Guidelines for Climate Proofing Water Investments in the MENA region

Transcription

1 Guidelines for Climate Proofing Water Investments in the MENA region Draft for consultation Prepared by Tom Eickhof, GIZ Competence Centre for Climate Change January

2 Contents Introduction and background...1 Objective and target group... 2 Scope... 2 Structure... 2 Part 1: Climate change and the water sector Climate change impacts in the MENA region... 3 Biophysical and socioeconomic effects of climate change... 3 Impacts on water investments Adaptation to climate change... 6 Decision-making under uncertainty... 6 Creating an institutional framework for climate change mainstreaming... 6 Part 2: Climate proofing water investments Overview Entry points for integrating climate adaptation into the project cycle Steps for climate proofing water investments...11 Step 1: Project vulnerability screening...11 Step 2: Detailed climate risk assessment...12 Step 3: Options for adaptation...17 Step 4: Integration of adaptation measures into project and M&E system...19 Glossary References and further reading

3 List of tables Table 1: Summary table for analysis (example of irrigation project) Table 2: Example risk matrix (modified, based on EC 2013) Table 3: Criteria for selection of adaptation options (based on: GIZ 2011, EC 2013) List of figures Figure 1: Lifetimes of different types of investment decisions compared with the time scales of some global environmental changes, and implications for adaptation (Source: Stafford Smith et al. 2011)... 4 Figure 2: The relationship between coping range, critical threshold, vulnerability, and a climate-related success criterion for a project (Source: modified, based on Willows and Connell 2003)... 5 Figure 3: Steps of the climate proofing process... 9 Figure 4: Typical project cycle and key entry points for climate proofing

4 Abbreviations ACCWaM ADB AMWC AR4 AVG CBA COP 18 EC EIA ESCWA GCM GDP GHG GIZ IPCC M&E MCA MENA OECD SEI WB Adaptation to Climate Change in the Water Sector in the MENA region Asian Development Bank Arab Ministerial Water Council IPCC Fourth Assessment Report Average Climate Change Projection Cost-Benefit Analysis 18 th session of the Conference of the Parties to the UNFCCC European Commission Environmental Impact Assessment United Nations Economic and Social Commission for Western Asia Global Climate Model Gross Domestic Product Greenhouse Gases Gesellschaft für Internationale Zusammenarbeit International Panel on Climate Change Monitoring and Evaluation Multi-Criteria Analysis Middle East and North Africa Organization for Economic Cooperation and Development Stockholm Environment Institute World Bank 0

5 Introduction and background The Middle East and North Africa (MENA) region represents the most water scarce region world-wide, with 16 out of the 22 Member countries of the League of Arab States having less than 1,000 m³ of annual renewable water resources available per capita, which is the defined threshold for water scarcity (SEI 2012). Population growth, socio-economic development and pronounced urbanization trends, combined with unsustainable production and consumption patterns, are expected to increase water demand by 60% by 2045, leading to a supply-demand water gap of 200 km 3 /year by that decade (Immerzeel et al. 2011). At the same time, the region s water resources are highly vulnerable to regional climate change impacts which will further exacerbate the situation by reducing water availability due to higher rainfall variability combined with likely general reduction as well as higher temperatures (IPCC 2007). The adaptive capacity of relevant stakeholders to manage and reduce these impacts is still insufficient. Accordingly, and due to the fact that water provides the basis for socio-economic development in the MENA region, the Arab Strategy for Water Security (AMWC 2010) has identified climate change as one of the key challenges to sustainable development and as a major threat to water security in the MENA region. However, it can also serve as an opportunity to promote much needed technological, socio-economic and institutional innovation and adaptation in the water sector (Hoff 2012). While there are growing national activities in the region in planned adaptation (and mitigation) by state organisations and international donors as well as climate research undertaken by academic and government institutions, adaptation to climate change in the water sector has not yet become an integral part of national water sector strategies, plans and investment decisions. Even in cases where climate change adaptation has been addressed in national legislation, implementation of measures and enforcement of regulations is often lacking. Consequently, there is the need for increased climate change mainstreaming and the development of approaches for integrating adaptation (and mitigation) measures in order to reduce the water sector s vulnerability. Several ideal entry points exist in the region to foster such a systematic integration, including the rising awareness for climate change as well as the increasing political will to achieve climate resilient development and realize green growth potentials (SEI 2012). At the regional level, this is also reflected in the Arab Strategy for Water Security adopted in 2010 by the AMWC. Moreover, Arab countries are increasingly involved in the global climate policy dialogue (e.g. COP 18 in Qatar). The Intergovernmental Panel on Climate Change (IPCC 2007) concluded that the consideration of climate change impacts already at the planning stage is key to boosting adaptive capacity. Climate proofing is one of the tools for incorporating climate change into planning procedures at national, sectoral, and project level that is increasingly applied in countries around the world. Properly implemented, it makes a given strategy, plan or investment projects more climate resilient, thus avoiding lock-in situations and path dependencies that lead to increased future vulnerability, adverse socio-economic impacts, higher costs, and limited flexibility to respond to future climate impacts. Moreover, there is a growing interest of public financial institutions, commercial banks, and insurers in seeing evidence that project developers have integrated climate resilience measures into the project as a prerequisite for funding/insuring investments (EC 2013). In light of the future mid and long-term water sector investments needed to foster sustainable, climate resilient development in the MENA region, the GIZ programme Adaptation to Climate Change in the Water Sector in the MENA region (ACCWaM) has commissioned the GIZ Competence Centre for 1

