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Theme: Possible work of the Task Team in the 2015/16 biennium: Adaptation, Development Planning, Policy and Co-operation Presentation of the work in this area, with attention to the political economy of adaptation planning and engagement of key stakeholders, including the private sector, in developing countries. Presented at the Meeting of the OECD Joint DAC-EPOC Task Team on Climate Change and Development Co-operation, April 2014, Zürich, Switzerland. For more information, please contact Michael Mullan (michael.mullan@oecd.org) & Jan Corfee-Morlot (jan.corfee-morlot@oecd.org).
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Adaptation and Development Cooperation
The role of ODA in financing adaptation: Findings from Bangladesh, Ethiopia, Nepal and Rwanda, Kenya, The
Gambia and Zanzibar
1. Supporting public policy responses for climate resilient development: Evolution of discourses that shape policy responses to CRGE and Finance
2. Political economy analysis: Understand the knowledge base of actors shaping policy responses + Facilitate reflection and dialogue
3. Case studies: Ethiopia, Rwanda, Bangladesh and Nepal
4. Government Group: Bangladesh, Nepal, Kenya, The Gambia and Zanzibar
BACKGROUND
STUDY OVERVIEW ETHIOPIA
Climate Resilient Green Economy
THE GAMBIALow Emission
Climate Resilient Development
KENYAClimate Resilient Green Economy
RWANDAClimate Resilient Green Growth
ZANZIBARLow Carbon
Climate Resilient Development
BANGLADESHClimate Resilient
Low Carbon Development
NEPALLow Carbon
Climate Resilient Development
1. Gap in demand and supply of climate finance:1. 2012: Estimated USD 359 for investment into adaptation and mitigation (CPI, 2013).2. Ethiopia: In excess of USD 150 billion over the next 20 years. Approximately USD 7.5 billion per
year. In 2012 OECD USD 43.31 million for investment into adaptation and mitigation
2. Investments into adaptation a priority ……but 94 per cent of money invested in 2011 targeted mitigation (CPI, 2013)
3. Public sources of finance support investment into adaptation…..but private investments dominate climate finance accounting for 62 per cent of the total (CPI, 2013)
4. “How can the existing governance and institutional arrangements for climate finance deliver the scale of ambition?” – same old; project based; fragmented…..
FINANCING ADAPTATION: THE CONTEXT
Sources of climate finance
• International and national public finance
• International and national private finance
• Carbon finance
• Philanthropic climate finance
Intermediaries
• Multilateral banks and agencies
• Bilateral agencies
• National agencies
• National financial institutions (development & private banks; micro finance institutions)
• Multilateral , bilateral and national climate funds
Economic & Financial
instruments • Finance
Enhancing Instruments (PPA/Warranties)
• Risk Management Instruments (guarantee; insurance)
• Carbon offset flows
• Grants
• Concessional loans
• Capital (equity, debt financing)
Financial planning systems
• Institutional arrangements
• Budget and planning systems (budget code; MTEF)
• Financial planning tools
Uses & Users of climate finance
• Types of action: adaptation, mitigation, resilience, green economy
• Type of access: private sector, public sector, civil society organisations
Instruments for mobilising, managing and disbursing climate finance
Source Intermediary
Instrument Use & Users
FINANCING CRGE: TRENDS IN DESIGN CHOICES
International and national public finance
International and national private finance
Carbon finance
Multiple financial intermediaries{National financial institutions}
National CC Funds {programmatic financing}
Mix of economic and financial instruments
Financial instruments to match investment needs
Sequencing in deployment
Types of action: adaptation, mitigation, resilience, green economy
Type of access: private sector, public sector, civil society organisations
Planning systems
Financial Policy Legislation & Operational manuals
Institutional arrangementsFinancial management: Bangladesh, Ethiopia, IndiaResource allocation: Bangladesh, Rwanda
Planning and budgetingNepal CC Budget Rwanda on-budget
Rwanda: Phased & targeted approach to choice of intermediary
FONERWA: Public entity (MINIRENA)-Development Bank-Venture capital fund
Ethiopia: IRM
Rwanda: Sequenced approach to deployment of instruments0-1: Grants & performance-based grants2-5: guarantee; concessional loans>5: equity investment
1. Merged objectives at national level: How can money targeted at mitigation ensure adaptation co-benefits
2. Public finance (ODA) plays a key role in supporting investment into adaptation
3. Choose intermediaries that have the potential to leverage additional financial resources and disburse to identified investors and investments
4. Support economic and financial instruments that will incentivise investment into adaptation {look for sequencing}
5. Support financial planning systems that leverage synergy in investment outcomes 1. Build on institutions with existing mandates and capacity 2. Use budget and planning systems
DEVELOPMENT COOPERATION AND ADAPTATION
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