Remittances for Adaptation: An ‘Alternative Source’ of International Climate Finance?

Abstract

Climate finance is a key issue at the UN climate negotiations, but explicit international funding possibilities for adaptation in developing countries remain limited. According to the recent Paris Agreement, climate finance will come from a ‘wide variety of sources, instruments and channels’. To the extent that these are understood, they do not seem to generate the USD 100 billion per annum that was repeatedly pledged by developed countries, and they flow to mitigation rather than adaptation. Remittances have potential to finance adaptation, because (1) the potential is huge and unexplored); (2) remittances directly reach to households, including in remote and vulnerable areas; (3) remittances are often employed for (climate-induced) disaster relief and sometimes also for investments in long-term adaptation strategies. Whilst not ignoring ethical arguments against poor migrants’ remittances as an alternative source of adaptation finance for developing countries under the UN climate negotiations, this chapter examines whether remittances could technically constitute such a source. It analyses empirical evidence from remittance literature against ten climate finance criteria from the UNFCCC Copenhagen Accord. Our analysis finds that remittances could match criteria such as ‘adequacy’ and ‘predictability’. However, ‘improved access’ can only be matched if developed and developing countries create the right incentives to reach out to potential diaspora investors. ‘Transparency’ is unlikely to be met. Whether remittances contribute to the USD 100 billion climate finance pledge is a controversial political decision, but in any case remittances can support adaptation at household and community level. Public climate finance could increase the potential of remittance for such purposes.