6 Climate Change to develop a proposal for Climate Proofing Guidelines for water investments in the MENA region (henceforth called Guidelines ) and to conduct introductory training sessions on climate proofing in the three ACCWaM pilot countries Egypt, Jordan, and Lebanon. The contents of the draft Guidelines have been first presented to the Arab Ministerial Water Council (AMWC) Technical Committee at their meeting in Cairo in June Objective and target group The primary objective of these Guidelines is to assist public authorities of national water sector institutions as well as the private sector and development partners in the MENA region developing and implementing robust water investments that are resilient to climate variability and change, thus ensuring their long-term sustainability. In this context, water investments encompass physical assets and infrastructure of the water sector, such as water supply and sanitation systems, multi-use reservoirs, irrigation systems, water supply, sanitation and drainage, ports and navigation etc. A single investment is generally also referred to as a project. In order to integrate climate change adaptation (and mitigation options) effectively into project planning and to reduce additional workload and costs, the methodology is synchronised to the general project cycle and would ideally become integral part of routine analyses undertaken as part of investment planning/project development. Scope The application of this methodology focuses on investments (project level) in the water sector, including both planned and already existing projects in need of rehabilitation, but can in general also be applied to other, closely interlinked sectors such as agriculture and energy. Thereby, they can be used for both explicit adaptation projects such as flood protection infrastructure, or regular water sector projects such as new water supply or sanitation systems, desalination plants, or irrigation perimeters. Considering that individual countries in the MENA region have varying legislative and regulatory standards that govern investment planning and design, and may have begun to incorporate requirements for climate risk assessment into legislation, these Guidelines present a broad and generic approach and do not intend to override or define the specific national planning procedures and design standards that project developers should be working towards. Moreover, as experience on adaptation planning is still evolving, the Guidelines should be seen as a flexible, dynamic tool which will be regularly updated and become more specific based on lessons learned from climate proofing real-life projects in the region and taking into account the continuously evolving climate change science base. Structure The Guidelines contain two main sections: Part 1 provides a brief overview of climate variability and climate change projections in the MENA region, current vulnerability of the water sector to climate change impacts, and highlights the importance of an enabling institutional framework to facilitate systematic climate proofing of investments. Part 2 describes the integration of climate change aspects (impacts, adaptation options, mitigation potential) into the project cycle following a simple and straightforward four-step approach based on existing international climate proofing concepts and methodologies, and adapted to the water sector and specific regional context. Experiences and lessons learned regarding the application of the BMZ 1 /GIZ tool Climate Proofing for Development (GIZ 2010) have been taken into account. 1 German Federal Ministry for Economic Cooperation and Development 2

7 Part 1: Climate change and the water sector 1.1 Climate change impacts in the MENA region Climate change will severely affect the MENA region s water availability and exacerbate existing water stress. Despite the inherent uncertainty in global and regional climate projections based on global climate models (GCM) and emission scenarios, they indicate clear trends towards hotter, drier and more variable climatic conditions as well as more frequent and intense extreme events, including (Immerzeel et al. 2011, IPCC 2007): Increasing mean annual temperature and temperature extremes Increasing variability (frequency and intensity) of rainfall with likely reduction of rainfall Increasing risk of flash floods (particularly affecting cities and low-lying areas) Longer, more intense and more frequent droughts Increased evapotranspiration due to higher temperatures Sea-level rise For more detailed climate information, see also the links provided in Part 2, Step 2.1. Biophysical and socioeconomic effects of climate change Current water use practices, land-use patterns, and accelerating degradation of ecosystems and the services they provide negatively impact water quantity and quality and generally represent the greatest threat to water security in the MENA region, leading e.g. to groundwater over-pumping, land subsidence, delta erosion, and saltwater intrusion into coastal aquifers. These impacts are further exacerbated by climate variability and changing climate variables such as temperature and precipitation, which have numerous direct biophysical effects on water quantity and quality. Adverse effects on water quantity include increased evapotranspiration, reduced surface runoff and water infiltration into the soil, resulting in reduced groundwater recharge, river runoff, degradation of wetlands, and influencing crop growth and soil salinization. Sea-level rise is accelerating the risk of saltwater intrusion into coastal groundwater aquifers. Reduced precipitation and higher temperatures affect water quality by reducing the dilution of effluents in a river system, decreasing the oxygen content and increasing nutrient concentration and risk of algal bloom in surface water bodies, and can impact fisheries. Reduced surface runoff and droughts can also negatively affect the functioning of water supply and sanitation infrastructure (e.g. reservoirs, canals, water treatment plants) as well as hydropower generation. Periods with heavy rainfall can cause floods leading to infrastructure damage, increased soil erosion and sedimentation of reservoirs (reducing the hydropower potential of dams), and the spreading of water-borne diseases due to sewer overflow. These biophysical effects trigger and/or emphasize indirect socio-economic effects, such as increased water demand for drinking water supply and water for irrigation, increased need for flood protection, or increasing energy demand from hydropower. Climate and land-use change (e.g. urban growth, deforestation, wetland drainage, agricultural extension) closely interact and can thus, to some extent, also affect current land-use practices and amplify demographic shifts, increasing competition and potential for conflict over scarce water resources between different water users, between different basins of a country, and regionally between riparian countries. 3

