Background

Innovative financing sources and modalities hold significant potential to bridge the growing funding gap for adaptation. To leverage these, creative thinking and collaboration with non-traditional actors are essential.

This three-day exercise is quite timely, particularly with the recent launch of the NAP 3.0 initiative, the adoption of a decision on the New Collective Quantified Goal (NCQG) at COP 29, and advances in the discourse on transformative adaptation. It aims to bring together diverse stakeholders—including academics, policymakers, practitioners, and financiers—to explore and co-design innovative ideas for out-of-box modalities for financing adaptation in the future.

Objectives

The workshop will be designed to:

• Explore a typology that maps the different sources and modalities of finance (and their costs of capital) as mapped to the most appropriate uses in addressing adaptation;
• Identify opportunities for potential innovative financing mechanisms to support transformative adaptation interventions aligned with NAPs;
• Brainstorm scalability of existing financing initiatives, programs and instruments that are neither grants nor loans but could potentially generate new streams of financing for adaptation;
• Identify the potential for launching new modalities, including as amalgams of cooperative endeavors of existing innovative instruments, and
• Co-create actionable recommendations and roadmaps to operationalize innovative financing solutions for adaptation.

Indicative Agenda

Day 1: Understanding the Landscape of Adaptation Financing and the rationale for alternative financing

• Rethinking Financing for Adaptation: Moving Beyond Grants and Loans
• Exploring Alternative Financing Models: Microfinancing, Blended Finance, Impact Bonds and Crowdfunding
• Successful alternative financing initiatives from the region
• Initial discussion on mapping different types/modalities of finance to different uses

Day 2: Opportunities for innovative funding and transforming existing mechanisms to meet future needs

• Microfinance for Climate Adaptation
• Community-Based Financing Models for Adaptation
• Private Sector (innovative revenue generating) modalities
• Collaborative Approaches, including blended finance

Day 3: Defining the Path Forward

• Nudging Trends in Innovative Adaptation Finance
• Developing a Roadmap for Scaling Up Alternative Financing in Local Adaptation Projects
• Policy Dialogue for alternative financing models
• Follow-up action by UNFCCC and partners