UNEP Adaptation Gap Report (AGR) 2025

The United Nations Environment Programme (UNEP) Adaptation Gap Report (AGR) 2025 presents an urgent call for global cooperation to address the severe underfunding of climate adaptation, even as climate-related disasters intensify worldwide. The report underscores the widening chasm between the financial resources needed to protect vulnerable communities and ecosystems and the funds actually being mobilised. It also evaluates global progress toward adaptation targets, highlighting systemic gaps in finance, planning, and implementation, particularly across developing nations.

Rising Adaptation Finance Needs

According to the report, developing countries will require between USD 310 billion and USD 365 billion annually by 2035 to meet adaptation demands. When adjusted for inflation, the figure rises further to USD 440–520 billion per year, reflecting the growing frequency and intensity of both rapid-onset climate events—such as floods, cyclones, and heatwaves—and slow-onset impacts like drought, desertification, and sea-level rise. These escalating financial needs indicate that adaptation costs are increasing at a much faster pace than the available funding mechanisms can accommodate.
The report attributes the surge in financial requirements to several interlinked factors:

• Rising vulnerability due to unplanned urbanisation and ecological degradation.
• Increasing costs of implementing resilience-oriented infrastructure.
• The need for enhanced social protection systems to buffer marginalised communities.

Widening Adaptation Finance Gap

Despite the soaring requirements, the current international public adaptation finance stands at only USD 26 billion (2023). This leaves an annual funding shortfall of USD 284–339 billion, making the adaptation finance gap one of the most pressing challenges in global climate policy.
The Glasgow Climate Pact (2021) had set a goal of doubling the 2019 level of adaptation finance to USD 40 billion by 2025, but UNEP concludes that this target will almost certainly be missed. The New Collective Quantified Goal (NCQG), envisaging USD 300 billion annually by 2035, is also deemed insufficient, particularly as it is not adjusted for inflation.

Funding through Climate Mechanisms

Support from international climate finance mechanisms—such as the Adaptation Fund, Global Environment Facility (GEF), and Green Climate Fund (GCF)—rose to USD 920 million in 2024, representing an 86 per cent increase compared to the 2019–23 average. However, UNEP cautions that this increase may be temporary, reflecting short-term political commitments rather than a sustained trend. Fiscal constraints in donor countries, combined with competing domestic priorities, continue to limit the expansion of adaptation finance.

Unequal Burden and Slow Progress

Developing nations shoulder a disproportionately high share of adaptation costs, with about 58 per cent of adaptation finance arriving in the form of debt instruments, most of which are non-concessional loans. This not only aggravates debt burdens but also raises ethical concerns about climate injustice—where vulnerable countries pay the price for climate impacts they did little to cause.
The report highlights that 172 of 197 countries now have national adaptation plans (NAPs) or frameworks, yet 36 of these plans are outdated, reducing their relevance in the face of fast-changing climate realities. Small Island Developing States (SIDS) are recognised for having the highest degree of policy integration and institutional focus on adaptation, despite their limited financial and technical capacity.

Key Recommendations

UNEP outlines a series of recommendations to bridge the adaptation gap and enhance resilience, focusing on finance, policy reform, and international collaboration.
1. Baku to Belém Roadmap: Adopted at the 9th Conference of the Parties (COP 29) to the UN Framework Convention on Climate Change (UNFCCC), this roadmap calls for scaling up global climate finance for developing countries to USD 1.3 trillion annually by 2035. The initiative emphasises aligning adaptation finance with broader sustainable development and resilience-building goals.
2. Enhancing Private Sector Participation: Currently, private investment in adaptation is estimated at USD 5 billion annually. With improved policy frameworks, risk-sharing mechanisms, and blended finance models, this could rise to USD 50 billion per year. Nonetheless, even this figure remains a small fraction of total adaptation needs. UNEP stresses the necessity of public-private partnerships to de-risk investments in climate resilience projects.
3. Prioritising Grants and Concessional Finance: The report advocates for avoiding new debt traps by focusing on non-debt-creating instruments such as grants and concessional loans. It also urges the phasing out of fossil fuel subsidies, enabling the redirection of public funds toward adaptation initiatives.
4. Integrating Resilience into Financial Systems: Financial institutions—including banks, investors, and insurers—are encouraged to embed climate-risk assessments within their decision-making processes. This shift would align financial flows with climate resilience objectives, improving long-term economic stability.
5. Strengthening Mitigation: UNEP reiterates that effective emission reduction (mitigation) measures can reduce the overall cost of adaptation by lessening the magnitude of future climate impacts. Thus, adaptation and mitigation must be pursued in tandem to ensure comprehensive climate security.

• Adaptation: Adjusting to actual or anticipated climate effects to minimise harm or exploit beneficial opportunities. It encompasses both human and natural systems, promoting resilience and long-term sustainability.

• Adaptation Costs: The financial resources required for planning, preparing, and implementing adaptation activities, including administrative and transaction expenses.

• Adaptation Gap: The disparity between current adaptation actions and the level needed to achieve societal resilience goals, determined by available funding, priorities, and tolerance for climate risks.

India’s Approach to Climate Adaptation and Development

India’s climate strategy increasingly reflects an adaptation-centric approach, prioritising resilience in agriculture, water management, and disaster preparedness. This shift stems from recognition of global inequity in climate finance and the immediate local benefits adaptation provides. The National Adaptation Fund for Climate Change (NAFCC) plays a central role in mobilising resources for community-based projects.
The Economic Survey 2024–25 outlines a national vision to achieve developed nation status by 2047, with adaptation forming a cornerstone of sustainable growth. India upholds the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC), arguing that development must precede deep decarbonisation.
India’s pragmatic global stance also reflects growing frustration over inadequate international commitments—exacerbated by the withdrawal of the United States from the Paris Agreement in 2025 and delays in operationalising the Loss and Damage Fund. Consequently, India has delayed the submission of its 2035 Nationally Determined Contributions (NDCs), underscoring its demand for equitable climate finance.
Nevertheless, mitigation remains integral to India’s long-term vision, with a continued commitment to achieving Net Zero emissions by 2070, as stated in its Long-Term Low Emissions Development Strategy (LT-LEDS).

Outlook and Global Implications

The UNEP Adaptation Gap Report 2025 serves as a stark warning that global adaptation efforts remain dangerously underfunded. Without urgent mobilisation of concessional finance, reform of climate funding mechanisms, and enhanced mitigation, developing countries risk enduring irreversible climate impacts. The report’s overarching message is clear: investing in adaptation today is essential for global survival tomorrow, ensuring that no nation is left behind in the pursuit of resilience and sustainable development.