A national climate trust fund is a financial mechanism created by a government to pool and manage resources for climate adaptation and mitigation. These funds channel money from domestic budgets, international donors, and private sources into projects that strengthen resilience—such as water management, renewable energy, and disaster risk reduction. By centralizing climate finance under national priorities, trust funds help countries take ownership of climate action and improve access to global funding streams like the Adaptation Fund and the Green Climate Fund.
Securing international funding and setting up contingency funds are measures that complement setting up national climate trust funds.
Feasibility & Local Applicability
For Curaçao, Aruba, and St. Martin, establishing a national climate trust funds is ongoing and feasible but requires strong governance and fiscal discipline. Aruba has already created the National Climate Resilience Council and a national climate investment fund to coordinate climate strategies. Sint Martin operates a World Bank-managed recovery and resilience trust fund following Hurricane Irma. Trust funds should be paired with international partnerships and transparent management systems.
Co-benefits
Beyond financing adaptation projects, trust funds can stimulate green economic growth by supporting renewable energy, sustainable tourism, and ecosystem restoration. They also strengthen institutional capacity and create long-term planning frameworks, reducing reliance on short-term emergency aid. When linked to global accreditation systems, trust funds can unlock additional funding and technical support, fostering innovation and job creation in climate-smart sectors.
Equity & Vulnerability Considerations
Trust funds can prioritize vulnerable communities by directing resources to areas most exposed to climate risks, such as low-lying neighborhoods or drought-prone regions. Inclusive governance—through representation from civil society, private sector, and local authorities—ensures fair decision-making and transparency. Equity principles should guide project selection to avoid reinforcing existing inequalities and to guarantee that benefits reach marginalized groups.
Costs
High | Setting up a national climate trust fund involves legal, administrative, and operational costs, including fiduciary systems and monitoring frameworks. Initial capitalization often comes from environmental levies, donor grants, or debt-for-nature swaps.
Case studies & Examples
Literature
- Adaptation Fund. (2023). Lessons learned: The role of national financial institutions and trust funds in providing climate adaptation.
- Bhandary, R. R. (2022). National climate funds: a new dataset on national financing vehicles for climate change. Climate Policy, 22(3), 401–410.
- Habib, N., & Parris, H. (2025). SIDS and Sustainable Finance: A Systems Based Risk Approach to Improve Access to Private Investment. Island Studies Journal, 20(2), 75–102.
- Sheriffdeen, M., Nurrochmat, D. R., Perdinan, & Aliyu Abubakar, H. K. (2023). Effectiveness of emerging mechanisms for financing national climate actions; example of the Indonesia Climate Change Trust Fund. Climate And Development, 15(2), 81-92.