Climate change has broad-ranging implications for economies, fiscal and debt positions, the financial system, the environment, and society at large. Across the region, the average economic losses resulting from climate change induced disasters and other natural hazards in Asia and the Pacific costs an estimated $780 billion per year. This is forecast to increase to $1.1 trillion in a moderate climate-change scenario and $1.4 trillion in a worst-case scenario. At the same time, current financial requirements needed to support climate action far exceeds available resources. In addition, the macroeconomic outlook for the region is constrained by weak demand in developed economies, high inflation along with high interest rates, and rising public indebtedness. This suggests limited fiscal space and increases the risk that governments may remain constrained to finance their climate mitigation and adaptation priorities. Attracting private finance and private investment to meet mitigation and adaptation needs is therefore an increasing priority for the region. However, the ability to identify or build bankable projects aligned with government’s net-zero priorities, international best practices, and standards, and which meet the risk tolerance of investors remains a challenge across the region, particularly for LDCs, LLDCs and SIDS. Not surprisingly, investors continue to highlight a lack of feasible, green project pipelines in developing countries as a key bottleneck to investment. Additionally, government policies, incentive mechanisms and financing frameworks are often underdeveloped to adequately attract the capital needed – both domestically and internationally - towards the country’s NDCs and climate priorities.

This project is expected to enhance the capacity of selected countries in the Asia-Pacific region to mobilize sustainable finance and foreign direct investment, strengthen capacities related to developing green project pipelines and ensure public debt sustainability.