National Financial Instruments and Mechanisms to Manage Climate Risks and Impacts

This study analyses existing and planned measures to address climate risks and impacts in countries of the Climate Vulnerable Forum (CVF). It assesses the scope, coverage, success factors, gaps, and challenges regarding the set-up and maintenance of financial instruments and mechanisms. The analysis provides a broad picture of country-led instruments and mechanisms on the national and regional level. It is based on information provided through a survey with CVF country decision makers and experts from the field of climate and disaster risk management and loss and damage as well as a comprehensive literature review. The study presents six key findings:

1. CVF countries are already taking action to manage climate risks and deal with concrete impacts by using financial instruments and mechanism. However, the scope of actions differs significantly between countries.
2. Major gaps exist in CVF countries regarding the coverage of slow-onset processes and related climate risks and impacts.
3. Major gaps exist in CVF countries regarding the coverage of non-economic loss and damage.
4. The inclusion of relevant stakeholders through inclusive partnerships and open dialogues is a key success factor for setting up and sustaining national financial instruments and mechanisms.
5. Research and data gaps hinder evidence-based decision making on financial instruments and mechanisms to manage climate risks and impacts ex-ante and expost.
6. There is a need for adequate financial support from the international community to set up and sustain financial instruments and mechanisms to address climate risks and impacts in CVF countries.

Based on these key findings, a set of conclusions on knowledge gaps and open research questions, the necessary support from the international community as well as strengthened cooperation through partnerships are presented.