Component 1
Identifying evidence-based investment needs
The climate investment planning process is designed to lead to a well-defined set of investments and supporting activities that unlock the mitigation and adaptation actions necessary to achieve climate targets and avoid maladaptation.
These needs should be grounded in a robust understanding of the desired mitigation and adaptation impact, the country’s objectives established in their NDC, and any national or sector strategies related to climate (NAPs/LT-LEDS) and development priorities. Implementing this component is essential for accessing certain sources of finance (e.g., GCF) and ensuring that investment planning and mobilization lead to concrete climate and development outcomes, such as emissions reduction and resilience enhancement.
Steps
- Step 1Extract information from climate‑development policy instruments and understand what further evidence or analysis may be needed to formulate investments
- Step 2Conduct climate change risk and vulnerability assessments
- Step 3Identify the country’s emission scenarios for mitigation potential
- Step 4Identify potential climate mitigation and adaptation investment needs on a sectorial level
- Step 5Conduct a common practice analysis
Step 1
Extract information from climate‑development policy instruments and understand what further evidence or analysis may be needed to formulate investments
NDCs, NAPs, and LT-LEDS, National Communications, sectorial strategies, and other climate-development policy instruments provide critical starting points for understanding the evidence base for investment planning and prioritization of investment needs. To inform investment proposals and to identify any further analysis or gaps that need to be addressed, countries can compare the information contained in their NDCs, NAPs, and LT-LEDS, for instance, to the evidence requirements suggested in this guide and the extra resources available on this website. At this point, countries may also seek to develop an analysis that facilitates longer-term systems-level transformation if they have previously examined investment needs through a more incremental, short-term, or single-sector lens.
Example: Belize conducted a structured sectoral consultative process to determine its investment needs for achieving NDC targets. The country reviewed national climate change policies and sectoral strategies to identify actions and programs contributing to mitigation and adaptation goals. A technical group of sector leads ensured that all outputs were scientifically informed and aligned with national policies, strategies, and action plans. As part of this process, sectoral strategies were updated to reflect Belize’s enhanced NDC ambition, ensuring coherence and alignment with national priorities.
Step 2
Conduct climate change risk and vulnerability assessments
A Climate Change Risk Assessment (CCRA) enables a country to comprehend its vulnerability to climate change and prioritize adaptation action planning. This assessment may be undertaken (fully or partially) as a precursor to NDCs, NAPs, and LT-LEDS design. The spatial, temporal, and sectoral scales of conducting a CCRA do not allow for a universal framework. However, a robust CCRA should be carried out at the sectoral and subnational scale most relevant to the sector, allowing countries to identify, prioritize, and design adaptation interventions and therefore effectively reduce vulnerability and climate change–related risk, increase resilience, and avoid maladaptation. CCRAs should be grounded in well-evidenced scientific and observed data on climate change and relevant socio-economic data at the scale needed to support investment decisions. An assessment would typically:
- contain a context-specific analysis of climate change hazards, exposure, vulnerability, and overall risks;
- include historical and future trends or instances of climate change events/hazards and their impacts;
- present mapping of hotspots of vulnerability to climate change hazards;
- analyze potential non-climatic factors and the adaptive capacity to climate hazard risks and impacts;
- propose a list of potential interventions designed to improve resilience and reduce the risk of impact, including any current projects under way or completed;
- lead logically to enabling policies, funding sources, and mechanisms for climate action;
- be conducted in an interdisciplinary and participative manner, involving international and local experts as well key stakeholders and decision-makers;
- be an integral part of an adaptation process (with a clear link to any existing adaptation planning and ongoing adaptation activities).
Example: Rwanda, supported by the NDC Partnership, conducted climate change risk and vulnerability assessments to enhance resilience and guide adaptation strategies. Using geographic information system (GIS)-based mapping and stakeholder collaboration, Rwanda identified vulnerable sectors like agriculture and water and integrated these findings into its NAP and updated NDCs. These assessments have informed investment priorities, attracted international climate finance, and supported the implementation of measures to protect vulnerable populations and promote sustainable resource management.
Why the scale of analysis matters for investment planning
The outcomes of a CCRA may define entry points for promoting cross-cutting, multisectoral, and inclusive interventions that address complex, interacting climate risks while delivering economic and noneconomic co-benefits following the UNFCCC and the Paris Agreement. These interventions are typically formulated and implemented across various sectors (e.g., agriculture, water, energy, transport, etc.) and scales (e.g., national, subnational, watershed/basin level, etc.). Given the diverse and intricate socio-economic and climate contexts at different scales and sectors, the optimal combination of proxies and metrics for conducting a CCRA may vary. Therefore, a sector-specific multiscale assessment of climate change risks is recommended to ensure more tailored and concerted climate adaptation actions that address the needs of communities. This is crucial for guiding adaptation planning and providing the scientific foundation for countries to attract climate finance to implement the most suitable actions to reduce vulnerability to climate change–related risks, enhance resilience, and avoid multiscale maladaptation.
Step 3
Identify the country’s emission scenarios for mitigation potential
Emission scenarios represent the possible pathways that a country might take in the emissions of GHG. By making assumptions about how society will develop, including factors such as population growth, it becomes possible to estimate trends in emissions that could reveal priority mitigation interventions. For instance, if trends indicate a systemic decline in emissions from a particular sector and an increase in another, a country may choose to prioritize the sector with increasing emissions.
The determining factors for emission scenarios are known as driving forces. The primary forces that “drive” a country’s future emissions include population growth, changes in energy use, economic and technological development, and land use change.
By building on existing emission inventories and modeled emission scenarios, a country can identify the most significant mitigation potential across its economy and begin developing a list of potential interventions that would lead to GHG mitigation.
Example: Georgia developed its LT-LEDS, which includes detailed emissions scenarios aligned with its NDC targets. This strategy outlines pathways for reducing GHG emissions across key sectors, providing a foundation for targeted investments to achieve its climate objectives.
Step 4
Identify potential climate mitigation and adaptation investment needs on a sectorial level
The steps outlined above should lead to a validated set of potential climate mitigation and adaptation investment needs that are responsive to the country’s climate change challenges and unique circumstances. At this point, investment needs are characterized in general terms at a sectorial level rather than as specific interventions or investments, allowing greater flexibility at the financial planning stage.
Example: Fiji identified sectoral climate mitigation and adaptation investment needs to align with its NDC targets. Through comprehensive analysis, the country prioritized key sectors such as energy, agriculture, forestry, and water, focusing on high-impact actions like renewable energy, sustainable agriculture, and coastal resilience. Stakeholder engagement ensured the identified needs reflected local realities, while integration into Fiji’s Climate Finance Strategy and NAP provided a clear roadmap for implementation. This approach enabled Fiji to attract international funding and advance targeted projects, significantly progressing its climate and development goals.
Step 5
Conduct a common practice analysis
Undertake a study that analyses the extent to which the mitigation and adaptation technologies or practices identified above are already diffused through the intervention sectors. This study would identify activities that have been implemented previously or are currently operational in the country and that are comparable in scale, in the technologies they use, and in the environment in which they operate. The analysis should determine the extent to which these activities have penetrated the market and consider factors such as market conditions, commercial viability, the regulatory environment, barriers to implementation, and financial incentives. This top-down analysis will help countries ascertain whether similar technologies or practices have already been deployed in the country, what they are, and whether concessional finance is needed. Ultimately, the common practice analysis would provide insight into the priority interventions and the type of funding needed.
Support resources
The following resources can be considered. Explore the NDC Partnership Knowledge Portal Climate Toolbox for additional identifying evidence-based investment needs resources.