In our new Development Policy Centre discussion paper<\/a>, we study one component of Australian climate finance \u2013 bilateral aid given to help countries adapt to the effects of climate change \u2013 and interrogate the data. We focused on bilateral adaptation aid because it is the single largest component of Australian climate finance at present. Also, unlike some forms of funding such as private climate finance, aid is comparatively transparent. OECD data is available on a project-by-project basis and details whether donors consider particular projects to be: \u201cnot climate related\u201d; \u201cclimate principal\u201d (fully focused on climate issues); or \u201cclimate significant\u201d, which means projects where climate considerations have shaped the design and operation of the project in important ways. Helpfully, OECD data are also what donors tallying up when they make their claims about how much bilateral climate aid they are giving.<\/p>\n When we dug into the OECD data for Australia we found that, commensurate with overall trends in Australian climate finance, reported climate adaptation aid has been going up. So far so good, although \u2014 unsurprisingly given that overall Australian aid isn\u2019t going up \u2014 we also found that that the nominal increase was the result of an increasing share of Australian aid projects that were claimed to be adaptation related. In particular, as the chart below shows, the nominal rise was a product of a rapidly increasing share of projects being claimed to be adaptation significant. A rise that kicked off abruptly in 2019.<\/p>\n Figure 1: The percentage of Australian aid projects claimed to have a climate adaptation focus<\/p>\n Source: Assessing Australia\u2019s allocation of climate adaptation aid discussion paper.<\/a><\/p>\n And this is where the problem lies. Climate aid reporting to the OECD isn\u2019t audited or policed. As a result, donors have a lot of leeway to interpret whether projects are climate related or not. In the case of \u201cclimate principal\u201d projects, unless you\u2019re going to be utterly brazen about it, the leeway is less: either a project is all about addressing climate-related issues or it is not. However, there\u2019s just enough wiggle room in the \u201csignificant\u201d category to allow donors to claim, should they so wish, that a project is climate relevant even when linkages are very tenuous. This is more than a theoretical problem: international studies have found creative climate accounting practices amongst other aid donors.<\/p>\n In Australia\u2019s case, we found evidence of the same problem. We also found evidence that the problem has contributed to the rapid nominal rise in Australian climate aid.<\/p>\n As the chart below shows, we also found a worrying number of projects that had once been said to be unrelated to climate change suddenly became, for some reason or another, viewed to be climate significant in 2019.<\/p>\n Figure 2: Percentage of climate significant projects in any given year that were upgraded<\/p>\n Source: Assessing Australia\u2019s allocation of climate adaptation aid discussion paper.<\/a><\/p>\n There are potentially reasonable grounds for reclassifying projects. In particular, \u201cmainstreaming\u201d, which means designing, or in this case redesigning, projects so that they take climate concerns into account in a meaningful way. This is not the same as giving new and additional climate aid, but it can be good aid practice. And, as we note in the paper, DFAT appears to be taking the task of mainstreaming seriously. However, real mainstreaming takes time. And it is very hard to see how so many projects could have been redesigned between 2018 and 2019 to incorporate climate change sufficiently to warrant being classified as adaptation significant. What\u2019s more, when we sampled projects, we found examples \u2014 such as a transport project in Papua New Guinea, and a private sector investment project in Fiji \u2014 where the recoding seemed questionable, particularly as nothing obvious about the projects appeared to have changed.<\/p>\n To make matters worse, when we ran regressions to see where projects were most likely to be adaptation related, we unearthed something unexpected and concerning.<\/p>\n Throughout the period covered by our data, aid projects were always more likely to be climate adaptation principal when undertaken in countries that were more vulnerable to climate change. Prior to 2019 the same was true for adaptation significant projects. This is great: focus on climate adaption when giving aid to countries where it is needed most.<\/p>\n However, in the period from 2019 on, the pattern reversed for adaptation significant spending: projects in countries particularly vulnerable to climate change became less likely to be adaptation significant than projects in places that weren\u2019t as vulnerable. You can see this in the chart below, which plots the probability that a project will be adaptation significant on the y-axis and the climate vulnerability of the country they are in on the x-axis. (These are margins plots based on multinomial logistic regressions with a wide range of control variables included.)<\/p>\n Figure 3: Country vulnerability and the probability a project will be adaptation significant<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/Figure-1-600x360.png\")
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