Adapting to a New Climate Reality: are Climate Considerations Driving Overseas Adaptation Aid?

Abstract

Overseas adaptation aid is on the rise to protect vulnerable communities against the increasingly adverse effects of climate change, as many low-income countries lack adaptive capacity. In the current literature, there is no consensus on whether climate considerations drive adaptation aid allocation, which is in part due to the lack of a common methodology, definitions, and the lack of a donor-perspective. This thesis investigates whether bilateral donors allocate overseas climate adaptation aid to the countries where the climate risk is greatest between 2010 to 2021. Clist’s (2011) 4Ps framework is employed to investigate whether adaptation aid is allocated based on recipient need for adaptation, on recipient merit, which is how effectively the recipient can employ the aid, and on donor interests. These variables are regressed on OECD data on adaptation aid projects between 2010 to 2021 using a double hurdle model. The model finds that the climate vulnerability indices that mimic the need for adaptation aid are mostly irrelevant for explaining aid allocation, and that low-income countries receive more aid. Moreover, there is a small indication that the perceived quality of governance of the recipient plays a role. Lastly, donor-recipient relationships are quite important, but the importance of the predictors differs based on the donor who provides the adaptation aid. Future research should investigate actions that donors can undertake to closer align adaptation aid allocation to the adaptation need of recipients, thereby increasing the efficient allocation of adaptation aid and adapting to a new climate reality.