Which Climate Finance Instrument Works Better in Adapting to Climate Change?

Climate finance plays a pivotal role in adapting to climate change.However, climate specialists have recently argued that the mode of delivering the finance is also fundamental in ensuring adaptation.This study aimed at identifying the effectiveness of climate finance instruments in adapting to climate change.To examine the linkage, 515 households residing in coastal areas of Bangladesh were investigated.For data analysis a non-parametric causal mediation analysis has been used.The results of the study indicate that compared to loans, grants were more effective in adapting to climate change when mediated through climate change awareness.In addition, information and the combined policy package BCCSAP (Bangladesh Climate Change Strategy and Action Plan) significantly impacted adaptation initiatives.Consistent with existing literature, loans were found to be creating an additional burden on vulnerable communities with repayment obligations.Our findings concluded that climate change-vulnerable countries should develop their climate financing instruments, blending grants and policy instruments with a specific strategic action plan.