World Bank Strategic Framework for Climate Change. and Water Sector Challenges

Transcription

1 World Bank Strategic Framework for Climate Change and Water Sector Challenges Jamal Saghir Director Energy, Transport and Water The World Bank Ministry of Foreign Affairs Oslo, Norway 20 May 2008

2 Outline Climate Risks and Development: The Poor Countries Danger What it means to the Water Sector? What it means to The World Bank? What is The World Bank doing? Key Messages

3 Outline Climate Risks and Development: The Poor Countries Danger What it means to the Water Sector? What it means to The World Bank? What is The World Bank doing? Key Messages

4 Source: World Bank staff. Climate Risks Are Higher for Poor Countries

5 Climate Risks and Development: The Poor Countries Danger Six Climate Threats Top 12 Countries Most at Risk from Each Drought Flood Storm Coastal 1m Coastal 5m Agriculture Low Income Middle Income High Income Malawi Bangladesh Philippines All low-lying Island States All low-lying Island States Sudan Ethiopia China Bangladesh Vietnam Netherlands Senegal Zimbabwe India Madagascar Egypt Japan Zimbabwe India Cambodia Vietnam Tunisia Bangladesh Mali Mozambique Mozambique Moldova Indonesia Philippines Zambia Niger Laos Mongolia Mauritania Egypt Morocco Mauritania Pakistan Haiti China Brazil Niger Eritrea Sri Lanka Samoa Mexico Venezuela India Sudan Thailand Tonga Myanmar Senegal Malawi Chad Vietnam China Bangladesh Fiji Algeria Kenya Benin Honduras Senegal Vietnam Ethiopia Iran Rwanda Fiji Libya Denmark Pakistan Source: World Bank staff.

6 It Will Get Worse Likely Impact of Sea Level Rise on Low Lying Lands: BANGLADESH Today Total population: 112 million Total land area: 134,000 km 2 If sea level rises 1.5 m: Total population affected: 17 million (15%) Total land area affected: 22,000 km 2 (16%) Source: UNEP/GRID Geneva; University of Decca; JRO Munich; The World Bank; World Resources Institute, Washington, D.C.

7 It Will Get Worse Potential Impact on Agriculture Projected Percentage Change in Agricultural Productivity in 2080 Note: Scenario: SRES A2. Source: Cline 2007.

8 It Will Get Worse Climate Change Projections ( relative to ) 1999)

9 Likely Changes Dependent on Mitigation Likely change already baked in Likely change with successful mitigation action Likely change without significant action on mitigation Source: Adapted from IPCC Risk of catastrophic events increases with temperature

10 Outline Climate Risks and Development: The Poor Countries Danger What it means to the water sector? What it means to The World Bank? What is The World Bank doing? Key Messages

11 Water for: Rural Cities Irrigation

12 Water for: Energy Transport

13 Water for: Biodiversity Livelihood

14 % change in runoff by 2050 Many of the major food-bowls of the world are projected to become significantly drier Globally there will be more precipitation Higher temperatures will tend to reduce run off A few important areas drier (Mediterranean, southern South America, northern Brazil, west and south Africa)

15 Kenya is highly vulnerable to extremes rainfall variability, Ag GDP and GDP rainfall variability GDP 40 8 Ag GDP

16 Water stress in critical regions will increase Climate change can affect water availability & demand patterns and aggravate water stress.

17 Outline Climate Risks and Development: The Poor Countries Danger What it means to the water sector? What it means to The World Bank? What is The World Bank doing? Closing Remarks

18 Climate change is more than an unprecedented environmental challenge. It is a massive development, economic and social challenge.

19 Need a Complementary Mix of Policies With Appreciation of Different Focuses on Mitigation and Adaptation Complements or Substitutes? Global Action, Local Impact The more mitigation undertaken, the less adaptation is needed. However, without sufficient mitigation there is increased risk of catastrophic outcomes a point at which the costs are unreasonably high or there is no way to adapt (e.g., the loss of West Antarctic ice sheet implies a 5 15 meter sea level rise). Given increased temperatures baked into the earth, adaptation will be necessary. Yet mitigation and adaptation differ: Mitigation requires global analysis and global collective action Adaptation must be analyzed locally and addressed through local action. Developing countries need adaptation measures most urgently.