8 Impacts on water investments Ultimately, the combined biophysical and socioeconomic effects of climate change have impacts on the performance and sustainability of current and future water investments, increasing their vulnerability. This is especially true for large infrastructure investments with design lifetimes typically between years on average, such as irrigation projects, water supply/sanitation systems and dams, which will need to cope with increasing future climate risks (Figure 2). Figure 1: Lifetimes of different types of investment decisions compared with the time scales of some global environmental changes, and implications for adaptation (Source: Stafford Smith et al. 2011) Vulnerability 2 of large investments manifests itself for example in design thresholds built into infrastructure designs, which may be exceeded more frequently in the future leading to the disruption or failure of a project s services/operations, e.g. more frequent shut-downs of hydropower plants due to reduced reservoir capacity as a result of reduced rainfall and increased evaporation, or coastal assets becoming increasingly prone to flood risks as a result of sea level rise. This reduces the margin between normal operation and critical thresholds and will increase the chance of having to take more drastic, re-active management measures for adaptation, such as reduced operations (EC 2013; Figure 3, p. 5). The impacts of climate change can adversely affect various dimensions of a project (EC 2013), such as operational, financial, environmental and social performance and market conditions, potentially leading to: Deteriorating assets and reduced design life, risk of damage Increasing operational costs and need for additional capital investment Loss of income Reputation damage at several levels Changing market demand for goods and services Increasing insurance costs or lack of insurance availability 2 Vulnerability describes the degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. It is a function of the character, magnitude, and rate of climate change and variation to which a system is exposed, its sensitivity, and its adaptive capacity. 4

9 Figure 2: The relationship between coping range, critical threshold, vulnerability, and a climate-related success criterion for a project (Source: modified, based on Willows and Connell 2003) Design/ operational thresholds may be exceeded more frequently due to climate variability and change Adaptation extends the coping range The costs of climate change impacts and adaptation in the MENA region water sector By 2050, MENA countries like Syria and Tunisia are projected to experience a cumulative reduction in household incomes of about 7% of GDP every year due to climate change. For the Republic of Yemen the forecasts are even higher, indicating a loss of 24% of GDP, thus highlighting the indispensability of adaptation measures (World Bank 2012). According to the average climate scenario (AVG) included in the MENA Water Outlook to 2050 (Immerzeel et al. 2011), impact models show that water demand in the MENA region is likely to rise substantially, leading to an unmet demand of about 200 km 3 /year during However, only 16% of the calculated water shortage can be attributed to climate change in 2050, since the modelling allowed combining climate change and autonomous developments, such as an increase in population and economic development. For bridging the water gap, the study reviewed the cost-effectiveness of 9 alternative adaptation measures to climate change and water scarcity. Based on a mix of the most cost-effective measures, the total annual costs for closing the gap of 200 km 3 /year during amounts to 0.54% of the projected GDP of the MENA region (US$ 103 billion/year). Another World Bank study (2010) concludes that the MENA region will have to spend US$ 2.5 billion to US$ 3.6 billion in 2050 to overcome the negative impacts of climate change, though excluding increases in demand for irrigation, domestic and industry water needs. Thus, adapting to water scarcity is not only necessary in terms of climate change, but also inherently urgent in combination with autonomous future socioeconomic development scenarios. Already today, inefficient water management in the MENA region reduces public financial resources by 0.5% to 2.5% of GDP every year. 5

