Climate-Resilient Livelihoods In India’s Coastal Regions

Policy Update
Siva Nandhana P

Background

The National Adaptation Fund for Climate Change (NAFCC) was established in August 2015 by the Government of India to address the escalating vulnerabilities posed by climate change, particularly in states and union territories susceptible to its adverse effects. This fund was established to cover the costs of adaptation initiatives under the National Action Plan on Climate Change (NAPCC) and State Action Plans on Climate Change (SAPCCs), focusing on sectors such as agriculture, water resources, and coastal ecosystems.

The primary objective is to support concrete adaptation activities that mitigate climate impacts, enhance resilience, and promote sustainable livelihoods for vulnerable communities, including those in coastal regions where sea-level rise, cyclones, and salinity intrusion threaten fisheries, agriculture, and habitats.

NAFCC inception stemmed from India’s commitments under the United Nations Framework Convention on Climate Change (UNFCCC), with an initial budget allocation of Rs. 350 crores for 2015-16 and 2016-17 (National Adaptation Fund for Climate Change – NABARD – National Bank For Agriculture And Rural Development, n.d.). Beneficiaries include rural populations dependent on natural resources, such as farmers, fisherfolk, and livestock rearers, in drought-prone, flood-affected, and coastal areas. This timeline highlights the progressive implementation, with the National Bank for Agriculture and Rural Development (NABARD) designated as the National Implementing Entity (NIE) to leverage its expertise in rural development and prior role with the Adaptation Fund under the Kyoto Protocol.

Functioning

The NAFCC operates on a project-by-project basis, where states and UTs submit proposals aligned with their SAPCCs for appraisal, sanctioning, and funding by NABARD. The process involves identifying adaptation needs, formulating projects, disbursing funds in instalments based on performance, and conducting monitoring and evaluation to ensure outcomes such as enhanced water management and resilient agriculture. The evaluation draws on primary sources such as ministry dashboards and secondary literature, revealing challenges including delays in project execution due to land-acquisition issues and institutional capacity gaps.

In coastal regions, NAFCC focuses on ecosystem-based adaptation, like restoring mangroves and wetlands to buffer against storms and support livelihoods. For instance, projects integrate community participation in habitat rehabilitation, as noted in official guidelines: “Funding concrete adaptation projects/programmes aligned with the relevant Missions under NAPCC and the SAPCCs.” The functioning prioritises “adaptation” over “mitigation.”

In coastal regions, this translates into projects that do not necessarily reduce emissions but enhance the community’s ability to withstand sea-level rise, cyclones, and salinity intrusion. Funds are released in installments based on utilisation and physical progress. For instance, in Andhra Pradesh, funds flow from the MoEFCC to NABARD, and subsequently to the Executing Entity (EE) for implementation on the ground (PIB, 2024). Challenges include a mitigation bias in overall climate finance (90% vs. 10% for adaptation) and limited private sector involvement due to uncertain returns. Literature reviews highlight the need for better mainstream climate concerns in state planning to address execution bottlenecks.

Performance

The performance of NAFCC over the last 3-4 years reveals a dichotomy between successful localised pilots and a macro-level deceleration in funding. While the total sanctioned amount stands at ₹847.48 crore, fund releases have tapered significantly. In the financial year 2020-21, ₹42.94 crore was released, which dropped to ₹34.21 crore in 2021-22 (MoEFCC, 2022). Since NAFCC’s reclassification as a non-scheme in 2022, the focus has shifted entirely to completing ongoing projects rather than sanctioning new ones.

The Implementation Process:

The project “Promotion of integrated farming system of Kaipad in coastal wetlands of North Kerala” successfully reintroduced traditional saline-tolerant rice cultivation integrated with aquaculture, addressing the issue of sea-water intrusion (MoEFCC, 2022). The project “Management and rehabilitation of coastal habitats and biodiversity for Climate Change Adaptation and Sustainable Livelihood in Gulf of Mannar” targeted the restoration of coral reefs and seagrass, which are vital to the sustenance of artisanal fisherfolk (MoEFCC, 2022).

The project regarding “Climate Resilient interventions in Dairy Sector in Coastal and Arid Areas” (sanctioned cost ₹12.71 crore) has faced delays in land identification but aims to protect livestock from heat stress and cyclones in districts like Nellore and Vizianagaram (PIB, 2024). Interventions in Puducherry include rejuvenating tanks and village ponds to combat salinity ingress in coastal aquifers (ICT-A, n.d.).

Data from NABARD dashboards show coastal projects benefiting around 250 households in Kerala through salt-tolerant crops and fisheries integration.

YEAR	FUNDS RELEASED (Cr)	KEY COASTAL PROJECTS
2022-23	Estimated to be 34 Cr (according to the sources)	Andhra Pradesh Diary (Partial Implementation)
2023-24	0	Tamil Nadu Habitat Rehab (Ongoing Monitoring)
2024-25	N/A	Kerala Farming

Source: Parliamentary Annexures and NABARD Reports

Impact

NAFCC has substantially improved climate-resilient livelihoods on the coasts, meeting goals such as reduced vulnerability and improved ecosystem services.