20 Key Questions about Adaptation What? Why? When? The Good News Adaptation depends on country specific risks. Need better analyses at nationallocal level. Adaptation is necessary for development. Climate risks undermine growth and hurt the poor. Need to start now to adapt to current climate variability in a cost effective way and prepare for the future. In a very real sense development is the best adaptation: strong institutions, education, health, infrastructure, and a diversified economy strengthen resilience.

21 Areas for Action Knowledge and Capacity Technology Weather data collection and forecasts (for farmers, insurers, etc.) Technical assistance (i.e., extension services on new crop varieties, strengthening capacity of health systems to address new diseases) Knowledge development and dissemination on adaptation-mitigation options in land use change, forestry and agriculture Risk and vulnerability assessments Investment prioritization through improved understanding of options and costs Drought and saline resistant crops Efficient irrigation techniques Water-reuse technologies Tree species with high mitigation-adaptation potential Improved farming systems More competitive and versatile desalination Infrastructure Multi-purpose water storage (for water supply, irrigation, river regulation, and hydropower) Rainwater harvesting Improved drainage Climate proofed transport systems 21

22 Areas for Action (continued) Policies Institutions Eliminate counterproductive incentives (e.g., subsidies for waterintensive crops) Create appropriate incentive framework for private sector action (including private insurance) Improve land security and social protection mechanisms Improve integrated river-basin and ecosystems-based planning Strengthen key institutions in various sectors (e.g. water, agriculture, infrastructure) Increase inter-sectoral coordination (i.e., for disaster risk management) Improve participatory processes and community involvement in decisions Strengthen disasters preparedness and safety net for disaster-hit households Provide key public services (e.g., hydro-meteorological services, early warning systems)

23 Insuring Against Risks Public Sector PPP Support increase in insurance penetration and competitive insurance markets Introduce mandatory insurance in hazard-prone areas, improve land use regulations, building codes Develop data to monitor loss trends, improve catastrophe modeling Develop public/private risk transfer programs, e.g., Mongolia Index-Based Livestock Insurance, Mexico Catastrophe Bond, Caribbean Catastrophe Risk Insurance Facility Insurance pools the burden of climate risks Private Sector Donors Create derivatives and transfer risk to international markets, e.g., through re-insurance World Food Program weather derivative based on precipitation level (e.g., Ethiopia) World Bank Catastrophe Insurance Pool in Turkey Global Index Reinsurance Facility 23

24 How Much Does Adaptation Cost? There Are Some Estimates, but the Ranges Are Wide and Uncertain The implied change in temperature is 1.5º C for 2030 Cost estimates based on expert opinion Wide range of possible infrastructure costs due to information gaps Developing Countries Estimated Cost of Adaptation by 2030

25 Sources of Finance Fiscal Revenues Increase financial flows to governments eliminate counterproductive subsidies (e.g., energy and water) Reduce reliance on government budget Country risk insurance such as catastrophe bonds (e.g., Mexico) or risk insurance facilities (e.g., Caribbean) Development of private insurance markets International Financing 1. Specialized funds 2. Mainstreaming platforms 3. IDA Regional Development Banks Bilateral financing (e.g., EU climate partnership) Mitigation financing with adaptation benefits 4. Adaptation Fund (2% tax on CDM and voluntary contributions): forecasted US$ million per year between GEF adaptation programs: US$279 million Global Facility for Disaster Risk Reduction (multi-donor): US$15 20 million per year Pilot carbon funds (e.g., Forest Carbon Partnership Facility) Bilateral financing Sustainable development financing with adaptation benefits GEF (e.g., Land Degradation Operational Program) Financing ecosystems and sustainable land management 25

26 Outline Climate change is here What it means to the water sector What it means to The World Bank What is the World Bank doing? Closing Remarks

27 Bank s Approach to Climate Change Climate change must not come at the cost of development need to find and support ways to reconcile the growth needs of developing countries with addressing CC Must do both: mitigation to avoid the unmanageable, adaptation to manage the unavoidable Resource mobilization in addition to the current ODA levels

28 Pillars of Strategic Framework for Climate Change (SFCC) Make effective climate action both adaptation and mitigation - part of core development efforts Address the resource gap through existing and innovative instruments for concessional finance Facilitate the development of innovative market mechanisms Enabling the environment for private sector finance Accelerate deployment of existing and development of new climate-friendly technologies Step-up policy research, knowledge management and capacity building 28

