Adaptation finance for Small Island Developing States (SIDS) and Least Developed Countries (LDCs) remains far below the levels needed to address climate vulnerabilities. Public funding is stagnating or declining, while private flows are difficult to access and rarely reach the communities most exposed to climate impacts. Governments and local actors are calling for a faster, fairer, and more responsive system that aligns with local priorities. This compendium supports that call by presenting innovative, scalable, country-led case studies demonstrating practical approaches to improving access to and scaling adaptation finance.
The compendium is part of the Climate and Development Ministerial (C&DM) process, which focuses on three core goals: enhancing country-owned programmatic approaches, easing access to climate finance, and scaling finance from all sources. The case studies illustrate how countries are advancing these goals, providing lessons and best practices that serve as peer-learning opportunities for governments, fund providers, and practitioners.
Four illustrative case studies highlight practical approaches to easing access and mobilising finance from all sources. Barbados implemented a debt-for-climate conversion using a sustainability-linked loan, blended with guarantees and a Green Climate Fund grant, creating fiscal space while financing resilience investments. The Adaptation Fund’s Locally Led Adaptation (LLA) windows in Rwanda, Belize, and Micronesia devolved decision-making to communities, improving proposal quality, ownership, and local engagement. Tanzania’s Tanga UWASA Water Infrastructure Green Bond demonstrated how domestic capital markets can fund resilient public services, while the Agriculture and Climate Risk Enterprise in Africa combined digital tools and re/insurance partnerships to provide market-based micro-insurance for smallholders.
The case studies highlight key lessons for effective adaptation finance. Cross-ministerial coordination, dedicated technical capacity, and realistic, nationally driven targets accelerate decision-making and ensure finance aligns with resilience goals. Risk-sharing instruments such as guarantees, blended finance, and disaster clauses reduce investment risk and attract private participation. Direct local access supported by readiness assistance improves proposal quality, strengthens community ownership, and ensures sustainable outcomes. Mobilising domestic capital through subnational bonds and private sector engagement can scale financing while safeguarding fiscal space, and integrating adaptation finance into public financial management systems ensures accountability and long-term sustainability.
The Barbados debt-for-climate conversion demonstrates how political leadership, policy coherence, cross-ministerial coordination, robust technical units, and co-financing commitments enable complex, large-scale adaptation finance. Innovations such as disaster clauses, sustainability-linked performance targets, and blended finance structures enhance resilience, fiscal sustainability, and replicability. Lessons from Barbados show that high-level commitment, institutional capacity, and long-term monitoring are critical for scaling and transferring such models to other countries.
The Adaptation Fund’s LLA windows further illustrate the benefits of locally led adaptation. By devolving decision-making authority to local actors, providing flexible funding templates, and supporting inclusive project design, these mechanisms ensure that adaptation interventions reflect local priorities and knowledge. The LLA model strengthens accountability, equity, and effectiveness, particularly for communities that would otherwise face barriers to accessing finance.
Overall, the case studies in this compendium demonstrate that country-led innovation in SIDS and LDCs can transform adaptation finance by improving access, mobilising scaled resources, and generating replicable lessons. To fully realise this potential, systemic challenges around access, capacity, and institutional readiness must be addressed. Fund providers play a critical role in standardising governance blueprints, integrating climate finance into national systems, and providing ongoing technical support to local actors to sustain locally led adaptation over the long term.