10 1.2 Adaptation to climate change Decision-making under uncertainty The information basis for assessing climate change impact and vulnerability are projected global climate trends, which are subsequently downscaled and then used as input for impact assessment, using for example hydrological models, and subsequent vulnerability assessments (ESCWA 2011). Uncertainty is inherent in all global climate projections. The single largest of these is the fact that we cannot predict the future level of greenhouse gas (GHG) emissions. Many different emission futures are possible, leading to the use of different emission scenarios. By comparing the climate model outcomes for the different emission scenarios, a broad range of possibility for future climatic developments evolves (GTZ 2009). Global climate models (GCM) are constantly being improved, but uncertainty regarding climate variability, future society and the scale of future GHG emissions, and scientific knowledge of how the interactions of different components of the global climate system interact with each other will always continue to limit the confidence with which predictions of future climate conditions can be made. However, uncertainty is no reason for inaction or delaying activities. This is particularly true for the MENA region, where uncertainty of projected directions for precipitation trends (decrease) are considerably lower than in other regions of the world, on top of a generally distinct global trend regarding the increase of average temperatures (Hoff 2012). Project managers are faced with the challenge to incorporate uncertainty into their decisions. A number of principles to guide the development of adaptation options to climate variability and change and in dealing with uncertainty (GIZ 2010, GIZ 2012, Hoff 2012, SEI 2012) include: No-regret/low-regret options: Select adaptation options that will deliver net socio-economic benefits exceeding their associated costs or for which costs are relatively low, and concentrate on win-win opportunities and synergies with closely interlinked sectors (e.g. energy, agriculture). Also, look at the big picture and seize opportunities for simultaneous adaptation and mitigation options such as energy-efficient pumps for drip-irrigation or solar-powered desalination plants in order to increase climate resilience and reduce GHG emissions. Soft adaptation measures: Try to include a wide range of predominantly soft measures that can be adapted to changing circumstances flexibly, such as changes to operations of a facility, training and capacity development for decision makers and technical personnel. Adaptive management: Ensure flexible management of the project which can evolve and adjust as (climatic) circumstances and scientific knowledge change and develop adaptation measures which are suitable for a range of possible future climatic conditions. Robust adaptation options: Think widely and outside the box, prioritising adaptation options that primarily target today s climate variability, but which also have major co-benefits under predicted future climate change projections. Creating an institutional framework for climate change mainstreaming Mainstreaming climate change adaptation and mitigation in principal requires strong leadership and commitment at the regional and national level in order to be successful, including the setup/identification of an institutional structure responsible for the preparation of climate information and dissemination (e.g. hydro-meteorological data, information of regional/national/local impact and vulnerability assessments, fact sheets on sector-specific impacts, risks, and adaptation options). This would also require institutional support for climate research, data generation, monitoring, capacity 6

11 building for technical, socio-economic and political expertise related to climate change adaptation and mitigation options, and cross-sectoral coordination with other institutions and across the region. Access to reliable and timely climate information is essential for increasing resilience of projects. In this context, extensive capacity development activities have been undertaken in several countries of the MENA region (e.g. Lebanon, Jordan) with support from development organizations, multilateral organizations and international research initiatives. These activities included particularly the application of the Water Evaluation and Planning (WEAP) tool for integration of climate change projections into water resources planning for individual basins and countries as well as the Long-range Energy Alternatives Planning (LEAP) system, which is used for mitigation and low-emission development planning and can be combined with WEAP (Immerzeel et al. 2011, SEI 2012). Also, the Economic and Social Commission for Western Asia (ESCWA) in 2011 elaborated a comprehensive methodological framework including tools for an integrated, region-wide climate impact and vulnerability assessment as part of the Regional Initiative for the Assessment of the Impact of Climate Change on Water Resources and Socio-Economic Vulnerability in the MENA region, which presents an important first step towards generating climate information relevant not only for regional and national, but also for project-level decision makers and planers. Reduced or avoided disruption or damage of a water project s operations and assets will result in medium to long-term economic benefits. However, assessing climate risks as part of the project cycle and implementing adaptation options requires additional financial resources at the beginning and potentially higher operating costs during the project s lifetime. Decision makers at national level need to address these costs and make room for adaptation activities in the respective sectoral budget envelopes, or develop a national adaptation fund for all relevant sectors for adaptation mainstreaming that could finance these additional analyses and measures (OECD 2009, ADB 2011). Further policy options for water sector institutions include (based on ADB 2011): Inventory of water projects (infrastructure and location) vulnerable to climate change Conduct research on demographic responses on climate change and land-use interactions, and how these impact the water sector Support decision making at project planning level, providing modelling and adaptation planning tools Expand planning time frames to allow the incorporation of climate change impacts and adaptation options into project cycle Refine risk analysis tools for planners and engineers to address uncertainties inherent in climate projections Develop iterative risk and adaptive management approaches Develop new, regionally (MENA) harmonized design standards and codes incorporating projected changes in climate conditions Update regulations and require climate change adaptation screening in Environmental Impact Assessments (EIA); see box on page 8. 7

