Editing IPCC:AR6/WGII/Chapter-17 (section)

==== 17.5.2.6 Tracking Adaptation Finance ====

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Adaptation finance tracking is capturing the financial flows associated with adaptation. It can indicate how much is being spent on adaptation, where funds are going to and whether spending matches allocated budgets. Thus, adaptation finance tracking can provide useful information for decision-making, but it does not provide information on the achievements resulting from the invested funds. Accordingly, it can complement, but not substitute, M&amp;E of actions and outcomes. Adaptation finance tracking can be applied domestically ( [[#Guzmán--2017|Guzmán et al., 2017]] ; [[#Guzmán--2018|Guzmán et al., 2018]] ) as well as internationally, for instance by developed countries to report on the goal to mobilise USD 100 billion yr −1 by 2020 in climate finance ( [[#UNFCCC%20SCF--2018|UNFCCC SCF, 2018]] ). Data on adaptation finance can be used alongside information on planning and implementation to assess adaptation progress ( [[#UNEP--2021a|UNEP, 2021a]] ).

Tracking adaptation finance requires defining what counts as adaptation. Different definitions can lead to large variations in the estimated amount of adaptation finance ( [[#Donner--2016|Donner et al., 2016]] ; [[#Hall--2017|Hall, 2017]] ). A further challenge is how to account for adaptation that is mainstreamed, that is, where adaptation-specific investments form only part of a larger programme or budget line, or where actions contribute to adaptation without being labelled as adaptation. These challenges limit the direct comparability between adaptation and mitigation finance ( [[#UNFCCC--2019a|UNFCCC, 2019a]] ). In fact, tracking adaptation finance differs from tracking mitigation finance since activities cannot be ''a priori'' assumed to constitute adaptation but instead have to be assessed for their linkage to climate risks in a particular context (MDBs &amp; IDFC, 2018). Methods for adaptation finance tracking continue to be further developed aiming at better comparability and completeness ( [[#Richmond--2019|Richmond and Hallmeyer, 2019]] ; [[#Richmond--2021|Richmond et al., 2021]] ).

Various methods are used to track adaptation finance, which makes comparisons between adaptation finance figures challenging ( [[#UNFCCC%20SCF--2018|UNFCCC SCF, 2018]] ; [[#Weikmans--2019|Weikmans and Roberts, 2019]] ). For example, multi-lateral development banks use a different methodology than countries do under the OECD Development Assistance Committee (DAC) (Box 17.4; [[#MDBs--2019|MDBs, 2019]] ). One of the differences concerns the treatment of partially adaptation-relevant projects, namely whether only parts or the full amount of a given project volume are counted as adaptation finance (see, e.g., [[#MDBs--2019|MDBs, 2019]] ). Under the OECD DAC methodology, countries often use a fixed percentage (e.g., 50% of the total project value), whereas the MDB methodology attempts for a project-specific estimation of the adaptation-relevant proportion (MDBs &amp; IDFC, 2018). Another aspect is whether tracking distinguishes between financial instruments, such as grants or loans. Different accounting rules can lead to large differences in reported amounts of adaptation finance and to a lack of comparability between providers ( [[#Weikmans--2019|Weikmans and Roberts, 2019]] ). Studies identified an over-reporting (i.e., counting non-adaptation-related finance) by a factor of two to three, which suggests the need for a more consistent and transparent accounting system ( [[#Weikmans--2017|Weikmans et al., 2017]] ; [[#CARE--2021|CARE, 2021]] ).

Good coverage of adaptation finance data exists around international public finance flows, predominantly official development assistance flows from OECD DAC members and from multi-lateral development banks. Less data exist around domestic public finance and private finance flows to adaptation activities, but data sources continue to be further expanded, for example through climate change expenditure tagging and city-level data ( [[#Weikmans--2017|Weikmans et al., 2017]] ; [[#UNFCCC%20SCF--2018|UNFCCC SCF, 2018]] ; [[#Richmond--2021|Richmond et al., 2021]] ). Recent estimates of adaptation finance are provided in [[#UNFCCC%20SCF--2018|UNFCCC SCF (2018)]] , [[#Macquarie--2020|Macquarie et al. (2020)]] and Cross-Chapter Box FAR in this Chapter.

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