Communities worldwide are facing escalating climate impacts; from record-breaking heatwaves and rising seas to more frequent floods, storms, and droughts. Building resilience in livelihoods, ecosystems, and infrastructure has become an urgent priority.
To meet this challenge at scale, dedicated climate funds such as the Green Climate Fund (GCF), the Global Environment Facility (GEF), the Adaptation Fund, and the Climate Investment Funds (CIF) were created to channel resources into projects that help vulnerable communities adjust to a changing climate.
The ESA GDA Climate Adaptation and Finance (CAF) activity works at the heart of this system, ensuring that Earth Observation (EO) data guides where and how these investments are made. Building on earlier ESA GDA AID activities, the GDA CAF activity focuses on mainstreaming EO into climate adaptation finance mechanisms by working directly with climate funds and their accredited implementing entities.
Whereas earlier ESA GDA activities primarily partnered with International Financial Institutions (IFIs), ESA GDA CAF broadens this approach by also engaging directly with the global climate funds and with the wider climate adaptation finance ecosystem. This blog introduces the climate adaptation finance landscape, explains how ESA’s new GDA AID, CAF, supports it, and highlights the unique role of EO across the project cycle.
What is climate adaptation finance?
Climate finance comprises both climate mitigation finance and adaptation finance. Climate mitigation finance targets emission reduction and the enhancement of greenhouse gas sinks, while climate adaptation finance focuses on directing resources to help communities, ecosystems, and economies adjust and build resilience to the impacts of climate change. The importance of climate adaptation finance is growing as climate-related disasters intensify, and the reality of climate change means we must not only work to slow it down but also adapt to its effects. This is reflected in global climate agreements that call for greater emphasis on adaptation.
However, ensuring effectiveness and equity in climate adaptation finance remains a challenge. Adaptation is highly context-specific, outcomes are difficult to measure consistently, and vulnerable groups can be overlooked if investments are not guided by robust evidence. To address this, climate funds and implementing agencies are strengthening monitoring and evaluation, testing new adaptation metrics, and emphasising inclusive project design. EO provides an independent evidence base to support these efforts.
What gets funded?
Climate adaptation finance covers a wide range of priorities, often guided by National Adaptation Plans (NAPs) and programme/intervention pipelines developed with support from climate funds. Typical areas of investment include:
- Food security and climate-smart agriculture: drought monitoring, crop yield models, pest early warning, climate-resilient practices, and agricultural insurance products.
- Water resources management: flood mapping, watershed monitoring, groundwater management, and demand modelling to secure water supplies and protect against extremes.
- Ecosystem and land use resilience: protection of mangroves and wetlands, forest monitoring, land cover change tracking, and scaling of nature-based solutions.
- Urban and infrastructure resilience: climate-resilient transport networks, drainage systems, urban heat island mapping, and exposure and asset mapping.
These examples illustrate how climate adaptation finance translates into tangible projects. EO can add measurable value by providing consistent, cost-effective, and independent data at different scales.
The actors involved
Climate finance operates through a two layered ecosystem.
– At the strategic level, global climate funds, including the GCF, the Global Environment Facility (GEF), the CIF, and the Adaptation Fund, pool contributions from donor governments to direct towards climate priorities.
– At the implementation level, these resources are translated into projects by accredited entities such as IFIs, UN agencies, national governments, and, in some cases (as with the Adaptation Fund and CIF), directly by local and national partners.
ESA GDA CAF deliberately engages at both levels. At the fund level, the aim is to influence how capital is allocated and ensure that EO is embedded into strategic pipelines shaping project prioritisation, area selection, and monitoring frameworks. At the implementing agency level, the activity continues the ESA GDA AID tradition of supporting project design and delivery with tailored EO services. This dual focus ensures EO strengthens both the high-level direction of climate adaptation finance and the practical delivery of adaptation projects on the ground.
Our conversations with climate adaptation professionals so far indicate that there is a strong case to use EO at various stages of the typical project lifecycle. Climate adaptation projects typically follow a cycle: from the initial idea to funding approval, through design and implementation, and finally to Monitoring and Evaluation. ESA GDA CAF activity aims to embed EO into each stage of the adaptation project cycle, ensuring climate adaptation finance is guided by robust evidence and targeted where it has the most impact.
- Policy dialogue and concept stage: Projects often begin in the context of NAPs, where countries set priorities for resilience. EO provides baseline information on hazards and exposure, supporting governments in the identification of pressing risks and justification of investment proposals. Example: EO-based flood hazard mapping informed early discussions for flood management strategies in South Sudan.
- Design and proposal preparation: When agencies prepare projects for submission to funds, EO helps build a scientific case by contributing to climate risks modelling, hotspots identification, and adaptation options comparison. Clear, spatially explicit data strengthens proposals and increases their chance of being approved. Example: The World Bank used EO data to run a “Nature-Based Solutions Opportunity Scan” across 70 cities, shaping US$2.5 billion in planned investments.
- Implementation: Once finance is approved, projects are rolled out. EO provides near real-time data to guide operations, helping managers adapt to changing conditions and improve cost-effectiveness. It also directly supports project components such as early warning systems. Example: In East Africa, EO-supported locust monitoring enabled IGAD and the World Bank to issue earlier warnings, target pesticide use more efficiently, and reduce losses for farmers.
- Monitoring, evaluation, and learning: Funds and agencies must show results and refine their approaches for the next cycle. EO provides independent, long-term data to track how adaptation actions change landscapes, reduce risks, and improve resilience. Example: Flood risk analytics in South Sudan integrated into a World Bank US$225 m project, where EO maps allowed transparent monitoring of flood exposure and resilience impacts.
By embedding EO across this cycle, ESA is not only improving project delivery but also influencing how funds allocate capital and measure results. This ensures that climate adaptation finance is more strategic, transparent, and impactful.
Figure 1: How EO Contributes to Each Stage of the Climate Adaptation Project Cycle
Since the launch of the activity, the ESA GDA Consortium have had initial conversations with climate funds, development banks and local implementing entities to explore where EO can provide added value. These discussions have highlighted potential applications of EO across all stages of the project lifecycle, from establishing the climate science rationale in proposals to climate funds, to identifying suitable locations for programmes delivered by local agencies, and to setting up hazard mapping systems that regional entities can use to inform priorities across different funding sources.
The exchanges have taken place across multiple thematic areas, including food security, water resources management, land use and forestry, and urban resilience, and have spanned engagements in several countries. They have also helped surface criteria for prioritising where the CAF activity should focus its efforts, including the strategic value of the engagement, the maturity and alignment with consortium expertise, and the potential for scale-up.
