FOCUS: AdaptationFunding sources available and

how to access themLouis Perroy, ClimatEkos

30 August 2011, Vientiane, Lao PDR

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

What is climate change adaptation?

‘The adjustment in natural or human systems in response to actual or expected climatic effects, which moderates harm or exploits beneficial opportunities’

IPCC Glossary

What does it mean?•Climate change will have impacts on both natural and human systems;•Impacts are expected to be largely negative;•Climate change adaptation consists in taking initiatives and measures to make both natural and human systems less vulnerable to those impacts.

Climate change adaptation glossary

• Impacts of climate change: The effects of climate change on natural and human systems. The effects may be direct (e.g., a change in crop yield) or indirect (e.g., damages caused by an increase in the frequency of coastal flooding due to sea-level rise).

• Vulnerability: The degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change. Vulnerability is a function of the character, magnitude, and rate of climate change and variation to which a system is exposed, its sensitivity, its resilience, and its adaptive capacity. Adaptation aims to reduce vulnerability.

• Adaptive capacity: The ability of a system to adjust to climate change by taking adaptation measures that moderate potential damages, take advantage of opportunities, and cope with the consequences (e.g., the access to technology and know-how for changing farming systems).

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

Impacts of climate change and possibilities for adaptation actions

Vulnerabilities Possibilities for adaptation actions (examples)

1) Coastal zones sea level rise•Vulnerability of coastal lands to storms• grounds and fresh water salination in coastal zones• Coastal Erosion•Vulnerability of housings

•Plantation of mangrove or other tree types along the coast•Building dikes (polders)•Fresh water management•Coastal agriculture management (crops more resistant to salt)

2) catastrophic events (sudden climatic malfunction)• Storms, hurricanes• Heat waves, sudden droughts.• Flooding

•Analysis and management of zones liable to flooding•Water management•Meteorological forecast and warning systems•Plantation of short rotation forests in zones vulnerable to winds•Use of insurance scheme when possible

3) long term impacts (progressive climatic malfunction)•progressive warming of weather•Progressively lower precipitations in some regions and more intense precipitations on shorter periods in other regions.

•Management of agricultural and cattle breeding practices• houses insulation•Water management (better conservation and use)•Modifications of agricultural practices (types of crops…)•Reforestation•Adaptation corridors for the ecosystems and biodiversity conservation

Impacts of climate change on the agricultural, forestry and

land use sectorPhenomenon Examples of impactsOver most land areas, warmer and fewer cold days and nights, warmer and more frequent hot days and nights

Increased yields in colder environments; decreased yields in warmer environments; increased weed and insect pests and disease outbreaks

Warm spells/heat waves. Frequency increases over most land areas

Reduced yields in warmer regions due to heat stress; increased danger of wildfire

Changes in precipitation events. Frequency of heavy precipitation events increases over most areas

Damage to crops; soil erosion, inability to cultivate land due to water-logging of soils

Area affected by drought increases Land degradation; lower yields/crop damage and failure; increased livestock deaths; increased risk of wildfire

Increase in extreme weather events such as hail. Intense tropical cyclone activity increases

Damage to crops; wind-throw of trees

Increased incidence of extreme high sea level (excludes tsunamis)

Salinisation of irrigation water

Vulnerability of the agricultural, forestry and land use sector to climate change

• Climate change vulnerability can be exacerbated by other stresses such as poverty and unequal access to resources, food insecurity and conflicts

• Farmers and those dependant on forests and their products in developing countries, and especially in the least developed countries are therefore likely to be among the most vulnerable to the impacts of climate change

• Future vulnerability will depend largely on the chosen development pathway of those countries

Adaptation in the agricultural, forestry and land use sector to

climate changeExamples of autonomous adaptation Examples of planned adaptation• Changing inputs such as crop varieties and

species in favour of inputs with increased resistance to heat and drought

• Incorporate and integrate additional information, technologes and investments, infrastructures and institutions with the decision-making environment

• Increasing the use of technologies that ‘harvest’ water to conserve moisture in the soil and crops; make a more efficient use of water in areas where rainfall has decreased

• Set up safety nets and enable cash transfers; develop insurance policies that poor households can afford

• Diversifying income by integrating additional activities into farming such as livestock raising, or by seeking other market opportunities

• Develop a planned approach to include many forms of land use and land use change, new cultivation practices, new seed varieties etc

• Improving the effectiveness of pest, disease and weed management practices through, for example, breeding crop varieties that are resistant to pests and diseases

• Include an appropriate incentive structure, such as targeted payments for environmental services, to encourage farmers to engage in adaptation activities that at the same time lead to climate change mitigation.

