LONDON - Denmark and Sweden hope to raise up to $1 billion for climate adaptation projects in emerging markets by providing credit guarantees, a senior Danish government official told Reuters.

The countries are close to selecting up to three investment managers to receive some of a previously announced $100 million in guarantees for loans to companies involved in areas including agricultural technology and water preservation.

The target raise has not been previously reported.

Rich country promises of help for poorer ones to adapt to climate change have slowed despite more frequent extreme weather, with the annual financing shortfall for adaptation standing at $194 billion to $366 billion, a U.N. agency said in a report in November.

Adaptation measures could include drought-tolerant crops, infrastructure that can cope with extreme weather or disease surveillance systems tuned to maladies that thrive in heat.

The new funds are being provided through the Adaptation Finance Window, an initiative announced at global climate talks in Dubai last year by a consortium of Nordic countries and the U.S. international development agency USAID.

Under the programme, Denmark's Investment Fund for Developing Countries and Sweden's International Development Cooperation Agency will provide a guarantee on a portion of the loans made by the investment managers to the companies.

More than 40 investment managers applied for the funding, before the list was whittled down to a shortlist of three, said Jesper Hilsted Andersen, climate specialist at the Danish foreign ministry.

By taking on some of the risk that the projects fail to perform, the hope is more risk-averse investors join in, said Hilsted Andersen, speaking on the sidelines of a London Climate Action Week conference.

Citing OECD data that showed $4.4 billion of private capital was invested globally in climate adaptation projects in 2022, "we are expecting to mobilise up to $1 billion from our process alone", Hilsted Andersen said.

(Editing by Ros Russell)