Financing Climate Change Adaptation An Overview. May 2011

Transcription

1 Financing Climate Change Adaptation An Overview May 2011

2 Financial and Inv t Flows for Climate Action in Developing Countries Source: Atteridge et al. (2009). Bilateral Finance Institutions and Climate Change: A Mapping of Climate Portfolios, Stockholm Environment Institute. 2

3 A few main channels we are describing here GEF Others World Bank GEF The World Bank Financing Climate Change Adaptation Least Developed Country Fund Pilot Program for Climate Resilience Global Facility for Disaster Reduction & Recovery Efficient combination of resources can maximize and leverage public and private sources Each source may address different set of needs, risks or barriers Special Climate Change Fund The Adaptation Fund Risk Instruments IDA/IBRD Other TF 3

4 Pilot Program for Climate Change Resilience (PPCR) Governance Structure Implementing bodies: AfDB, ADB, EBRD, IDB, IBRD, and IFC PPCR Subcommittee : Six donor and six recipient countries, plus a high-level representative of the Adaptation Fund Board Unique governance structure of CIF Trust Funds (i.e. CTF and STF) fostering inclusion and consensus-based decision making Equal representation of donors and recipients Donors Recipients Objective Help highly vulnerable countries pilot and demonstrate ways to integrate climate risk and resilience into core development planning (national and sectoral); Funding public and private sector investments identified in those plans; Complementing other ongoing activities. a broad array of Observers 4

5 PPCR Logic Model flexible FW to track progress on program level Global - CIF Final Outcome (15-20 yrs) Country - PPCR Transformative Impact (10-15 yrs) Improved low carbon, climate resilient development Improved quality of life of people living in areas most affected by climate variability (CV) & climate change (CC) Increased resilience in economic, social, and eco-systems to CV & CC through transformed social and economic development Country - PPCR Catalytic Replication Outcomes (5-10 yrs) Improved institutional structure and processes to respond to CV & CC Scaled-up investments in resilience and their replication Regional level: Replication of PPCR learning in non- PPCR countries Project/ Program - PPCR Outputs & Outcomes (2-7 yrs) Project/ Program- PPCR Activities (1-7 yrs) Increased capacity and consensus on integration of climate resilience into country strategies Improved integration of resilience into country development strategies, plans, policies, etc Increased knowledge & awareness of CV & CC effects (e.g. CC modeling, CV impact, adaptation options) among government / private sector / civil society Capacity Building Policy Reform / Development / Enabling Environment Increased resilience in investment program/project specific agriculture, water, coastal areas, priority infrastructure, etc Investments (e.g., in agriculture, water, coastal areas, infrastructure, etc) Investments Enhanced integration of learning / knowledge into climate resilience development Increased learning and knowledge about climate vulnerability & adaptation Knowledge Management CIF Program New & additional resources for climate resilience Increased other public & private sources of financing / investment Leveraging Program PPCR Inputs New & additional resources supplementing existing ODA flows 5

6 PPCR-Conditions and Eligibility Requirements Country eligibility based on: (a) ODA-eligibility (according to OECD/DAC guidelines); and (b) an active MDB country program. Priority to highly vulnerable Least Developed Countries eligible for MDB concessional funds, including the Small Island Developing States. Fulfill the criteria of the respective trust funds. Countries submit country investment strategies. Country Pilot Programs Bangladesh, Bolivia, Kingdom of Cambodia, Republic of Mozambique, Nepal, Republic of Niger, Republic of Tajikistan, Yemen, Zambia Regional Pilot Programs Caribbean Dominica, Grenada, Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines Pacific Papua New Guinea, Samoa, Tonga Financing processed through the MDBs selected by the country with the operations following their policies and procedures. 6

7 PPCR- Design/Process Phase I Development of Strategic Program for Climate Resilience (SPCRs) Funding: Up to $1.5 million, with an advance grant of up to 25% of the request amount Phase II Implementation of the SPCRs Technical assistance Investments to support climate resilient investments in key/priority sectors (such as agriculture, water management, infrastructure..) 7

8 PPCR-Allocation of Resources PPCR provides both grants and highly concessional loans (equal or more than IDA terms), with significant portion expected to be in form of grants. Countries may choose to only access PPCR grant resources. Grants $ 614 mill Concessional Finance $ mill Total Pledges $ mill (as of Feb 2011) Total Fund Deposited (as of Feb 2011): $ mill Grants: Preparation Activities Preparation of SPCR: $ 1.5 mil max. Project preparation grants: No cap (included in envelope requested for SPCR) Allocation Country Pilots Allocation: USD million per country Regional pilot programs allocation: USD million per program Concessional loans Countries eligibility for borrowing, based on their financial and macro-economic circumstances: Some eligible to borrow on standard MDB loan terms. Some may access only subsidized credit through a variety of windows Some eligible through country strategy assistance cycle for a mix of credit and grant financing Some only eligible for grant financing. Countries' risk of debt distress is assessed MDBs will seek to use PPCR funds for concessional loans in private sector markets as well

