Mind the (Adaptation) Gap: The Costs and Challenges of Climate Adaptation in Indonesia

Abstract

The urgent need to combat the impacts of climate change in Indonesia requires prompt and effective adaptation strategies. This thesis explores the financial challenges of climate adaptation in Indonesia, highlighting the gap between projected costs of adaptation and the actual investments allocated. To address this, the research makes use of a dual approach: firstly, using data from established models (modeling approach) and country reported data (country reporting approach), this study downscales regional adaptation cost estimates to country level costs for Indonesia. Secondly, this study incorporates qualitative insights through interviews with professionals in various industries, offering a diverse perspective on financing climate adaptation. Quantitative findings reveal a significant financial gap in climate adaptation for Indonesia. The modeling approach suggests that costs of adaptation could range from $8.7 to $19.8 billion annually until 2030, with significant portions needed for coastal and flood protection measures. On the other hand, the country reporting approach estimates that costs of adaptation could range from $0.13 to $2.02 billion annually until 2030. These estimates contrast with the current yearly adaptation funding of about $0.55 billion, underlining a critical funding deficit. Qualitative interviews underline several challenges, including inconsistent policy frameworks, poor cross-sector collaboration, and a lack of quality data. To narrow the adaptation financing gap, this paper suggests improving climate literacy, developing a robust climate data infrastructure, and fostering collaboration between the private and public sectors. Additionally, repackaging adaptation projects to emphasize their socioeconomic benefits could enhance their appeal to investors.