Beyond Emergency Aid: Climate Adaptation Funding in Fragile States

By Isaac Caiger-Smith, BwB Senior Analyst, and Alison Shaw, BwB Vice President, with contributions from Phoebe Forbes, BwB Research Intern, and Rupesh Madlani, BwB CEO

As defense budgets around the world rise in response to heightened geopolitical tensions, one crucial aspect of security continues to be overlooked: climate vulnerabilities in countries affected by fragility, conflict, and violence.

Many fragile nations are trapped in a destructive feedback loop: climate stresses intensify political, economic, and social instability, which, in turn, erode the ability of these states to act on improving climate resilience. This already precarious situation is often compounded by limited institutional capacity and minimal access to climate finance.

The current geopolitical landscape provides many examples of this unfortunate reality. In Somalia, for example, successive droughts have destroyed livelihoods and intensified competition over scarce resources, fueling cycles of local conflict and enabling armed groups to expand their influence.

Without a decisive shift from reactive, short-term, aid-based responses to climate shocks towards proactive, long-term, and conflict-sensitive climate adaptation, the geopolitical, economic, and human costs of conflict will continue to grow.

The destabilizing impact of climate stress

Climate change is a ‘conflict risk amplifier’. By driving resource scarcity, population displacement, and disruption to livelihoods, climate pressures heighten tensions while undermining a state’s capacity to respond.

Looked at through this lens, there is an unfortunate logic to the fact that in 2022, 18 of the world’s 25 most climate-vulnerable countries are also classified as fragile or conflict-affected (V18). Spread across Africa, Asia, and South America, the group includes countries such as Sudan, Somalia, Mauritania, Afghanistan, and Papua New Guinea.

Each of the V18 face distinct climate vulnerabilities that reflect their geography. For example, Sudan is grappling with accelerating desertification across the Sahel belt, Afghanistan faces rapid glacial melt and flash-flood risks, and Papua New Guinea must contend with rising sea levels and coastal erosion that are threatening its low-lying islands. At the same time, this group of nations also share several significant traits: low levels of socio-economic development, rapid population growth and urbanization rates, and weak governance structures.

How financial systems fail fragile states

These major challenges are exacerbated by a lack of climate-related investment: despite being among the nations most in need, the V18 often receive the least climate adaptation funding. According to World Bank data, countries affected by high-intensity conflict received an annual average of US$2.74 per capita in overseas development assistance-backed adaptation investment. In 2021, the world’s 10 most fragile countries collectively received just US$223 million in climate adaptation finance – less than 1% of the global total.

As a 2021 report by ODI Global observes, “the more fragile a country is, the less adaptation finance it receives”.

The V18 are highly dependent on humanitarian and development aid flows. While these funds are essential for addressing immediate crises such as food shortages, peacekeeping, and/or medical care, this short-term, reactive assistance does little to address the root causes of vulnerability. A more stable and secure future for these nations will require a major increase in investment targeting climate adaptation and systemic resilience.

However, several factors make conventional financing structures ill-suited to achieving this objective:

Lack of conflict-sensitivity: To date, most climate finance mechanisms have shown limited capacity to integrate conflict risk into their design.

Short-termism: The unpredictable environment in fragile states means that financing is often short-term (1-3 years), making long-term adaptation planning difficult.

Siloed approaches: Climate finance in fragile states generally focuses on addressing immediate impacts of shocks, such as drought and famine, versus building infrastructure and investing in long-term adaptive capacity.

Inadequate risk-sharing: There is a severe lack of tools or mechanisms that allow for the sharing or transferring of the risks associated with operating in these environments.

In summary, the current climate finance system is not fit for purpose in fragile and conflict-affected environments. High-need countries are excluded or underserved due to a combination of external hesitance and internal weaknesses.

Innovative financial approaches are needed to shift priorities

Directing climate investment towards where it is urgently needed in fragile states will require a re-tooling of existing financial architecture, with greater use of innovative instruments and approaches that involve insurance, pooled funds, crisis modifiers, and guarantees. Table 1 highlights how creative structuring of financial solutions could be used to overcome existing challenges.

Table 1: Overcoming barriers to adaptation investment in fragile states using innovative financial solutions

Climate resilience as a security strategy

As governments increase defense spending in response to global insecurity, more attention should be paid to underlying issues that heighten the risks and impact of conflict. Climate vulnerability is a major force multiplier that, if left unaddressed, will continue to undermine stability and exacerbate existing tensions.

Proactive investment in building adaptive capacity in the V18 and other fragile states is a crucial pre-condition for a durable and sustainable peace. The lens must shift from ‘short-term aid’ to ‘long-term security strategy’. This means scaling risk-sharing mechanisms, embedding flexibility in finance, and developing structures that break down traditional siloed approaches.

In the face of growing climate risks, ensuring climate adaptation investment is fully embedded in security strategies is crucial to unlocking future peace dividends and supporting long-term geopolitical stability.