The Readiness Gate in Climate Finance: Allocation Scale and the Adaptation Divide across Asia and the Pacific

Abstract

This paper identifies the allocation architecture that converts climate need into development finance across Asia and the Pacific. It assembles 2,920 Asian Development Bank financing transactions covering 1,409 projects committed between 2019 and 2025 and matches them to lagged vulnerability, institutional readiness, financing constraints, disaster exposure, sovereign market access, and pre-sample ADB relationships. Vulnerability alone does not produce larger allocations. Readiness changes the scale at which vulnerability enters the commitment portfolio. Among recipient country-years, the gate coefficient of 0.482 decomposes exactly into a 0.179 project-count margin and a 0.303 average-project-size margin; both components are significant. Pre-2019 approval volume predicts later finance, while historical project stocks absorb more of the interaction, showing that readiness compounds through inherited portfolio relationships. The gate survives wild-cluster inference, every leave-one-country-out estimate, and controls for debt, disasters, and sovereign-rating coverage. A stacked system rejects an equal mitigation and adaptation response: the adaptation interaction is 0.337 below mitigation in PPML and 0.265 below it in the log specification. Energy carries the original-dollar scale response, while agriculture's gate is 0.602 lower. Small island developing states share the scale architecture but face sharper entry friction. Climate-finance scarcity is reproduced where vulnerable countries must convert need into signable portfolios. Closing the adaptation gap requires an operating model that finances project formation, aggregation, and implementation capacity alongside physical assets.

Author abstract from the research manuscript. Typography and line breaks have been normalized; the linked source may show a different manuscript version.