Adaptation meets Mitigation of climate change

Within the Agriculture and LUCF numerous Adaptation projects are also Mitigation projects:

• This is the case for Advantages of using Mitigation projects for Adaptation

purpose:• Complement finances (faster?!)• Improve the MRV of the projects and therefore conforts

donors,

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

Adaptation in the global climate change discussions

UNFCCC and Kyoto Protocol: • All Parties shall:• ‘Formulate, implement, publish and regularly update national and, where

appropriate, regional programmes containing measures to mitigate climate change […], and measures to facilitate adequate adaptation to climate change’; (UNFCCC, Art. 4.1b; KP, Art 10b)

• ‘Cooperate in preparing for adaptation to the impacts of climate change’; (4.1.e)

• ‘The developed country Parties […] shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects’; (UNFCCC, Art 4.4; similar in KP, Art. 12.8)

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

National Adaptation Programmes of Action

• Established by the Parties to the UNFCCC when negotiating the adaptation funds

• Provide a process for countries to identify priority activities that respond to their urgent needs with regards to climate change adaptation

• First step towards accessing funding from one of the adaptation funds (LDCF)

• Document prepared by authorities in least developed country (usually Ministry of Environment) with the help of usually UNDP, GEF and consultants, and funds from the Least Developed Countries Fund (LDCF)

• Focus on adaptive capacity to climate change variability• Take into account existing coping strategies and build upon those to identify

priority activities• Include short profiles of projects/activities to address immediate adaptation

needs of that country

So far, 45 least developed countries have submitted their NAPAs to the UNFCCC; including Cambodia and Lao PDR.

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

Potential sources of adaptation funding

- UNFCCC Funds- Special Climate Change Fund (SCCF)- Least Developed Countries Fund (LDCF)- Adaptation Fund (AF)

- Other Bi-lateral and multi-lateral funding, such as- Climate Change Adaptation in Africa (CCAA)- GEF Small Grants Programme (SGP)- Global Facility for Disaster Reduction and Recovery (GFDRR)

- Private sector funding

Sources of adaptation funding

In addition to ODA financing comes from numerous climate funds, such as

• Dedicated funds: Global Environment Facility’s (GEF) Trust Fund, Special Climate Change Fund (SCCF), Least Developed Country Fund (LDCF), the Adaptation Fund, Clean Technology Fund (CTF), Strategic Climate Fund (SCF), Asian Development Fund (ADF);

• Multilateral development institutions such as: Asian Development Bank (ADB),

• Multilateral financial Institutions: International Fund for Agricultural Development (IFAD), European Commission (EC), World Bank (WB),

• Bilateral organizations: United States Agency for International Development (USAID), The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Swiss Agency for Development and Cooperation (SDC), Swedish International Development Cooperation Agency (SIDA), Danish International Development Agency (DANIDA), Japan International Cooperation Agency (JICA), Korea International Cooperation Agency (KOIKA), governments of Finland and the Netherlands, French Agence Française de Developpement (AFD).

Sources of adaptation funding

• Financing of adaptation initiatives have also been done directly by the UN, and by the private sector.

• The majority of financing comes in form of grants, technical assistance, and loans.

• Majority of the initiatives involves two or more financing mechanisms, with a share of country participation, as well.

• The region will also be targeted with financing from the emerging global Green Fund, and many other mechanisms in the future.

An up to date, exhaustive list of such funds can be found from:http://www.climatefundsupdate.org/listing/hatoyama-Initiativehttp://www.climatefinanceoptions.org/cfo/Funding%20Sources

UNFCCC Funds - SCCF• Objective:

– Implement long-term adaptation measures that increase the resilience of national development sectors to the impacts of climate change

• Administrator: GEF• Eligibility:

– All Non-Annex 1 countries are eligible to apply for funding under the SCCF, although the most vulnerable countries in Africa, Asia and the Small Island Developing States (SIDS) are given priority

• Status: – USD 148 million pledged to the SCCF, of which USD 110.48 deposited

(as of May 2010).– USD 105 million have been allocated to 30 approved projects (as of

January 2011)• South East Asia relevance:

– Potential source of adaptation funding– Thailand:

Strengthening the Capacity of Vulnerable Coastal Communities to Address the Risk of Climate Change and Extreme Weather Events

UNFCCC Funds - LDCF

• Objective: – Address the special needs of the Least Developed Countries which are

especially vulnerable to the adverse impacts of climate change , including preparing and implementing the NAPAs

• Administrator: GEF• Eligibility:

– All least developed countries are eligible to apply for funding under the LDCF. Funding is disbursed based on a series of criteria drawn from the COP guidance

• Status: – USD 221 million pledged, of which USD 169 million deposited (as of

May 2010)– USD 147 million have been allocated to 94 approved projects, including

the preparation of 48 NAPAs (as of January 2011)• South East Asia relevance – • Relevant to South East Asia, including 2 NAPAs

