Making adaptation finance deliver for India’s frontlines

This article is authored by Amit Kumar Thakur, director and Dipankar Saharia, executive director, TERI.

A failed monsoon, a drying village water source or declining forest produce can mean a lost harvest, mounting debt or the erosion of a season’s income. For rural and forest-dependent communities, climate change is not an abstract risk; it is a threat to livelihoods. Yet while vulnerability is experienced locally, decisions about climate finance often remain distant from the communities that need it most.

Impact of failed monsoon on farmers

As the world approaches COP31 in Antalya, the challenge is not simply to mobilise more climate finance, but to correct the imbalance between financing emissions reduction and preparing communities to live with climate impacts already unfolding. Mitigation attracts investment through energy transitions, infrastructure and technological innovation. Adaptation, by contrast, frequently involves dispersed, locally specific interventions whose benefits are public, difficult to monetise and realised over time. This makes adaptation harder to finance through conventional markets, despite its importance to lives and livelihoods.

The scale of the financing challenge is substantial. The UN Environment Programme’s Adaptation Gap Report 2025 estimates that developing countries will need $310–365 billion annually by 2035, while international public adaptation finance flows to these countries stood at $26 billion in 2023. The resulting gap is estimated at 12–14 times current flows. This is not merely a shortage of capital; it is a warning that existing financing arrangements are not keeping pace with climate risk.

The Global Goal on Adaptation (GGA), established under Article 7 of the Paris Agreement, seeks to enhance adaptive capacity, strengthen resilience and reduce vulnerability. At COP30, Parties adopted 59 Belém Adaptation Indicators to help assess progress towards this goal. COP31 now has an opportunity to connect this emerging measurement framework to the way adaptation finance is allocated, evaluated and scaled.

The critical shift is from measuring expenditure to measuring outcomes. Funds committed, projects completed and infrastructure built are necessary indicators of delivery, but they do not establish whether vulnerability has declined. A water structure, tree plantation or livelihood programme may be worthwhile without necessarily constituting effective adaptation. The distinction depends on whether an intervention addresses an identifiable climate risk and produces additional, measurable resilience benefits.

This is where adaptation additionality must become a central policy principle. Before an investment is counted as adaptation finance, it should demonstrate the climate risk being addressed, explain what the risk requires beyond business-as-usual development, and identify the outcomes expected for exposed communities. This would help prevent routine development or corporate expenditure from being relabelled as adaptation simply because it occurs in a climate-vulnerable area.

For India, corporate social responsibility (CSR) and private capital can contribute to closing the implementation gap, but only if their role is clearly defined. CSR can support locally grounded approaches that conventional investors may overlook because returns are uncertain or benefits cannot be captured commercially. It can help demonstrate models that public programmes and development finance can subsequently scale. However, CSR spending should not automatically qualify as adaptation finance, nor should private investment substitute for public funding of essential adaptation needs.

The priority should be to finance integrated, climate-risk-informed interventions rather than isolated activities. Watershed restoration, for instance, can be linked to climate-resilient agriculture, agroforestry and diversified livelihoods. Forest-based initiatives can combine ecosystem recovery with sustainable harvesting and market access. Decentralised renewable energy can support climate-resilient processing, storage and rural enterprises. Their value should be assessed not simply by assets created or money spent, but by improvements in water security, livelihood stability, ecosystem condition and the ability to withstand climate shocks.

India could advance this approach by developing a pipeline of community-scale adaptation projects at district or landscape level. Public schemes, CSR contributions, development finance, research institutions and responsible businesses could work through a shared framework for climate-risk assessment, community participation and outcome measurement. Public funding would anchor interventions with broad social benefits, while private and CSR capital could complement implementation, innovation and replication. Such arrangements would also need safeguards against maladaptation. For example, water interventions that improve immediate availability while worsening long-term groundwater depletion.

COP31 should, therefore, advance three distinctions: between adaptation and business-as-usual development; between finance mobilised and finance that is genuinely additional; and between projects delivered and vulnerability reduced. These principles could help translate the GGA from a global ambition into more accountable investment decisions, while recognising that public finance remains indispensable and private capital has a complementary role.

Ultimately, adaptation finance must answer four questions: Did it address a clearly identified climate risk? Did it reach those most exposed? Did it strengthen adaptive capacity? And would the outcome have occurred without the intervention?

If COP31 is serious about turning adaptation commitments into implementation, success cannot be judged by capital mobilised alone. The measure that matters is whether finance reduces climate vulnerability and whether every rupee delivers a demonstrable gain in resilience.

(The views expressed are personal)

This article is authored by Amit Kumar Thakur, director and Dipankar Saharia, executive director, TERI.