and adaptation innovation have gained prominence as critical tools to combat climate change.
It refers to financial resources from public, private, and alternative sources mobilized to support mitigation (reducing greenhouse gas emissions) and adaptation (building resilience to climate impacts) actions.
The Paris Agreement mandates developed countries to provide at least $100 billion annually, guided by the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR–RC).
Green Climate Fund (GCF): Established under the Cancun Agreements (2010), it supports mitigation and adaptation in developing countries with grants, loans, and equity.
Adaptation Fund (AF): Set up under the Kyoto Protocol (2001), funded partly by a 2% levy on Clean Development Mechanism (CDM) credits. The World Bank serves as the trustee.
Global Environment Facility (GEF): Operational since 1994, it provides grants and loans for clean energy and climate projects.
Special Funds: The Special Climate Change Fund (SCCF) and Least Developed Countries Fund (LDCF), managed by GEF, focus on technology transfer and adaptation in vulnerable nations.
Emerging Mechanisms: The Loss and Damage Fund (LDF), operationalized at COP28 (2023), targets climate-vulnerable regions.
In 2024, global climate finance flows reached $ 2 trillion; adaptation finance represents less than 10% of global climate investments. (Source: World Resources Institute)
It refers to the development and deployment of novel technologies, practices, and systems to enhance resilience against climate change impacts, such as floods, droughts, and rising sea levels.
It includes innovations like climate-resilient crops, early warning systems, water management technologies, and urban planning solutions to reduce vulnerability.
Examples of Adaptation Innovations:
Adaptation innovation enables countries like India to address immediate climate risks while promoting sustainable development, complementing mitigation efforts.
Geographical and Climatic Factors
Socio-Economic Vulnerabilities
Protecting Vulnerable Communities
Adaptation innovation safeguards rural and coastal populations from climate-induced displacement (e.g., Sundarbans flooding), ensuring social stability.
Economic Benefits
Investments in resilient infrastructure and agriculture reduce economic losses from disasters. For example, India’s 2018 Kerala floods caused $4.4 billion in damages, underscoring the need for preventive innovation. (Source: UNDP)
Food and Water Security
Innovations like drought-resistant crops and efficient irrigation systems ensure food production and water availability amidst changing rainfall patterns.
Private Sector Opportunities
Adaptation innovation attracts private investment (e.g., green tech startups), encouraging economic growth and job creation.
Deloitte’s 2023 report estimates India needs $1.5 trillion by 2030, to achieve climate and energy targets
National Adaptation Fund for Climate Change (NAFCC): Established in 2015, funds projects like watershed management and coastal resilience in states like Odisha and Tamil Nadu.
Sovereign Green Bonds: Launched in 2022-23, these finance green infrastructure, including adaptation projects like urban flood management.
National Clean Energy Fund (NCEF): Funded by coal cess, it supports clean energy R&D, indirectly aiding adaptation through renewable energy access.
Compensatory Afforestation Fund (CAMPA): Supports afforestation to enhance ecosystem resilience.
Coastal Protection: The Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) aims to restore and conserve mangrove forests.
Himalayan Ecosystem: The National Mission for Sustaining the Himalayan Ecosystem (NMSHE) focuses on assessing vulnerability, building capacity, and developing adaptation policies in the region.
Water Management: Initiatives like the Jal Shakti Abhiyan focus on rainwater harvesting, groundwater recharge, and afforestation. The National Aquifer Mapping Project (NAQUIM) and Bhu-Neer portal aim to manage groundwater resources.
Urban Resilience: The National Mission on Sustainable Habitat (NMSH) promotes sustainable waste and water management, and green buildings. The AMRUT 2.0 program addresses urban flooding.
Solar Power: PM Surya Ghar Yojana offers subsidies for rooftop solar installations, while the PM-KUSUM scheme supports solar pumps and plants for farmers.
Insufficient Funding: India’s domestic climate finance is inadequate for the $1.5 trillion needed by 2030.
Private Sector Hesitancy: Long gestation periods and low returns deter private investment in adaptation projects compared to mitigation.
Urban Bias: Climate finance favors urban projects, neglecting rural and coastal vulnerabilities.
Capacity Gaps: Limited technical expertise in local institutions hampers innovation deployment (e.g., scaling AI-based weather systems).
Fragmented Market: The adaptation market is highly fragmented, with solutions specific to local contexts and hazards (e.g., flood resilience vs drought resilience), making it harder to achieve economies of scale.
Difficulty in Quantifying Returns: The benefits of adaptation (e.g., avoided losses, enhanced resilience) are harder to quantify financially compared to mitigation (e.g., energy cost savings), making it challenging for innovators to attract funding.
Innovative Financing
Targeted Bonds: Issue municipal and sovereign green bonds specifically for adaptation and resilience initiatives.
Unified National Fund: Establish a centralized climate fund (like Brazil’s Amazon Fund) to streamline adaptation financing.
Capacity Building
Skill Development: Train local institutions in climate finance access and technology deployment.
Community Involvement: Promote PPP-People models to involve communities in adaptation projects, ensuring local relevance.
Local Solutions: Empower local communities to drive and implement context-specific adaptation innovations.
Policy & Regulation
Clear Taxonomy: Develop a robust green finance taxonomy to define and categorize adaptation activities.
Incentives: Introduce targeted incentives (e.g., tax breaks) for private sector investment in adaptation innovation.
Mainstream Adaptation: Integrate climate adaptation into all levels of planning and budgeting (e.g., climate budget tagging).
Data & Knowledge: Provide accessible, standardized data on climate risks to reduce investor uncertainty.
Source: DOWNTOEARTH
PRACTICE QUESTIONQ. Examine the concept of climate adaptation and its significance for India’s sustainable development goals. 150 words |
Mitigation finance funds projects that reduce greenhouse gas emissions, while adaptation finance supports projects that help societies cope with the unavoidable impacts of climate change.
The GCF is the largest global climate fund, established under the UNFCCC to support developing countries in their climate action plans.
It's a debt instrument issued by the government to raise funds specifically for public sector projects that are environmentally sustainable.
© 2025 iasgyan. All right reserved