9 PPCR- Project Example Bangladesh SPCR Investment Plan Components MDB Requested PPCR Amount ($million) Investment Project 1: Promoting Climate Resilient Agriculture and Food Security IFC 13.1 Investment Project 2: Coastal Embankments Improvement and Afforestation Investment Project 3: Coastal Climate Resilient Water Supply, Sanitation, and Infrastructure Improvement Technical Assistance 1: Climate Change Capacity Building and Knowledge Management Technical Assistance 2: Feasibility Study for a Pilot Program of Climate Resilient Housing in the Coastal Region WB ADB ADB IFC The requested PPCR funds (US$50 million grant, US$60 million loans) will leverage an additional US$515 million from ADB and the World Bank 9

10 GFDRR (Global Facility for Disaster Risk Management) Structure Administered by: The World Bank 3 tracks: Track I Global and Regional Cooperation Track II- Disaster Risk Reduction Mainstreaming Track III- Sustainable Recovery Objective: To help developing countries reduce their vulnerability to natural disasters and adapt to climate change Total Amount: $258 million pledges and contributions (as of Dec 30, 2010) Since GFDRR s inception in 2006, more than $27 million or 2/3 rd of financial assistance has primarily focused on climate change adaptation Eligibility: From under $100,000 (individual grants) to over $1 million (country programmes) 10

11 GFDRR Project Example Fiji: Integrated Flood Management in the Pacific-Nadi Flood Pilot ($1,399,000) Objective: Pilot an integrated flood management approach in the Nadi basin as a measure to reduce disaster risk that can be replicated in other watersheds in Fiji and other Pacific countries Components: 1) Institutional Strengthening of Flood Forecasting and Warning Systems: Develop a standard operating procedure for coordination, monitoring and response to flood events including data collection, management and dissemination and Integrate the flood forecasting and warning system with meteorological services and arrangements 2) Flood Risk Assessment, Identification of Mitigation Measures and Dissemination: Acquire baseline data of sufficient quality to enable local level flood risk modeling and identification of the most appropriate flood mitigation measures 3) Institutional Strengthening for Integrated Flood Management: Develop or strengthen the policy, institutional and regulatory framework that support integrated flood management 11

12 GFDRR Project Example Strengthening of Flood and Drought Early Warning System for Cambodia ($100,000) Objective: To support the Ministry of Water Resources and Meteorology to strengthen its capacity to develop a fully operational flood and drought forecasting centre for Cambodia in cooperation with Mekong River Commission (MRC)/Regional Flood Management and Mitigation Center (RFMMC) and Department of Meteorology (DoM) (TRACK II: Mainstreaming DRR; Ongoing Project) Components: 1) Assessment of existing hydro-met network and recommendation for improvement Detailed inventory of stations, equipment and their conditions; Recommendations for improvement and upgrading. 2) Assessment of Institutional capacity and preparation of capacity building plan Integrated capacity development program (on-the-job training, specialized training courses, workshops, higher studies, etc),and capacity building of the private sector. Institutional capacity building plan and program for DoM and DoH and other specialized agencies. Staff development plan based on a training needs assessment. 3) Development of strategy and program of flood and drought monitoring, forecasting, and dissemination of early warning: Rainfall data from all real time / near real time reporting stations; Estimate catchment rainfall over the forecast period; 12

13 WBG- Risk Instruments Catastrophe Risk Insurance Facilities (help the poor cope with economic repercussions of disasters before they happen) Index Based Weather Derivatives (to provide risk management products to member countries, transferring the weather risk to the market. MultiCat Program (fixed income securities that insure sponsor of bond against predefined set of natural disasters) Catastrophe Deferred Drawdown Option (A contingent loan that provides immediate liquidity following a natural disaster) 13

14 IDA (International Development Association) One of the largest sources of assistance for the world s 79 poorest countries Replenished at the end of 2010 (Total $ 49.3 billion) = IDA 16 Achieving Climate Resilient Development as IDA 16 s Special Theme 3 with an objective to Support Climate Resilience in IDA Countries 14

