Climate finance and the multilateral development banks

Climate change has become an ever more crucial factor in various facets of economic development. In this context, climate finance, namely bilateral and multilateral financial flows from donor countries that aim to assist recipient countries in reducing their greenhouse gases (mitigation) as well as increasing their resilience to climate shifts (adaptation), has gained increasing importance. Nascent research adapts methods from the development aid literature - carefully shown elsewhere in this volume - to the realm of climate finance. This chapter provides a synopsis of this literature and its findings and highlights the limitations in understanding climate finance patterns. Further, many of the existing analyses investigate bilateral flows of environmental aid. Hence, the chapter also unpacks multilateral development banks’ (MDBs’) contributions in this area in suggesting avenues for future research. While MDBs are well positioned to provide climate financing, we show that their role in this area significantly lags behind their capacity.