The 1451 Review (Volume 1) 2021

Endogeneity remains an issue, particularly in the year-fixed effects models and
therefore the results should be interpreted as correlation rather than causation.
However, with such complicated aggregated variables as vulnerability to climate
change and implementation capacity, it is methodologically challenging to have no
remaining correlation with the error term.
Furthermore, the OECD data on climate finance has several drawbacks. The
data only became available in 2010, meaning only less than 10 years of data is
available. This makes it challenging to draw any coherent conclusions on the change
of the variables over time, especially as many of them only move slowly.
This research only considered the allocation of finance, but the actual impact
comes from the effective use of the finances. Nevertheless, examining the effectiveness
of adaptation aid requires more subnational data and longer time scales, which
although is beyond the scope of this paper, remains an important question for future
research. In conjunction, considering the allocation based on subnational but as
robust vulnerability measures as the ND-GAIN would be another question for further
research.
Conclusion
Motivated by the double-injustice in climate change, this paper set out to examine how
equity and efficiency concerns affect adaptation aid allocation at the aggregate, paying
particular attention to the different dimensions of vulnerability. The results indicate
that the outcome of the adaptation aid allocation process does not follow the priorities
set in the Paris Agreement. Indeed, efficiency concerns seem to dominate allocation
decisions rather than recipient need, meaning that the most vulnerable will not be
prioritised. Vulnerable countries have called for increases in adaptation finance for
years and the Paris Agreement reinstating the USD 100 billion goal was a major win
along with the balance between adaptation and mitigation. Having those goals not
reflected in the outcomes of climate finance delegitimises the UNFCCC in the eyes of
many vulnerable countries. Better data on commitments as well as disbursements
would make it easier to hold donors accountable. Further research should investigate
both the allocation and the effectiveness of adaptation aid on a sub-national level.
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