15 IDA s strategy in CC Five closely linked areas: (i) discussing in 100 percent of IDA CASs CC vulnerabilities, and including activities in CC mitigation and adaptation areas when requested by the recipient country; (ii) scaling up IDA Analytic and Advisory Activities on adaptation and mitigation (iii) establishing coding system to measure the share of IDA investments that provide climate adaptation and mitigation co-benefits, and reporting on the number of projects that aim at climate change co-benefits in their design by Mid-Term Review. (iv) analyzing in all projects in climate change sensitive sectors the potential climate impact of project activities to ensure that they are consistent with the climate change mitigation and adaptation strategies of the country; (v) providing expertise to and continuing dialogue with development partners (including OECD/DAC and MDBs) on Rio- Markers with the objective of developing and agreeing on quantitative measures of global financing for climate adaptation and mitigation actions 15

16 Climate Change Adaptation Co-benefit Coding- Agriculture, Fishery, and Forestry Code AB: Agricultural extension and Research AH: Crops AI: Irrigation and drainage AJ: Animal Production AT: Forestry AZ: General agriculture, fishing and forestry Activities with Adaptation Co-benefits Develop, test and introduce practices or techniques more resilient to CC&CV in farming systems, plant breeding, and livestock breeding. Develop, test and introduce management systems for commons better adapted to CC&CV. Forestry research on increased and new threats resulting from CC&CV. Ex situ conservation of species and germplasm adapted to CC&CV. Support extension services to incorporate CC&CV in their programs. Recover degraded areas for crop production through innovative management practices. Soil management practices that control soil erosion, nutrient loss and improve the water regime in the soil profile (e.g. minimum tillage). Crop storage facilities designed to reduce vulnerability to CC&CV. Develop and introduce weather or climate indexed crop insurance programs. Change watershed, wetland and irrigation management systems and practices to reduce vulnerability to CC&CV. Integrated ecosystem management approaches for watersheds and wetlands to reduce vulnerability to CC&CV. Construct dams and water storage systems to manage changes in the water cycle due to CC&CV. Change management practices or techniques to reduce vulnerability to CC&CV in animal health service, pasture management, fodder production and storage practices, Change fish farming and aquaculture practices or techniques to reduce vulnerability to CC&CV (e.g due to changes in water quality or variation in fishing season). Restore or maintain environmental services (including watershed functions). Maintain resilience of forest systems. Maintain productivity of forest systems. Increased use of trees, woodlots, forests, wood and non-wood products in rural adaptation strategies. Safeguard biodiversity as a resource to cope with CC&CV. Establish protected areas for species migration responding to CC&CV. Increase landscape connectivity in response to CC&CV. Conserve threatened and endangered species ex. Situ. Invasive species management responding to CC&CV. Use of ecosystem functions to cope with CC&CV. Integrated Coastal Zone Management responding to CC&CV. 16

17 The Global Environmental Facility (GEF) Funding for the preparation of Non-Annex I countries national communications Can cover incremental costs of projects with global climate benefits. Supports capacity-building and demonstration projects related to adaptation. Strategic Priority on Adaptation (SPA) Trust Fund Secretariat Support for The Adaptation Fund Manages Least Developed Country Fund (LDCF) Special Climate Change Fund (SCCF) GEF replenished in June 2010 as GEF 5 (climate change allocated the largest funding- USD 1.35 billion- a 32% increase), but does not include LDCF and SCCF Objectives: Operating entity of the financial mechanism of the UNFCCC Eligibility: Parties to UNFCCC, non-annex I Parties or eligible to borrow from the WB (IBRD and/or IDA) or eligible recipient of UNDP technical assistance. 17

18 GEF-Least Developed Countries Fund (LDCF) Structure Operating entity: GEF Objective Focus on the unique, urgent, and immediate adaptation needs as identified in National Adaptation Programs of Action (NAPA) Resources: Around $100 mill available for new projects Ceiling - $10 mill per country (recently up scaled) Eligibility: 48 Least Developed Countries (LDCs) that have completed a NAPA 18

19 Project Example: LDCF Increasing resilience to climate change and natural hazards in Vanuatu GEF Agency: WB LCDF Grant: $ 3 mill Co financing: $3.21 mill Designed to: (i) address the main climate and weather related hazards (ii) address immediate priorities already identified through the NAPA, NAP and other consultation processes (GFDRR stock-take) (iii) support the country s sustainable development priorities (iv) take account of the existing and potential capacity for implementation (v) The likelihood of achieving results. 19

