Summary

The UK faces a considerable gap between the scale of required climate adaptation and the finance currently accessible. To address this, the UKRI-Defra-funded ATTENUATE project is developing a new Adaptation Investment Framework (AIF) to mobilise investment through multi-level governance. The framework identifies 37 enabling conditions relevant to the UK, categorised under themes such as mainstreaming sustainable finance, multi-level governance, supportive policy, skills development, and decision-relevant data. Key recommendations include ensuring the framework is practical for use at all government levels and maximising private sector potential for funding based on return characteristics. It aims to identify where private capital can invest on commercial terms and where government interventions—such as risk-sharing or standards—are necessary.

Context: rising climate impacts, growing financing gap

The UK is experiencing urgent climate risks, including extreme flooding and heat, with projected impacts across sectors like agriculture and energy. While large flows of public and private finance are essential for resilience, a significant adaptation investment gap remains. The costs of inaction are high; selected climate risks could cost billions annually by mid-century. Analysis suggests these costs could reach 1% to 1.5% of gross domestic product by 2045, rising to 4% by the century’s end. Implementing adaptation measures will require investment ranging from £5 billion to £10 billion per year into 2030. Although these costs are affordable from a societal perspective, featuring benefit–cost ratios from 2:1 to 10:1, they often involve low financial returns and revenues.

Barriers to finance

Unlocking investment requires addressing several nascent barriers in the UK context. These include market failures, such as public goods characteristics and positive externalities, and a lack of predictable revenue streams. Information gaps, governance failures, and regulatory needs further compound the low investment levels. Currently, the UK lacks an investment planning process that integrates finance from the outset to produce bankable project pipelines. Overcoming these obstacles requires deliberate public policy to change the enabling environment and align markets with societal resilience goals.

Findings from a global review

A review of 29 global guidance documents indicates that while net-zero investment planning is well-developed, adaptation frameworks are only now emerging. Most existing frameworks target developing country contexts, with few designed for multi-level governance. Government-facing resources focus on policy building blocks and budget integration, while investor-facing guides help the private sector assess climate risks. Subnational models in Europe are helping regional entities identify investment needs and develop pipelines of bankable projects. Early analysis from the Asian Development Bank indicates that such planning is successfully mobilising additional loans and sectoral grants.

Lessons for the UK from global frameworks

Lessons from global reviews suggest that a UK AIF should be anchored in public financial management (PFM) and investment processes. The framework must improve project viability and bankability by quantifying economic and fiscal benefits and matchmaking funding sources with specific needs. Existing frameworks often assume a linear pathway to delivery, but in practice, investment is frequently constrained by upstream social and political factors. These include competing immediate priorities and challenges in sustaining commitment across electoral cycles. Addressing these requires iterative processes that link project development with enhancements to the wider market-based environment.

Enabling conditions for unlocking adaptation finance

Thirty-seven enabling conditions have been identified across five overarching categories. Mainstreaming into the financial sector involves better aligning existing instruments and pricing physical climate risk into markets. Effective multi-level governance and institutional arrangements are foundational for scaling up finance across local, regional, and national levels. Supportive policy and regulation, such as building standards and infrastructure resilience metrics, are critical levers. Furthermore, institutional capacity and technical skills require strengthening to overcome persistent gaps in engineering and planning. Finally, robust data systems and standardised metrics are essential for effective prioritisation and appraisal of adaptation investments.

Box 1. The enabling role of climate storylines in adaptation finance

The ATTENUATE project is pioneering the use of climate storylines—structured narratives connecting climate science with socioeconomic developments—to bridge the gap between technical data and practical decision-making. Storylines help stakeholders understand the dynamic evolution of climate events and their consequences, making complex risks more tangible. This approach is particularly valuable for identifying critical vulnerabilities and considering adaptive strategies that might be overlooked by traditional probabilistic forecasts, thereby supporting more forward-looking scaling of adaptation finance.

Considerations for a UK-specific adaptation investment framework

A UK-specific AIF must account for differences in local mandates, priorities, and coordination capacity. It requires the alignment of planning and budgeting across central government spending cycles and local authority capital management. A key strategy is integrating a two-way feedback process between investment planning and macro-economic conditions to address identified barriers. Furthermore, the framework should account for behavioural and psychological factors influencing investor motivations, which are often absent from technical planning. Incorporating a capability diagnostic could help evaluate the strength of human skills and institutional readiness to support a resilient UK economy.