Redirecting local funding lines to climate change adaptation in a European outermost region

Key Learnings

About the Region

Climate Threats

The EU Outermost regions, which includes Guadeloupe, are named in the 2024 European Climate Risk Assessment report (EUCRA) as hotspots for multiple climate risks, including volcanic activity, hurricanes, sea level rise, forest fires, earthquakes, droughts and floods. The economy of Guadeloupe, heavily reliant on agriculture and tourism, is sensitive to climate change. The remote location and limited economic diversification enforce Guadeloupe’s climate risk. More specifically, extreme weather damages key crops like sugarcane and bananas, while rising sea levels and coastal erosion threaten the tourism sector. Additionally, the region’s rich biodiversity, including coral reefs and mangroves, faces increasing pressures. Other climate-driven threats, such as land salinisation, invasive seaweed blooms, and extreme heat waves, further compound the challenges posed by rising temperatures and persistent flooding.

Creating a Local Adaptation Fund in a European outermost region

We developed a Local Adaptation Fund by applying a collaborative approach. The aim was to meet all parties’ needs and interests, ranging from the beneficiaries to the investors. We targeted the greatest challenges such as making adaptation projects bankable, discussing a regional political adaptation framework, and providing human resources to support local implementation.

Marie-Edith Vincennes, Project Manager at ADEME Guadeloupe, French Agency for Ecological Transition

The process behind setting up a Local Adaptation Fund

The following steps have been taken to develop the Local Adaptation Fund:

1. Feasibility study for the financial mechanism

The feasibility study included a desk review and fieldwork, 30 interviews, and seven workshops. Tourism and agricultural operators, public institutions, and banks actively participated. In the feasibility study, a collaborative approach is followed in which the local investors were mapped and their needs streamlined to the future implementers of adaptation action (beneficiaries of the fund). The feasibility study also resulted in a principal agreement to develop and pilot test the Local Adaptation Fund.

2. Design of the governance and decision-making structure of the Local Adaptation Fund

The Local Adaptation Fund supports local-scale and innovative climate change adaptation projects in Guadeloupe, following a call for proposals and subsequent project selection process. The project team explored several governance options, focusing in particular on:

1. the legal and administrative feasibility of pooling budget lines from different entities,
2. the decision-making process for allocating the pooled funds, and
3. the criteria for awarding funding to adaptation projects

In the first funding round, the team decided not to pool the budgets. Instead, each funder could choose between either delegating a portion of their funds to the coordinating entity or financing selected beneficiaries directly, using their own internal administrative and financial procedures.

ADEME Guadeloupe, the regional branch of the French Agency for Ecological Transition, serves as the fund coordinator. It leads the project selection process and chairs the Technical and Financial Committee, which defines the operating rules, sets the selection criteria, and decides which projects will be supported through the Fund.

In this current model, the Committee jointly selects the projects to be funded, after which each funder independently manages contracting and payments with the beneficiaries according to their own procedures.

In future funding rounds, a basket funding approach could pool budgets into a common account managed by a central entity. This model would streamline the process for beneficiaries by offering a single point of contact and harmonized administrative procedures. However, implementing such a mechanism requires prior agreement among funders on common procurement, contracting, and payment rules – an alignment that is not yet in place at this stage.

Engaging the private sector has proven quite challenging: Although the process involved several local banks, they rarely attended the Technical and Financial Committee meetings and only one finalised cofinancing of one of the projects. To secure private bank support, ADEME guided beneficiaries in developing robust business plans, showcasing financial health, revenue projections, and public institutional backing as leverage.

3. Launch of 1st batch of local adaptation projects, following a call for proposals

The Local Adaptation Fund used a call for proposals to collect interest and award projects. Proposals had to target the agriculture and tourism sectors and should target adaptation solutions for climate hazards such as hurricanes, floods, high temperatures, droughts, and coastal erosion. Proposals had to align with one or more of the adaptation categories, such as governance, nature-based, technology and behavioural change.  Within each category, the projects could be studies, research and innovation, investment or behavioural change projects.

The first call for proposals resulted in six winning projects, with a total budget of €1,240,000. The Local Adaptation Fund made it possible to mobilise over €1 million in funding, including more than €900,000 in public grants and €100,000 from private sector contributions.

Summary

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