In Tamil Nadu’s Gulf of Mannar, restoration has given 6,900 resilient livelihoods to fisherfolk in 23 villages by rehabilitating seagrass and coral, sequestering carbon, and ameliorating storm surges.

It was also informed that Kerala’s project enhanced productivity in salt-prone wetlands, benefiting coastal households with integrated paddy-shrimp systems. In all, the fund has reached 1.9 million beneficiaries. This also aligns with India’s Adaptation Communication to UNFCCC, which identified priorities including coastal protection.

According to a situational analysis by the Climate Policy Initiative, NAFCC addresses the estimated annual adaptation requirement at USD 14-67 billion per year for 2015-2030. Despite this, there are shortcomings in addressing coastal risks, as sea-level rise is estimated to result in losses of USD 349 billion by 2030. Recent studies emphasise the advantages of creating jobs and establishing carbon sinks, as illustrated in the Economic Survey. Cross-referencing with the ministry documents indicates positive effects on food security and biodiversity, but this distribution is highly uneven, favouring agriculture over coastal-specific measures.

Additionally, the impact is further bound by the “non-scheme” status, which means that successful pilots are presently not being scaled up through this particular funding window.

Emerging Issues

The designation of NAFCC as “non-scheme” in November 2022 is the most critical emerging issue (PIB, 2024). It suggests a lack of domestic budgetary commitment to a dedicated national adaptation fund, forcing states to rely on international finance, which can take time for approval within the bureaucratic structure.
The Andhra Pradesh dairy project reported “delays in land identification & alienation” and challenges in finalising designs for climate-resilient animal hostels (PIB, 2024). Such structural and implementational leaks must be monitored throughout the process.
There is a mismatch between the high vulnerability of India’s 7,500 km coastline and the limited funds (approx. ₹847 crore total for all India) available under NAFCC. Coastal adaptation requires capital-intensive infrastructure, which the current grant sizes cannot fully support.
Unlike mitigation projects (solar/wind), adaptation projects in coastal livelihoods offer low financial returns for private investors, making them entirely dependent on public grants, which are now shrinking.

Way Forward

The NAFCC has functioned as an excellent laboratory for testing adaptation strategies. Nevertheless, the current trajectory suggests that it is being wound down. A strategic pivot will be essential in building the climate resilience of India’s coastal communities:

The successful models from NAFCC need to be incorporated into bigger centrally sponsored schemes like MGNREGA and the Pradhan Mantri Matsya Sampada Yojana to ensure scalability.
The government needs to clarify the future of domestic adaptation finance. In case the NAFCC has to be closed down, a dedicated “Coastal Resilience Fund” should be carved out of the National Clean Energy & Environment Fund (NCEEF).
The coastal states are to revise their respective SAPCC, integrating lessons from the NAFCC pilots to ensure that such interventions are continued through the state budgets, even in the event of cessation of central funding.

References

Chakravarty, M., Pal, U., Sikka, A., Jena, L. P., & Climate Policy Initiative. (2024). Financing adaptation in India. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/02/Financing-Adaptation-India_reportannexes.pdf
National Adaptation Fund for Climate Change—NABARD – National Bank for Agriculture and Rural Development. (n.d.). Retrieved December 1, 2025, from https://www.nabard.org/content.aspx?id=585
Sabha, R. (n.d.). GOVERNMENT OF INDIA MINISTRY OF ENVIRONMENT, FOREST AND CLIMATE CHANGE. 2140.
ICAT-A Stakeholder Mapping Report. (n.d.). https://climateactiontransparency.org/wp-content/uploads/2022/06/Puducherry_Stakeholder-mapping-reports-for-second-set-of-priority-areas.pdf
NABARD. (n.d.). National Adaptation Fund for Climate Change—NABARD – National Bank For Agriculture And Rural Development. Retrieved December 4, 2025, from https://www.nabard.org/content.aspx?id=585
PIB. (2024). Status of Projects under NAFCC. Retrieved December 1, 2025, from https://www.pib.gov.in/www.pib.gov.in/Pressreleaseshare.aspx?PRID=2041460
Srinivasan, M. (2023). Climate Finance in India 2023. Indian Institute for Human Settlements. https://doi.org/10.24943/CFI11.2023
Status of Projects under NAFCC. (n.d.). Retrieved December 4, 2025, from https://www.pib.gov.in/www.pib.gov.in/Pressreleaseshare.aspx?PRID=2041460
Year-end Review 2024: Ministry of Environment, Forest and Climate Change. (n.d.). Retrieved December 4, 2025, from https://www.pib.gov.in/www.pib.gov.in/Pressreleaseshare.aspx?PRID=2088406