Innovative market solutions to confront climate change

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Contributor(s): Claudio Frischtak, Basak Odemis, Professor Rohini Pande, Ali Sarfraz | Large investments are needed to confront climate change. Current levels are far below what is required. Bridging this investment gap rests on harnessing both public and private climate finance. Yet, accessing and effectively using these funds presents substantial challenges, especially in developing countries. Innovative market solutions could help. Markets can be useful because climate change is a global commons problem and different countries have different abilities to reduce emissions. What is missing is a link between those who wish to and can pay for reducing emissions and those who have opportunities to do so. These challenges are amplified in low and middle income countries which grapple with limited institutional capacity and complex international finance frameworks. Strict eligibility requirements and cumbersome application processes further complicate access to vital financial resources, exacerbating disparities between promised and actual funds disbursed, leaving many communities without necessary support for climate adaptation and mitigation initiatives.