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Project-based public support constitutes the most important financing mechanism for implementing adaptation followed by explicit budgetary allocation

Financing instruments for adaptation

  • Project-based public support: Implementing adaptation is facilitated with the help of public funding on the basis of projects (e.g. research projects including test cases where implementation is carried out, financing adaptation measures to be implemented regionally/locally).   
  • Explicit budgetary allocations: A dedicated part of public finance is earmarked to finance adaptation implementation. This may lead to project-based adaptation, and hence in some cases may be overlapping with project-based public support.
  • Insurance mechanisms: To equitably transfer the risk of a loss, insurances help to avoid or minimize human and economic losses following climate change related events.
  • Public-private-partnerships (PPPs): A venture between a government service and the private sector which is funded and operated through a partnership. PPPs can be a useful tool to combine financial and knowledge resources from both the public and private sectors on specific projects in order to foster adaptation implementation.

Countries indicate a wide range of financing instruments for implementing adaptation. In general, project-based public support is mentioned to be the most important financing mechanism currently in place for adaptation (Figure 2.19). This is true for all sectors/areas except for cultural heritage where insurance mechanisms are used more often than project-based public support. Second most frequently used financing mechanism is an explicit budgetary allocation for adaptation. In case of water and agriculture, explicit budgetary allocations are reported to be used by eleven European countries. In addition, insurance mechanisms are indicated to be often used in agriculture and water as well as in the forestry sector. Generally, public-private partnerships (PPPs) are less often used, but seem to play an important role in the water sector, followed by transport and energy.

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