12 Integrating climate change risk assessment into EIA: Potential for the MENA region? Environmental Impact Assessments (EIA) are used to assess the (adverse or beneficial) impacts of a proposed project on the environment before deciding whether or not to undertake a project, and to develop and implement measures to avoid or reduce those impacts as a mandatory, state regulated condition of approval for the project. As such, incorporating climate change impacts and adaptation options into EIA as part of the project cycle generally represents an alternate or complementary approach for increasing the resilience of water projects to climate change. This would include not only the consideration of the impacts of climate change on the project ( adaptation options), but also the implications of the project on GHG emissions ( mitigation options). While this approach is increasingly gaining momentum, to date only a few countries (notably the Netherlands, Canada, Australia) have started to integrate climate change considerations into EIA and making it a legal requirement for the EIA process regarding the development of major projects (Agrawala et al. 2010, Bell et al. 2003). Recently, the European Commission (EC) published a general climate proofing guideline for practitioners and is likewise planning to make to revise the EIA directive in order to make climate proofing a precondition for projects (European Commission, 2013). In the MENA region, many countries have adopted general national EIA systems and requirements, in principle providing the opportunity for integrating climate change considerations. However, in practice, past studies indicate that focus and quality of the EIAs vary significantly within the region and even within a country, mainly due to existing differences and inadequacies in environmental legislation, regulation, and institutional capacity (El-Fadel and El-Fadel 2004, ESCWA 2001). Lack of clarity of the systems and guidelines, fear of additional costs coupled with poor enforcement and monitoring further contribute to this. Against this background, the development and/or improvement and effective enforcement of existing EIAs as well as their harmonization across the region is as much a prerequisite as it presents a potential entry point for integrating climate risk assessment and making it a binding condition prior to project development. 8

13 Feed back experience Part 2: Climate proofing water investments 2.1 Overview This Guideline for climate proofing water investments contains four main steps, which are illustrated in Figure 3 below. Owing to the flexible approach of this methodology, steps 1-3 can be extended or adapted according to the specific context, i.e. the specific socio-economic and political conditions as well as to the existing institutional framework. Prior experience with environmental tools such as Environmental Impact Assessments (EIA), technical expertise and the extent to which project managers are aware of climate change, as well as the funds available for climate risk analysis and implementation of adaptation options are further on-site conditions that have to be taken into account. Each step of the methodology includes multiple sub-steps and a corresponding checklist with guiding questions as well as links to helpful tools and information sources. Figure 3: Steps of the climate proofing process Main steps Step 1 Project vulnerability screening Is the project sensitive to climate change impacts? Sub-steps Identify key climate variables and climate trends, and project exposure units If there is no indication for considerable sensitivity to climate change, no detailed assessment is required. Yes Step 2 Detailed climate risk assessment Step 2.1: Gather available climate information Step 2.2: Assess biophysical and socioeconomic effects Step 2.3: Evaluate the impact of the effects on the project s objective Step 2.4: Assess the risk and relevance for project planning Step 3 Options for adaptation Step 3.1: Identify adequate adaptation options Step 3.2: Evaluate and prioritize adaptation options Step 4 Integration into project and M&E system Step 4.1: Adapt or redesign the planned project Step 4.2: Design a monitoring and evaluation plan Step 4.3: Feedback into project cycle, policy making and knowledge management processes 2.2 Entry points for integrating climate adaptation into the project cycle The development of a project generally follows a cyclic sequence of steps, also known as a project cycle (see Figure 4). While the formulation of the cycle and its stages varies from one sector, administration and country to another, some basic components of the cycle are similar and represent main steps of a 9

14 routine analysis performed by project developers. The project cycle represents the framework for the integration of climate risk assessment and the identification, evaluation and prioritization of adaptation options, each step presenting a specific entry point for interventions. The figure below illustrates typical stages of a project cycle and the ideal intervention points for integrating climate risk assessment. While interventions at the beginning of the project cycle will be most effective, climate risk assessment can also be carried out also for projects already further advanced in the planning cycle or for existing project that need rehabilitation or extension. In these cases, however, it should be noted that the scope for building in adaptation provisions will be narrower than at the project identification stage, as many parameters relevant for climate change adaptation (type of project and objective, geographical location etc.) will largely have been set already (OECD 2009). Figure 4: Typical project cycle and key entry points for climate proofing Feed-back M&E results, lessons learnt, and best practices Water sector investments programme/plans Project identification (Strategy) Establishment of preliminary scope and strategy (based on time frame and budget allocation) Monitoring & evaluation/ operation Operation, maintenance and improvement of project Project appraisal (Plan) Establishment of development options and execution strategy (e.g. conceptual design, site selection, contract planning, technology selection, cost estimating, feasability study, EIA scoping and baseline) Project implementation Detail and construction of asset (detailed engineering, engineering, procurement & construction management) Detailed design Finalize scope and execution plan (e.g. front end engineering, cost estimating, full EIA) 10

