A@A Knowledge Network: Financing adaptation for mountain communities

Summary

The Adaptation at Altitude (A@A) Knowledge Network held its learning event ‘Financing adaptation for mountain communities’ on 26 June 2025. The meeting was hosted online by the Stockholm Environment Institute (SEI) under the Adaptation at Altitude programme, supported by the Swiss Agency for Development and Cooperation (SDC). The event gathered 25 participants all working on or with an interest in mountain environments.

The A@A Knowledge Network meeting was opened by Rosie Witton and Kate Williamson (SEI), who provided a brief introduction to the A@A Knowledge Network and an overview of the meeting agenda, before introducing the panellists:

• Dipesh Chapagain – Senior Research Associate in the Global Mountain Safeguard Research (GLOMOS) programme at UNU-EHS Bonn.
• Janne Parviainen – Research Fellow at SEI-Oxford.
• Mariam Devidze – Climate Change and Biodiversity Specialist at the UN Environment Programme (UNEP).

The panel of experts provided opening remarks before participating in a panel discussion and audience Q&A.

Background

Mountains feature some of the clearest indications of climate change. Rising temperatures, melting glaciers and changing precipitation patterns are disrupting water flows and affecting ecosystems, creating and worsening natural hazards, and threatening livelihoods and communities both within mountains and downstream.

Adaptation finance is central to strengthening the resilience of mountain communities and the ecosystems they depend on. Yet adaptation finance often falls short in tackling the root causes of vulnerability and reaching those – around the globe – who need it most (Shawoo et al., 2024). In mountain regions, the story is no different. Between 2011-2019, around 6% of all bilaterally and multilaterally funded adaptation projects targeted mountain regions; yet this was unevenly distributed and failed to flow to the most vulnerable countries.

Moreover, mountain communities face unique challenges – to which adaptation finance must adequately respond. This includes climate risks (e.g. glacial lake outburst floods) that can cascade across shared mountain ecosystems and country borders, as well as high altitudes, rugged terrains, and remote locations that can pose barriers to and increase the costs of adaptation implementation. Such factors have implications for how adaptation finance may be costed, allocated, and ultimately distributed to mountain communities.

Opening remarks

Adaptation finance landscape

Janne Parviainen started the event by providing an overview of the adaptation finance landscape and emphasising the need for finance to reach those who are most vulnerable to the impacts of climate change:

• We need to dramatically increase finance for adaptation. For countries of the Global South, an average of US$215 –387 billion is needed per year by 2030, with estimates ranging from US$101 – 975 billion (UNEP, 2023).
• Climate change mitigation receives most of the funding available.
• Private sector contributions to adaptation finance are fairly limited to date, and bilateral development agencies, multilateral development banks, and development finance institutions are experiencing funding cuts and internal reorganisation.
• National Adaptation Plans, which detail funding needs, are steadily increasing but they often lack sectoral plans and detailed cost-benefit analyses which are required to support adaptation planning at sub-national levels.
• Questions we need to consider include:
  • How can we get money to those who need it most, at the lowest appropriate level?
  • How can we increase the capacity and technical skills of local actors to cope with injections of finance to a standard that financiers consider ”adequate”?
  • How can we ”incentivise” adaptation investments whilst keeping in mind that adaptation finance is also a matter of justice (therefore necessitating funding for grant-schemes, in consideration of the high levels of debt many countries already face)?

Adaptation finance needs in mountainous countries

Dipesh Chapagain then shared insights on what this means in a mountainous context, highlighting the gap between finance needs and the amount of funding available:

• Adaptation Finance Needs are financial resources required by countries from international and domestic sources to implement their domestic adaptation plans.
• Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs) offer country-driven, bottom-up estimates of adaptation finance needs.
• As of 31 May 2025, 99 developing countries have included quantified adaptation finance needs information in at least one NDC or NAP submission.
• Estimates are dynamic and highly heterogeneous due to varying adaptation ambitions, different climate and socioeconomic scenarios, diverse costing methodologies, and sectoral and temporal coverage differences.
• Adaptation finance needs reported by developing countries vary widely. Higher-income countries report greater adaptation finance needs in absolute dollar terms—likely reflecting more extensive infrastructure and higher asset values. Lower-income countries face higher needs relative to the size of their economies.
• Mountainous developing countries have high adaptation finance needs in sectors such as agriculture and food, infrastructure, and water supply.
• Adaptation finance needs in mountainous developing countries far exceed current adaptation finance flows, resulting in a substantial adaptation finance gap.

Accessible finance at the local level

Mariam Devidze then closed the opening remarks, by sharing insights on small grant funding schemes in the South Caucasus mountain region and ways to maximise the accessibility of finance at the local level:

• The Mountains ADAPT project seeks to promote innovative mountain adaptation action, provide needs based and easily accessible financial support to catalyse concrete solutions at local scales, and establish small grant schemes that answer the needs of local communities.
• The project’s small grant stocktake analysis identified and analysed existing programs that channel small grants.
• Key recommendations include:
  • Adapt application, selection and reporting processes to the capacities of mountain communities
  • Define smart routes for funds transfer and disbursements
  • Minimise the costs and implementation time by leveraging technology
  • Ensure sustainability and mobilise communities by building capacities and understanding their priorities and motivations

Panel discussion

What recommendations do you have for communities in identifying, applying for, and benefiting from available adaptation support? Are there particular funding mechanisms and pathways that have shown to be more effective in reaching those most at need? 

Janne: It is often perceived that civil society organisations or local level actors do not have the technical capacity or resources to handle large amounts of money and implement it effectively in practice. As a result, the big financiers often use mechanisms at a national government level and local communities and actors are invited to apply for finance through this intermediary. There are still knowledge gaps around which funding modalities are most effective at getting finance to the local level, but we can learn from decentralised or deconcentrated finance methods deployed by development agencies over the years.

Do you think a market approach can work?

Janne: Risk tolerance from the financier is one thing, but the incentives to increase adaptation finance and involve the private sector is another. This has historically been easier in climate change mitigation – it is more challenging to conduct cost-saving analysis and provide concrete numbers in the context of adaptation, since it’s long-term and responds to changing needs. There is definitely a role for the private sector but more research is required to strengthen the business case and incentivise adaptation financing.

What do you think the key enablers and barriers are to making finance impactful at the local and community level? Do you have any examples you can share from the South Caucasus given you’ve kind of been applying and testing small grants in practice?

Mariam: There are so many enablers and barriers I could mention! International climate finance needs to be accessible and consider the needs and capacities of mountain communities and local organisations. Barriers to applying for and accessing funding include the requirement of co-funding and laws that require grant registration. Additionally the lack of embedded decentralisation can discourage collaboration between national governments and local stakeholders. Governments also need to consider local needs in national adaptation planning processes to ensure sufficient finance and resources are available. But there are already good solutions available in the South Caucasus and it’s important to promote and learn from these.

What do you think can be done to close the adaptation finance gap in mountainous countries and ensure that the available finance responds to the unique challenges mountainous countries face (e.g. glacial lake outburst floods)?

Dipesh: Having a clear definition of mountainous countries, particularly in the context of global climate policy and negotiation, could enable accurate measurement, tracking, and reporting of adaptation finance needs and flows to these regions. This will also support advocacy efforts for a dedicated climate finance window for mountainous areas. It’s also important to develop bankable, high-quality projects – while overall climate finance is limited, some funds remain underutilised due to lack of access or capacity.

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