UNFCCC Funds – LDCFrelevance to SE Asia

Cambodia: Strengthening the adaptive capacity and resilience of rural communities using micro watershed approaches to climate change and variability to attain sustainable food securityLao PDR: Effective Governance for Small Scale Rural Infrastructure and Disaster Preparedness in a Changing ClimateCambodia: Vulnerability Assessment and Adaptation Programme for Climate Change in the Coastal Zone of Cambodia Considering Livelihood Improvement and EcosystemsLao PDR: Improving the Resilience of the Agriculture Sector in LAO PDR to Climate Change Impacts

UNFCCC Funds – Adaptation Fund• Objective:

– Finance projects that will provide concrete support to adaptation activities that reduce the adverse effects of climate change facing communities, countries and sectors

• Administrator: Adaptation Fund Board• Eligibility:

– Kyoto Protocol Parties that are particularly vulnerable to climate change impacts, such as low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems

• Status: – Roughly USD 250 million, including ~USD 150 million from the sale of

CERs (2%), ~USD 100 million from donor countries, + some investment income

• Central Africa relevance:– Potential source of adaptation funding– No projects financed in the sub-region to date, only nine projects financed

to date in total

Other bi-lateral and multi-lateral funding

GEF Funds Focus Areas Volume pledged Status Eligibility Projects funded in

sub-region

GEF Small Grants Programme (SGP)

Activities of non-governmental and community-based organizations in developing countries in five focal areas including adaptation

N/A

USD $247m disbursed so far in 9,500 grants. Open for project ideas

Countries that ratified both the UNFCCC and CBD

Numerous adaptation specific projects in the region

Global Facility for Disaster Reduction and Recovery (GFDRR)

Improve the ability of low and middle income countries to respond and manage disaster reduction and recovery, including adapting to climate change

N/A N/ALow and middle income countries

Lao PDR, Cambodia and Vietnam are on the list of targeted countries.

Others

Adaptation Private Sector Initiative

• The “Adaptation Private Sector Initiative” (UNFCCC initiative) aims to catalyze the involvement of the private sector in the wider adaptation community

• It provides a platform for business to further engage with adaptation in order to address three threads of work• Contribution that the private sector is making and can make to

adaptation• The contribution that international organizations and governments can

make to the adaptation of affected businesses• The strategies that should be put in place by business in ensuring that

their own adaptation efforts are sustainable • Activities carried out by these companies span a variety of businesses and sectors,

including insurance industry, consultancies, environmental management, infrastructure and transportation sector, water sector and financial sector, and are described in more detail below.

• 33 companies have so far joined this initiative, including Allianz, Caisse des Depots, Deutsche Bahn, McKinsey, PwC…

Content

• Definition of climate change adaptation• Climate change impacts, vulnerability and

adaptation options• Adaptation and the global climate change regime• National Adaptation Programmes of Action (NAPAs)• Adaptation funding• Outlook for post-2012

Adaptation in the Cancun climate talks

The Cancun Agreements for adaptation:• Creation of a new Climate Adaptation Framework and associated

Adaptation Committee– Raise the importance of adaptation in the UNFCCC agenda– Should make a more coherent, action-oriented treatment of adaptation possible

• Identification of a broad set of priority areas for action on adaptation:– The development of plans, projects and programmes;– Strengthening institutions;– Improving research, observation and information management systems;– Impact, vulnerability and financial needs assessment;– Adaptation technology

• Establishment of a ‘Green Fund’

Remaining unresolved issues:• Allocation of adaptation finance among developing countries

– Fast-start finance priority to the most ‘vulnerable countries’ (LDCs and countries in Asia)– Long-term finance (e.g. from Green Fund) to ‘most vulnerable countries’ (= not defined!)

Green Fund• Country ownership in the context of CC adaptation finance entails a strong role

for governments. • In many cases the adaptation finance is often channeled around governments,

through multiple and poorly coordinated channels, and without alignment with national adaptation or development plans or investments aiming at enhancing national capacity. The plan of the new Green Climate Fund (GCF) particularly is to make countries the drivers for the use of funding.

• COP16 in Cancun formalized the commitment made by developed countries in Copenhagen to mobilize USD 100 billion a year by 2020 to address developing countries mitigation and adaptation needs.

• Large parts of these funds will be administered by a newly created ‘Green Fund’, to simplify the complicated funding mechanisms and bilateral agreements

Green Fund• Many details of the Green Fund still remain to be clarified, but It has already

been decided that the board governing it will be composed of an equal portion of developed and developing country members.

• The Green Fund could potentially constitute a great opportunity to finance climate change adaptation in SE Asia.

• The Green Climate Fund will support projects, programmes, policies and other activities in developing country Parties using thematic funding windows

• However, the Green Fund shall only help to disburse the $100 billion a year by 2020 but is not designed to raise them. The funding is supposed to come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources.

KEEP AN EYE OPEN FOR FURTHER DEVELOPMENTS AT THE COP IN DURBAN!

Thank You!

Louis PerroySenior Partner and CFOClimatEkosLouis.perroy@climatekos.com