15 2.3 Steps for climate proofing water investments Step 1: Project vulnerability screening The goal of this step is to assess whether the project is in principle vulnerable to climate variability and change or whether it may affect the vulnerability of the human or natural system to climate change. This includes the use of risk screening tools or checklists and the identification of relevant climate variables as well as the project s exposure units. If the results indicate that considerable climate risks exist, then carrying out further detailed climate risk assessment is necessary in order to identify adequate adaptation options. The ideal entry point within the project cycle presents the project identification stage. Identify key climate variables, climate trends, and project exposure units As part of a holistic climate change mainstreaming process, a climate lens may have already been applied at the policy level, and climate risks and vulnerabilities factored into water sector policies and plans as well as sectoral planning documents (see Part 1, Section 1.2). Regardless of whether water sector authorities have already implemented a climate proofing process at national level (see Part 1, Section 1.2), a preliminary vulnerability screening at project level is strongly recommended to assess whether climate variability or climate change could compromise the integrity, effectiveness, or sustainability of a project within its lifetime. Prior to screening the project s concept note, business model and/or feasibility study for its sensitivity to climate change, the climate change variables and trends most relevant for the project need to be identified along with those elements the exposure units of the project which are particularly affected by climate change. Climate change variables and respective trends for water sector projects refer in particular to: Temperature Precipitation Frequency and magnitude of extreme weather events (droughts, floods) Changes in onset of growing season (link to irrigation and rainfed agriculture) Sea-level rise and wave action Changes to snowfall events Wind speed Exposure units of a project particularly vulnerable to changing climate variables may concern the following components (EC 2013): Inputs, e.g. water, energy On-site assets and processes, e.g. irrigation infrastructure, water pumps, wells and boreholes, water treatment plants and effluent treatment, dam infrastructure, turbines Outputs (products) such as treated wastewater, irrigation water, hydropower, increased flood protection/safety, drinking water Distribution networks, e.g. water supply pipes and canals, sewerage and drainage channels, electricity lines/grid Once climate trends and exposure units have been narrowed down, several options for a rapid vulnerability assessment exist, based on existing climate change knowledge, time and financial budget, and ease of use. One option for project managers is to use online risk screening tools developed by a number of organizations to rapidly assess the potential risk posed to a planned project. Another option 11

16 would be to develop and use simple checklists to systematically assess climate risks and outline opportunities for increasing climate resilience. An essential prerequisite for the usage of such risk screening tools is expert opinion based on general awareness and knowledge of climate variability and change. In some cases, the vulnerability screening may reveal that sufficient risk allowance has already been built into the project to account for climate change, or that the magnitude and frequency of the relevant changes is too minimal with regards to the nature of the project, and no further action is required to enhance climate resilience. Guiding questions: What is the nature of the project and its setting, i.e. its type (water infrastructure being developed and services provided), expected project lifetime, preferred geographic location within a water basin, number of people living in the area and affected by it? Does climate variability or change have an impact on the project? If yes, to what degree (e.g. low, medium high)? Which elements of the project (exposure units) are particularly affected by climate change (regarding for example inputs, on-site assets and processes, outputs, transport links)? Online risk-screening tools and checklists: Adaptation wizard (5-step guide assessing an organisation s vulnerability, identifying options and developing an adaptation strategy) Community-based Risk Screening Tool (CRiSTAL) (Project planning tool, helping to design adaptation activities) Project Risk Screening Tool by ADB (Tool/Checklist for potential climate-induced and disasterrelated impacts) Step 2: Detailed climate risk assessment Based on the results of the initial project screening, the project manager conducts a detailed climate risk assessment in order to assess the potential impacts of climate change on the project s objective as a basis for identifying specific adaptation options. This step includes the assessment of the biophysical and socioeconomic effects on the exposure units previously defined, the probabilities of the effects occurring, the impacts of these effects on the overall project objective, and finally the assessment of the risk level, i.e. the relevance for project planning. Climate risk assessment is most effective if carried out at the project appraisal and design stages of the project cycle. Step 2.1: Gather available climate information The basis for integrating climate resilience into project planning is available, up-to-date climate information on regional climate variability and change. The information would ideally be provided to the project manager via a specialised, central unit or department of a relevant national institution responsible for climate data generation and collection, preparation and dissemination (see Part 1, Section 1.2). In the interim, a large number of web-based climate information portals exist that help decision makers to gather relevant climate information (see below). Guiding questions: Does reliable and up-to-date climate information exist at regional level? If yes, which public institution/unit at national level (e.g. Ministry of Water and Environment, Meteorological Services, 12