29 Process for SFCC A World Bank Group strategy: IBRD, IDA, IFC, MIGA Focus on understanding and addressing the needs of developing countries, ownership by WBG clients Coordinating with other MDBs, UN agencies and donors Building on existing/on-going work within WBG: CEIF, regional business plans, IFC initiatives, etc. Extensive consultations with players

30 On Water and Climate Change Accelerate and broaden current reforms and investments in water resources management and development Focuses on adaptation, but also mitigation where relevant Example: renewable resources -- Hydropower Develop effective menu of adaptation options Knowledge and capacity building Technology Infrastructure Policies, Institutions Mechanisms for risk-sharing Mechanisms for financing Decision-making process under uncertainty Water services delivery and resource management Assessing impacts and vulnerability

31 Hydropower is the big brother of renewables Deputy Minister (Energy), Norway (2008) MITIGATION Hydropower: accounts for 88% of renewable energy is a mature technology has ancillary benefits, such as system stability, peaking capability can store energy ADAPTATION Multi-purpose Hydro: contributes to a minimum platform of infrastructure for water security can help mitigate extreme events (droughts and floods)

32 Our work on Water and Climate Change Designed to support Bank operations and the client countries in making water investment decisions that account for climate variability and change. Address the following key questions: What are the impacts of climate variability and change on water systems; What are adaptation strategies to reduce vulnerability of water systems to these impacts; and How can the Bank assist client countries in making informed decisions regarding adaptation options in their water investments?

33 Water Systems respond to Climate Change differently World Bank Water Investments (Fiscal Year ) 5, FY06/FY07 Actual Lending 92 4,500 FY08/FY09 Projected Lending Water Systems 4, , , Service Delivery 2, , Resource Management Multipurpose Facilities Water Resources Management Watershed Management Agriculture Water Management Flood Control Rural WSS 0 Urban WSS 0 No. of Projects 70 Irrigation and Drainage US$million 3,500 1,000 90

34 Managing Water Under Uncertainty There is significant uncertainty about the impacts of climate change on the water sector. Reducing the water sector s vulnerability to climate change means managing water under conditions of uncertainty. wait until science is better at making projections; insist on pushing modeling efforts to their limits, and beyond; take uncertainty as a given and try manage it Many options to improve performance of water systems are the same with or without climate change e.g., demand management measures. Other options are justified only under climate change. It is here where care will need to be taken in decision-making because of the underlying uncertainties.

35 Indicators for Assessing Vulnerability Two types of indicators to frame decision-making under uncertainty due to climate change regional patterns of vulnerability water system performance Regional patterns vulnerability with respect to water resources is strongly related to availability, demand, infrastructure to link them, and other societal factors. Water system performance vulnerability is a function of the probability that a system will provide the intended level of services under a defined set of conditions for: Reliability; Resiliency; and Robustness.

36 Key Areas of Further Work Improving estimates of adaptation costs and benefits by sector and type of risk. Developing innovative tools for: Rapid assessment of vulnerabilities and priorities Decision making under uncertainty Identifying innovative ways and building local capacity for mainstreaming adaptation in development Innovative technological solutions for climate resilient investments Advancing instruments for financing adaptation Insurance for different risks and customers, notably the poor Understanding and designing incentives for private sector investments Adaptation-mitigation win-wins supported by financing Mix of instruments to meet financing needs in a country-specific context

37 Outline Climate change is here What it means to The World Bank What it means to the water sector What is the World Bank doing? Closing Remarks

38 Key Messages All countries are vulnerable to climate change and instability in weather patterns, but the poorest countries and the poorest people are most vulnerable. Adaptation and mitigation must go hand in hand, although one is based on local knowledge and action, and the other must be addressed globally. There are mitigation-adaptation synergies, especially in low income countries For developing countries, climate change is today s crisis, not tomorrow s risk: adaptation matters for development and has to start now.

39 Key Messages Adaptation will require both no-regret and climatejustified actions. Adaptation will require a range of coordinated actions: risk management, knowledge and capacity building, technology, infrastructure investment, and strengthening governance, policies, and institutions. Adaptation requires expanding the availability and access to financial resources. Existing international financing sources help bear the costs but much more is needed.

40 Thank You