How is Adaptation Finance Faring Post-USAID?

Ten months ago, global adaptation finance was dealt a critical blow. Soon after President Trump took the oath of office for the second time, his administration set to work dismantling the US Agency for International Development (USAID) in an unprecedented exercise of executive fiat.

The agency’s near-total elimination has already cost at least 660,000 lives from the disorderly withdrawal of humanitarian assistance and important health programs. It has also wiped out a major source of adaptation finance for promising climate-proofing projects across the Global South. Specialist funds and organizations primed to receive USAID dollars prior to Trump’s inauguration were suddenly left in the lurch, among them the GAIA Fund, the Insurance Development Forum, the Climate Bonds Initiative, and The Lightsmith Group.

Fast forward to this month, however, and while the hole in adaptation finance left by USAID remains vast, a motley coalition of non-US government agencies, NGOs, and philanthropies have swept in to support many initiatives that otherwise would have withered and died. 

In the last two months alone, The Lightsmith Group has announced funding from the Global Environmental Facility and Norwegian Ministry of Foreign Affairs to build out its “virtual green bank for adaptation”, the Insurance Development Forum’s Infrastructure Resilience Development Fund — backed by major financial institutions including BlackRock and Axa — achieved its first close, and the Climate Bonds Initiative was able to hire a Global Resilience Lead to push forward its pioneering resilience taxonomy. 

These good news stories suggest that the post-USAID adaptation landscape is not as bleak as initially feared. Still, conversations Climate Proof had with several former USAID officials make it clear that significant ground has been lost — and that progress on international adaptation finance could still falter without continued support.

USAID was no bit-player in adaptation finance. In 2023, Congress appropriated at least US$270mn to USAID and the State Department specifically for adaptation programs. Many millions more were directed toward agriculture, ocean plastics, biodiversity, and health projects that included adaptation outcomes. Before the agency’s destruction, USAID finance had gone toward a range of climate resilience efforts — including improving water security in Peru, boosting agricultural resilience in Colombia, and supporting a global Flash Flood Guidance System.

USAID was also integral to a range of adaptation finance transactions that crowded in public and private investment from other sources. Data from blended finance network Convergence shows that the agency participated in 14 adaptation blended finance deals in the period 2019-2024 — more than other entity tracked besides the International Finance Corporation — and invested US$28mn in aggregate.