Adaptive capacity to climate change: Asymmetric effects of energy aid and governance quality

Adaptive capacity to climate change refers to the ability of systems to adjust to climate impacts, reduce vulnerability, and seize available opportunities. Understanding this concept and the factors that shape it is key to addressing current climate challenges and enhancing preparedness for future risks. Accordingly, this paper investigates how the main determinants of adaptive capacity—energy aid and governance quality—affect countries differently, using a panel dataset of 64 nations from 2002 to 2020. Applying fixed effects panel models and quantile regressions, we identify significant heterogeneity across the distribution of adaptation deficits. Results show that energy aid has a stronger impact in countries with limited adaptive capacity, while governance quality becomes particularly relevant in highly vulnerable contexts. However, their interaction does not consistently yield positive outcomes, pointing to possible coordination failures or misaligned priorities. These findings highlight the need for policy strategies that integrate infrastructure investment with institutional strengthening and ensure that resources are effectively targeted to the most vulnerable countries.