it is essential to build a well-functioning, efficiently regulated and transparent domestic climate finance ecosystem | Photo credit: Pakorn Supajitsoontorn
Broadly speaking, it is important to recognize the growing gap between required and actual financing for adaptation from international public finance flows. According to UNEP’s latest Adaptation Gap Report 2025, the need for adaptation financing by developing countries like India is estimated at $310 to $365 billion per year in 2035, 12 to 14 times higher than the actual funding flow of $26 billion per year. In such a scenario, India needs to strengthen the domestic climate finance ecosystem to ensure future food security and farmers’ livelihoods.
Globally, the mobilization of adaptation funds has slowed significantly, which has become a cause for concern. However, it is encouraging that significant efforts were made at the COP30 in Belem, Brazil, especially to promote agricultural adaptation.
The agrifood system receives only about 20 percent of total adaptation funds, while there is a requirement of about 54 percent, according to the report ‘Agrifood Systems in National Adaptation Plans – An Analysis’, published by the Food and Agriculture Organization (FAO) and the United Nations Development Program (UNDP) in November 2025.
New platform
In view of this, India, along with thirteen other developing countries, agreed at the COP30 to launch a new country platform that could become an operational instrument for the NAP, with the support of the Green Climate Fund (GCF). The platform will serve as a unified mechanism connecting domestic public finances, private investments and international climate funds.
While no comprehensive estimate is available in India on the status of domestic climate finance flows for adaptation in the agricultural sector, a partially tracked estimate from the Climate Policy Initiative (CPI) puts it at around ₹265 billion, or US$3.6 billion, accounting for only about 24 percent of the total resources for adaptation, at ₹1,092 billion, in 2021-2022. The estimate tracked on-farm agricultural adaptation activities including agroforestry, crop insurance, efficient irrigation, research and capacity building, resilient cropping system and soil and water conservation. Nevertheless, financing for agricultural adaptation in India between 2015 and 2030 was also significantly below the required amount of US$67 billion per year. Some of the main reasons for the significant gap in agricultural adaptation financing are the dismal participation from private sector sources and the limited flow of international public finance.
Public sector sources of financing, mainly from central and state government budgets, accounted for 98-99 percent, while private financing at about ₹2.7 billion accounted for only about 1 percent of total domestic financing for agricultural adaptation.
Poor private sector participation is mainly due to inherent investment risks in agriculture, with an increased frequency of extreme weather events, long wait times for returns and difficulties in defining clear business cases. Moreover, more than 80 percent of the end-users of technological innovations from such investments are small farmers. Their small and fragmented land holdings limit the feasibility of achieving economies of scale, discouraging large-scale private sector investment.
In such a situation, public finances must continue to take priority over private finances. However, the private sector should be encouraged to invest through appropriate financial strategies and instruments, such as blended finance, public-private partnerships, minimum guaranteed return schemes, etc.
Furthermore, it is essential to build a well-functioning, efficiently regulated and transparent domestic climate finance ecosystem for seamless financial flow, creating comprehensive knowledge and data for climate risk assessment.
Reddy is Joint Director, Policy Support Research, ICAR-National Institute of Biotic Stress Management, Raipur, and Lingareddy is Senior Economist, Sustainable Finance and Agriculture, Mumbai. Opinions are personal
Published on February 28, 2026
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