European financial institutions and tools for adaptation

Description

In Europe, funding climate change adaptation is crucial, because the cost of inaction is rapidly becoming higher than the cost of prevention, and because climate-related damage is already affecting infrastructure, local economies, and public services. 

Recent EU data show that this is no longer a marginal issue, but rather a need for structural investment. The EU is vulnerable to heat waves, droughts, floods, wildfires, and rising sea levels, with direct impacts on health, energy, water, transportation, and agriculture. The 2021 European Adaptation Strategy aims precisely to make Europe more resilient, more quickly, and at all levels of governance. Without funding, plans remain theoretical, and local authorities cannot turn assessments into construction projects, protective measures, or tailored services. At the conclusion of the strategy, the European Commission reiterates that at least 25% of the 2021–2027 budget must be allocated to climate-related spending, which includes adaptation. A study cited in 2026 indicates that the EU, its member states, and the private sector should invest approximately 70 billion euros per year through 2050 for adaptation. The EIB also estimates that every euro invested in prevention and adaptation prevents 5 to 7 euros in future damage and reconstruction costs.

Extreme weather events already have a significant macroeconomic cost in Europe, with average economic losses estimated at 26 billion euros per year over the most recent period examined by the European Court of Auditors. And some projections indicate that, without adaptation, sea-level rise could cost up to €872 billion by 2100 in coastal regions of the EU and the United Kingdom. These figures show that inaction is not a cost-saving measure, but merely a deferral of costs.

The needs primarily concern basic infrastructure: urban drainage, flood protection, water networks, district cooling, public health, and energy resilience. Funding is also needed for risk assessment, climate data, local plans, and capacity building for government agencies and operators. Finally, a significant portion of the needs concerns local governments, which are on the front lines but rarely have sufficient budgetary resources.

This means that every euro spent now prevents several euros in losses later on. In the EU, the real debate is therefore no longer whether to fund adaptation, but how to scale up and accelerate this funding to match the risks. 

But what are the main financial levers for funding this adaptation to climate change, distinguishing between public funding, market-based instruments, and technical support?

In Europe, we’re talking about public grants through international climate funds; funding mechanisms such as the Green Climate Fund and the Adaptation Fund; concessional loans for adaptation projects; guarantees and risk coverage through EIB instruments; so-called “blended finance,” which combines public funds, concessional loans, guarantees, and private capital to make projects bankable; national and local budgets, etc. There are many options. But how can we make sense of them? Which levers are the most important and the most viable?

How can we design innovative financial mechanisms—both public and private—that enable large-scale financing of climate adaptation investments in line with current European climate and financial frameworks (such as the EIB’s announced doubling of funding for adaptation—up to €30 billion between 2026 and 2030—the taxonomy, SFDR 2.0 (end of 2025 – Sustainable Finance Disclosure Regulation), climate change adaptation under the future European adaptation strategy, etc.)?

Speakers

• Vivian DEPOUES, Head of Climate Change Adaptation, I4CE (Institute for Climate Economics)
• Sébastien SOLEILLE, Director of Sustainable Finance, French Banking Federation (FBF)
• Santiago TORRES, Director, ESG Logic

Moderator: Charles COVERDALE, economist at Ricardo/MiP4Adapt