The foreign aid system is in crisis. Official Development Assistance (ODA) is becoming increasingly unavailable, following the dismantling of the United States Agency for International Development, the country’s leading aid agency, and European states redirecting spending to their militaries. These cutbacks put more pressure on the already precarious flow of remittances, the transfer of funds or goods from migrants back to their communities of origin. These funds account for the largest distribution of funds from rich countries to poorer ones, which are also more vulnerable to climate impacts, and are thus a crucial component of climate finance.

The continued crackdown on migrants in the United States, with a growing number of immigrants being removed from the country and therefore unable to earn wages to send home, is expanding to target remittances with potential legislation taxing outbound transfers made by non-citizens. As the world grapples with more climate-related disasters, and decreases institutional funding to support recovery, remittances are increasingly important to global climate resilience.

How should remittances fit into the climate finance puzzle? What’s the outlook for both ODA and remittance financial flows in 2025? And what steps can destination and origin countries take to increase remittance flows and utilize them for socially important investments?