The Arab region is on the frontlines of a climate emergency. Under a high-emissions scenario, average temperatures are projected to soar by 3.3 to 5.7 degrees Celsius before the end of the century, threatening water supplies, food security, and entire ecosystems (IPCC 2023). The need for decisive climate action has never been more urgent. But a closer look at the data reveals a dangerous paradox: the financial ‘lifeline’ being offered is often an anchor, dragging the region deeper into debt and away from true resilience.
Following are the core truths about a funding model that is not only flawed but is actively undermining the region’s ability to survive the coming crisis.
1. The Climate ‘Solution’ is a Debt Trap
When we think of climate finance, grants and aid often come to mind. The reality is starkly different. Between 2010 and 2020, the Arab region received over seven times more financing in the form of loans (over 4 billion) (ESCWA 2022). From a communications standpoint, the term ‘climate finance’ itself is misleading. It projects an image of benevolent aid, masking a reality that is functionally closer to high-interest infrastructure lending.
Making matters worse, in 2019, a staggering 75% of public climate finance flows were non-concessional loans, which carry less favourable market-rate terms (ESCWA 2022). This model shifts the immense financial risk of a global climate crisis onto the nations least responsible for causing it and least able to bear it, trapping them in an impossible choice between environmental resilience and economic stability.
2. The Vulnerability Penalty: A System Designed to Exclude
This debt-based model creates a devastating ripple effect, systematically channelling funds away from the most vulnerable nations. Instead of flowing to those most in need, climate finance is highly concentrated, bypassing the countries on the brink.
The statistics reveal a profound inequity. Between 2010 and 2020, 92% of all climate finance went to just six countries: Morocco, Egypt, Jordan, Tunisia, Iraq, and Lebanon. In stark contrast, the six Arab Least Developed Countries (LDCs)—Comoros, Djibouti, Mauritania, Somalia, Sudan, and Yemen—collectively received a mere 6.6% of total funding (ESCWA 2022 based on OECD).
This isn’t just an unfortunate outcome; it is a feature of the system. A lender-centric model favours countries perceived as lower-risk borrowers with the capacity to manage complex debt. Securing funds often depends on producing “well-designed feasibility studies” and securing “government endorsement.” This creates a high barrier to entry, systemically excluding the LDCs that also lack the technical and financial capacity to develop the “investment-ready” proposals the current system demands, a challenge further exacerbated by the demanding nature of the submission and procedural requirements. Compounding this situation is the recognition that many Arab nations encounter significant challenges in advancing their NDCs, stemming from constraints related to available resources, financial capacity, and technical expertise—areas where climate finance and international support could be particularly impactful.
3. Funding is Dangerously Mismatched with Survival Needs
Arab nations have clearly stated that their most urgent priorities are adapting to the immediate impacts of climate change, particularly in water and agriculture. Yet the allocation of funds tells a story of profound disconnect.
From 2010-2020, funding for climate mitigation projects, aimed at long-term global emissions reduction, totalled 7.75 billion. This preference for mitigation manifests directly in which sectors get funded. The energy and transport sectors combined received 45% of all climate-related finance, while the critical adaptation sectors of water and agriculture received only 22%. Even more striking is that a mere 4% was allocated for disaster risk reduction (ESCWA 2022).
Why the disparity? The source context provides the missing link: investments in mitigation projects like energy efficiency, electric transport, and gas flaring reduction are considered “attractive” to the private sector. This allocation is deeply problematic because it finances long-term, capital-intensive energy projects that appeal to international investors, while systematically underfunding the immediate, life-sustaining needs of local populations facing imminent water and food shortages. A powerful granular example of this is seen between 2015-2020, when the energy sector received double the support of the water and sanitation sector, and about five times the support that the agriculture and forestry sector received in the Arab countries.
Conclusion: A Call for Smarter, Fairer Investment
The data is clear: the current model of climate finance in the Arab region is creating debt, exacerbating inequalities, and failing to address the most urgent on-the-ground needs. It is a system designed for lenders, not for the realities of the climate crisis.
To correct this course, Arab countries need to highlight the urgency of a fundamental shift. This requires more than just redirecting funds; it demands a systemic overhaul. Key steps include building national capacities to develop the bankable projects that attract funding and establishing favourable legal and regulatory frameworks to mobilize private investment for adaptation. Critically, the process must involve a wider range of stakeholders—including civil society, academic institutions, and vulnerable groups—to ensure solutions are equitable and effective. Finally, the region and its partners must prioritize innovative tools like debt-for-climate swaps alongside a massive increase in grant-based and concessional funding.
As the climate crisis accelerates, can the region and its international partners pivot from this broken funding model to one that builds true, sustainable resilience before it’s too late?