17 Disaster Risk Management Units) is in charge of providing these data? Which other institutions may have worked on this topic (e.g. universities, regional initiatives, development organizations, multilateral donors)? What is the processing level and quality of the data (historic records, climate projections until 2030/2050/2080 at regional level)? Does it include results of impact and vulnerability assessments? Will further processing and analysis be necessary? How much time and budget is available for gathering and compiling climate information, and who will be responsible for it? Web-based climate information portals: Ci:grasp (PIK) (Web-based information platform, structuring impact chains for supporting decision makers in prioritizing adaptation needs) Climate Change Knowledge Portal (World Bank) (Interactive, global information and data platform) IPCC Data Visualization Data Distribution Centre (USAID) (Platform providing climate, socioeconomic and environmental data and scenarios) SERVIR (Global network of regional partners for environmental management) NOAA Climate Services (US-based data, information and news platform) PREVIEW (UNEP) (Global risk data platform sharing information on global risk from natural hazards) Regional Climate Centres (RCCs) (WMO designated Regional Climate Centres, established to generate more regionally focused high-resolution data) Regional Climate Outlook Forums (RCOFs) (Providing real-time regional climate outlook products from several parts of the world) Climate wizard (Helps to access climate change information and visualizing impacts worldwide) weadapt (Web-based information and knowledge sharing platform) Knowledge Navigator (Categorized dataset of Climate Change platforms covering adaptation, mitigation and development) Climate change Agriculture and Food Security (Web-based information platform) Adaptation Learning Mechanism (Knowledge sharing platform developing tools to support adaptation practices, capacities and integration of climate risks and adaptation into policies) Adaptationcommunity.net (Inventory of methods for adaptation to climate change and platform for exchange among practitioners) Step 2.2: Assess biophysical and socioeconomic effects Based on the climate information available for the most relevant climate variables, the project manager can now broadly estimate the biophysical effects on each exposure unit (e.g. reduced river runoff, reduced recharge of groundwater aquifer, sedimentation of reservoirs), triggered by the changing climate variables. Following the chain of effect (see also Part 1, Section 1.1), these biophysical effects lead to socio-economic effects on the exposure units (e.g. higher municipal and agricultural water demand, loss of income), which are likewise assessed and compiled in a table such as below. Here, it is important to keep in mind that climate change is relevant to a project in two ways: Firstly, the project may be vulnerable to the impacts of climate change (e.g. reduced water availability for 13

18 irrigation system). Secondly, the project itself may increase or decrease the vulnerability of naturalhuman systems to climate change (e.g. irrigation project using groundwater, thereby contributing to overexploitation and further drawdown). Both aspects need to be considered and adaptation objectives chosen in such a way as to minimize these potential effects (see example below). Guiding questions: Based on the location/site of the planned project within a basin, what are the direct biophysical effects (e.g. the effect of increasing maximum temperatures or flood events on construction/distribution material such as dam walls, pipes etc.) of projected climate trends directly on the project s exposure units? What are the biophysical effects (e.g. reduced water availability due to reduced rainfall and runoff, or increasing risk of sewer overflow and disruption of treatment plant operations due to increasing storm water runoff) on the watershed/sub-watershed in which the project is/will be located? What role does current land cover and land use play for the hydrological processes in the basin, and how do climate and land use change interact, resulting in alterations of the hydrological cycle (e.g. reducing vegetation cover and increasing desertification due to reduced rainfall and droughts leading to increasing surface runoff and risk of flash floods, decrease of groundwater recharge etc.)? What is the capacity of ecosystems to buffer the impacts of climate change? What are the socioeconomic effects triggered by the biophysical effects of projected climate trends (e.g. increasing water demand in cities in turn requiring the increase of desalination capacities and higher energy demand and cooling water, stronger water demand management, etc.)? How may climate change alter markets in the future, i.e. the demand for water-related products (drinking water, water for agriculture or tourism, cooling water of industrial processes, storage hydropower) and the direction of land-use trends (e.g. increase in irrigated agriculture, abandoning of less fertile agricultural lands, increasing urbanisation and surface sealing)? What is the adaptive capacity of the population in the basin to deal with climate variability and change impacts, e.g. traditional adaptation measures such as soil and water conservation, water harvesting, planting of drought-tolerant and water efficient crops? How do these measures perform under future climate trends? Do they fail beyond a certain climate change threshold, making a transition towards completely new adaptation measures necessary? Step 2.3: Assess the impact on the project s objective After the elaboration of biophysical and socioeconomic effects for relevant climate trends and the exposure units of the project, that are sensitive to it, the last element in the chain of effects is the assessment of the potential climate impacts (negative and positive) these effects have on the project s overall objective. This qualitative climate impact assessment will be based on expert judgement and greatly profits from inputs by different experts reflecting the multiple dimensions and broad range of expertise required to define potential impacts. The impacts should be numbered in order to facilitate the subsequent risk assessment (see Table 1, p. 15). 14

