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Instruments to Finance Climate Protection and Adaptation Investments in Developing Countries


The financing of climate-relevant investments in developing and industrializing countries has become an important element of development cooperation (DC). As global efforts are made to mitigate climate change and its consequences, substantial financial transfers have to take place - particularly from industrialised countries to non-OECD regions. In this context – as for other purposes of DC as well – there is a debate over the choice of suitable financing instruments. It is occasionally argued that, for moral or factual reasons, climate protection and, in particular, climate change adaptation should not, or only in exceptional cases, be financed through loans, which would only worsen the indebtedness of the developing countries, and that additional funds should preferably be made available in the form of grants.  This paper is intended to demonstrate why the choice of instruments should not be about opting for either one or the other, but applying a differentiated mix of instruments attuned to the specific situation of the countries, partners and sectors so as to achieve the best possible impact.

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Categories: Water, Infrastructure Financing, Energy, Transport, Climate Change

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