20 M a i n C o m p o n e n t s Project Example: Kiribati Adaptation Phase III Objective: To improve the resilience to the impacts of climate change on freshwater supply and coastal infrastructure Total financing: USD 10.8 mill Estimated Board Date: July 7, 2011 Improve water resource use and management (US$4.3 mill) KAP I TA Increase awareness KAP III KAP II Pilot Implementation Project Groundwater Abstraction Systems; Water Reticulation Management (Leakage detection and repair of real losses); Capacity Building; Community Behavior Change Campaign; Roof Rainwater Harvesting; Advisory Support for Water Projects; Improved Water Management Governance Increase coastal resilience (US$2.9 mill) Investments in Shoreline Protection; Advisory Support for Shoreline Erosion Mitigation Measures; Asset Management of Coastal Infrastructure; Mangrove Replanting in Outer Islands Strengthen the Capacity to Manage the Effects of Climate Change and Natural Hazards (US$2.2 mill) Technical Support to the Strategic Risk Management Unit, OB; Coastal Management Policy and Locally Managed Adaptation Planning; Communications & Media; Climate Change Website Maintenance; Disaster Fund Small Grants Scheme 20

21 Special Climate Change Fund (SCCF) Structure Operating Entity: GEF Objective To implement adaptation interventions to expand and fortify the resilience of specific national development sectors to the expected effects of climate change. Fund measures that take a long-term view of climate change adaptation and appropriate preemptive measures. Ideally catalyze additional resources from bilateral and/or other multilateral sources of financing. Resources: $ 33 mill available for new projects Eligibility Non-Annex I countries with focus on Africa, Asia and small island states Current requirement is 1:4 co-financing 21

22 SCCF- Project Example Philippines CC Adaptation project, Phase I Objective: Pilot project to develop and demonstrate approaches that would enable targeted communities to adapt to the potential impacts of climate variability and change. This would be achieved by strengthening existing institutional frameworks for climate change adaptation, and by the demonstration of cost-effective adaptation strategies in agriculture and natural resources management. Main Project Components 1. Strengthening the Enabling Environment for CCA 2. Demonstrating CCA Strategies in the Agriculture 3. Enhanced Provision of Information for climate risk mgmt SCCF: $ 4.9 mill Co financing: $ 50.5 mill 22

23 The Adaptation Fund Structure First major international fund solely committed to adaptation to climate change. Set up under the Kyoto Protocol of the UNFCCC Grant funding- no requirement for co-financing Operating Entity- The Adaptation Fund Board, UNFCCC Financed from a 2% share of the CER proceeds on the Clean Development Mechanism (CDM) project activities and other sources of funding Objective Financing concrete adaptation activities that are country driven and are based on the needs, views and priorities of eligible Parties. Finance : Funding availability of $ million, with $ million as funds held in trust (as of January 31, 2011), $ 353 million (medium estimate, by end-2012) Eligibility Developing country Parties to the Kyoto Protocol Project types: Small Scale (upto $ 1mill) Regular (over $ 1 mill) 23

24 Project Example- The Adaptation Fund Addressing Climate Change Risks on Water Resources in Honduras: Increased Systemic Resilience and Reduced Vulnerability of the Urban Poor Regular Project $ 5.62 mill Goal: Contribute to incorporate climate change issues into the planning processes and investment decisions of key line ministries institution capacity building and improving the tools of relevant institutional structures (National Water Authority) Safeguard Tegucigalpa and the watersheds that provision the capital city in response to existing and projected water scarcity and to vulnerability to extreme climate events 24

25 An Outcome of COP 16...Green Climate Fund A decision at COP 16-Cancun Governed by Green Climate Board To support projects, programmes, policies and other activities in developing country Parties using thematic funding windows. WB invited as interim trustee for 3 yrs The details of the Fund will be discussed throughout the year until the next negotiation of COP 17 in Durban, South Africa in December

26 Fast Start & Long Term (1) Fast Start Finance ( ) -To Date: $30 billion pledge legitimized at Cancun, about $12 billion committed Goal to mobilize Long-term Finance of $100 billion per year by 2020 agreed in Cancun -Variety of sources including: public, private, bilateral, and multilateral -Significant share of multilateral funding for adaptation should flow through the Green Climate Fund Issue: How to leverage (multiply) public funds through mixing with private, public, and carbon market funding

27 Climate Finance Challenge Additional investment needs in developing countries, by 2030 Cost of developing countries to adapt to climate change between 2010 and 2050 is estimated at US$70 billion to US$100 billion a year at 2005 prices- World Bank study -Economics of Adaptation to Climate Change. Source: World Bank,