19 Table 1: Summary table for analysis (example of irrigation project) Climate trend Exposure unit Biophysical effect Socioeconomic effect Climate impact on project s objective ( increase of irrigated area ) Increase in mean annual temperature Increased frequency and duration of droughts Input: water supply from groundwater aquifer Process: water distribution and irrigation reduced aquifer recharge increased evapotranspiration salinization of topsoil increased blockage of irrigation valves and porosity of (plastic) pipes increasing competition with drinking water supply higher demand for irrigation water opportunities for new crops? decrease/ increase of harvest loss of/ increase in income 1. Increase in operating expenditures for pumping from greater depths and maintenance due to weardown of pumping equipment 2. Need for additional water resources 3. support for change of cropping patterns and use of new crops 4. Guiding question: How do the combined biophysical and socioeconomic effects of each climate trend impact the project s exposure units, considering all exposure themes such as inputs, assets and processes, outputs, and transport/distribution? Step 2.4: Assess the risk and relevance for project planning This last step qualitatively assesses the risk of the project to the climate change impacts evaluated (and numbered) in the previous step and deducts the relevance for planning by assigning different risk levels (e.g. high, moderate, low risk) to each one of the impacts based on expert judgment and review of relevant literature. Risk has two dimensions: in the context of assessing climate risk, it is a function of the probability of the potential climate impact occurring ( likelihood ) and the severity associated with that climate impact ( magnitude of consequence ). In order to visualize the risks in a risk matrix (Table 2), in a first step the probability of the impact occurring is evaluated within the lifetime of the project (e.g. likelihood scale from 1-very likely to 5- highly unlikely ). In a second step, the severity of the consequence of the climate impact for various risk areas, such as for asset damage/ engineering /operational threat, environment, is judged (e.g. on a simple scale, e.g. from insignificant to catastrophic ). Now, the risk scores of both consequence and likelihood can be combined, i.e. the higher the overall score, the higher the climate risk to the project, and also plotted on a graph (e.g. scatterplot) for improved visualization (EC 2013). 15

20 Table 2: Example risk matrix (modified, based on EC 2013) Risk areas Magnitude of consequence of climate impact on project Asset damage/ engineering/ operational threat Impact can be absorbed through normal activity Adverse event, but can be absorbed Serious event requiring additional actions Critical event requiring extraordinary actions Disaster with potential to lead to closure/ collapse/ Risk level High Moderate Low Environment No impact on baseline water resources Localized impact within site boundaries, recovery measurable Moderate harm with possible wider effect on water resource Social Financial Likelihood of occurrence of climate impact on project 1- Insignificant 2- Minor 3- Moderate 4- Major 5- Catastrophic Incident is very likely to occur, possibly several times Incident is likely to occur 5- Almost certain 4- Likely Incident has already occurred in same region /setting Given current practices and procedures, incident is unlikely to occur Highly unlikely to occur 3- Moderate 2- Unlikely 1- Rare Guiding questions: Qualitative risk assessment is fundamentally based on expert experience and knowledge does relevant knowledge exist in the project team? If not, which experts are needed, such as climate change and adaptation experts, economists, ecologists, and social scientists, and can they be involved in the process in a timely manner? Is additional training and capacity development required? What are relevant risk areas with regards to the magnitude of the consequences that need to be taken into account? Does the likelihood of the climate impact occurring take into account the adaptive capacity of social and natural systems and the probability of the climate trend manifesting itself? 16

21 Step 3: Options for adaptation The project manager can now identify options for adaptation measures to respond to the most significant impacts according to the risk assessment in order to increase climate resilience, thereby making use of the opportunities presented by climate change. This step is carried out during the project appraisal stage, its results to be included in the project design stage of the project cycle. Step 3.1: Identification of adaptation options In a first step, a qualitative assessment of different adaptation options is carried out, taking into account a range of general selection criteria (see Table 3). The identification of adequate options will be based on the technical expertise and judgement of the project management/planning team and its experts, taking into account national and/or international best practices for climate change adaptation that have successfully been applied to similar project (for an example of possible adaptation options in the water sector). Consultations with a range of stakeholders including experts from the fields of climate change, adaptation, environmental science and policy, water and other sector institutions, as well as communities and NGOs can greatly enrich the process and assist with further elaboration of potential options. When identifying adaptation options, focus should also be on the opportunities presented by climate change, such as rehabilitating and extending the often deteriorated sanitation and sewer infrastructure as well as wastewater treatment facilities in many cities in the MENA region, reducing the risk of future overspills, flooding, and pollution while increasing the number of people with access to sanitation. Table 3: Criteria for selection of adaptation options (based on: GIZ 2011, EC 2013) Criteria Description Effectiveness Option meets the overall adaptation target (reduction of the impact 1, 2, 3 on the project). Option specifically targets the exposure units most at risk. Option has a reliable and long-term, goal-oriented effect (i.e. risk reduction). Option prevents irreversible and dramatic damages. Timing Option can be realistically implemented within the time frame of the project cycle. Side effect Option supports or is consistent with the objectives of other activities (sustainability, biodiversity, climate protection/emission reduction). Option creates positive effects on different fields of action (win-win solutions, in particular concerning climate protection and sustainability). No regret and low regret Option generates positive effects both without changed climatic conditions as well as under different climate scenarios. Flexibility and adaptive management Economic aspects/ efficiency Option can be modified or further developed. Option can be reversed once conditions change. The medium or long-term benefit of the option is greater compared to its costs (including non-monetary aspects). The use of resources for implementing the option is efficient. Robustness Option is robust under today s climate variability and also under a series of different and plausible climate change projections Equity Option does not negatively impact other systems, sectors, or vulnerable social groups (avoiding maladaptation) Political and social acceptance The moment for implementing the option is favourable ( window of opportunity ) 17