Training on Adaptation Finance: Enabling Direct Access to the Green Climate Fund in Bangladesh

Phase III: Economic and Financial Analysis (EFA) of GCF adaptation project

This training aims to provide participants with a comprehensive understanding of the newly developed Economic and Financial Analysis (EFA) methodology of Green Climate Fund (GCF) and equip them to prepare and interpret the results, in line with GCF guidelines. 

Event description

Bangladesh is high on the list of countries most vulnerable to climate change, ranking seventh on the 2021 World Climate Risk Index. Climate change-induced natural disasters plague Bangladesh due to its geographic location and flat, low-lying topography. Its high population density, poverty, and reliance on climate-sensitive sectors for water and food security increase its vulnerability to climate change. Climate-induced disasters are exacerbating stresses on Bangladesh’s otherwise tremendous development trajectory, impeding socioeconomic progress and human well-being. 

The needs of Bangladesh for financing to adapt to the impacts of climate change are significant and cannot be covered by a single financial mechanism. Actions to close the adaptation financing gap must therefore target multiple sources, both public and private, and international and domestic, while exploiting complementarities. The Bangladesh National Adaptation Plan (NAP) identified a financing need of US$230 billion for the period of 2023–2050. Developing climate resilience will require seven times the current spending to transform adaptation, at a rate of $8.5 billion per year, with $6 billion per year coming from external sources or international climate funds and development partners. 
Given the central role of the Green Climate Fund (GCF), the unprecedented volumes of funding it offers, the range of financial instruments it provides, and its blended funding strategy, countries are focusing on accessing GCF resources. In addition to the international access modality, the GCF has adopted the groundbreaking innovation of Direct Access. This path allows developing countries to access finance without having to go through the international intermediaries that dominate other sources of funds, making finance more accessible while also providing these entities with the opportunity and resources to strengthen internal systems and more effectively integrate climate change into their operations. 

GCA Multi-Phased Adaptation Finance Training 
To support the country towards readiness to access GCF resources, the Global Center on Adaptation (GCA) organized a multi-phased training program on Adaptation Finance for existing and potential Direct Access Entities (DAEs), Executing Entities (EE) and other relevant stakeholders on developing robust adaptations’ Concept Notes and Funding Proposals for GCF to support Bangladesh to access climate finance for adaptation projects. The Phase I training took place in November 2023, Part 1 Phase II in September 2024, Part 2 Phase II in November 2024 and finally Phase III in March 2025. 

Phase III Training on Economic and Financial Analysis (EFA) of GCF 
To access GCF resources, DAEs need to prepare a set of documents using GCF standard templates while submitting a project for GCF approval. Economic and Financial Analysis (EFA) is one of the mandatory annexes required only for GCF adaptation project.  
The EFA allows DAEs to demonstrate the relative viability and efficiency of the climate interventions considered in the Funding Proposal. It helps GCF to understand how the project’s financial and economic performance contribute to each of the six GCF investment criteria. 
GCF adopted its Economic and Financial Analysis (EFA) guideline in 2022. The newly developed EFA describes the detailed methodology to develop EFA for GCF which is quite new for the relevant stakeholders. 
 
GCA conducted Phase III training that aims to provide participants with a comprehensive understanding of the newly developed EFA methodology and equip them to prepare and interpret the results, in line with GCF guidelines. 
The residential training covered various aspects of financial analysis preparation, including the interpretation of results from financial and economic analyses, relevant GCF investment criteria, and sector-specific guides. Participants also learned methods for deriving economic prices, valuing environmental benefits, assessing non-financial benefit/cost components, and determining the economic discount rate. Additionally, case studies of EFA for GCF projects were also discussed, with hands on exercise by parcipants. 
 
Expected Outputs 
Participants to the training were benefited by:  

• Comprehending the Economic and Financial Analysis (EFA) methodology as per the GCF’s newly adopted guidelines. 
• Understanding relevant GCF investment criteria and sector-specific guides, enhancing their ability to align projects with GCF requirements. 
• Capacity building to prepare and interpret EFA, enabling them to apply these skills to future projects. 
• Learning techniques for deriving economic prices, valuing environmental benefits, and assessing non-financial benefit/cost components, contributing to more comprehensive project evaluations.