Transcript Climate Finance: Challenges and Opportunities

Financing – Mobilizing Finance for
Adaptation in the Water Sector
Water Day
UNFCCC – Bonn intersessional meetings
The Nature Conservancy
June, 2010
Outline

TNC and Climate Change

Climate Finance: overall picture



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
Needs & Distribution of Responsibilities
Sources, Agents & Channels
Types of Financial Instruments
Fast-start Finance: why is it important
On the ground: Water Funds in Northern Andes
Why Climate Change Matters to
The Nature Conservancy?
“Every acre of land and mile of coast protected by
The Nature Conservancy, every state and nation
where we work, will be affected by climate change.
The Nature Conservancy’s commitment to mission
compels us to act. Our science, reputation and
experience call us to lead.”
Outline

TNC and Climate Change

Climate Finance: overall picture





Needs & Distribution of Responsibilities
Sources, Agents & Channels
Types of Financial Instruments
Fast-start Finance: why is it important?
On the ground: Water Funds in Northern Andes
Needs & Distribution of
Responsibilities
 Distribution of Responsibilities
Source: KfW Analysis based on EU COM – SEC, 2009
Sources, Agents & Channels
Source: SEI, 2009
Types of Financial Instruments
 Different ‘pots’ of finance available by
i n s t i t u ti o n s c a n b e a r r a n g e d b y :
 Grants
 Lending
 Equity
 Credit Lines
 Carbon Finance and other environmental services
Fast-start Finance:
Why is it important?
 Jumpstart action on climate change
 B u i l d s m o m e n t u m i n c l i m a t e n e g o t i a t i o ns
 Brings to forefront structural gaps:



Donor countries: go beyond business as usual
financial structures
Recipient countries: institutional arrangement and
policy design
Lessons to be learned and applicable for post 2012
regime
Outline

TNC and Climate Change

Climate Finance: overall picture





Needs & Distribution of Responsibilities
Sources, Agents & Channels
Types of Financial Instruments
Fast-start Finance: why is it important
On the ground: Water Funds in Northern Andes
Water Fund Model & Mechanism
Users
Providers
$
Water
Fund
CLEAN
WATER
$
Water Fund Model & Mechanism
Water users
capitalize the fund
Fund
% of profits from the
water company,
electricity company
Financial
revenue
+
Donor Catalyst
Grants
+
Additional
resources of
projects
Watershed
protected
Conservation
programs and
projects
Quito Water Fund (FONAG)
Importance
Fund Progress
Conservation
Progress
Partners
• 2 million residents
• Condor Bioreserve: 2.5 million acres,
exceptional biodiversity, including 760 bird
species; 28 rivers
• 2000: $21,000 start-up
• 2008: $6,000,000
• 2008: provided $700,000 for conservation in
watersheds: park guards, environmental
education, sustainable livelihoods.
• EMPAAQ (Quito’s water agency); Quito Electric
Company; TNC; USAID; Swiss Development
Corporation; Cerveceria National (beer company);
Tesalia Springs Co.
Quito Water Fund (FONAG)
Importance
Fund Progress
Conservation
Progress
Partners
• 2 million residents
• Condor Bioreserve: 2.5 million acres,
exceptional biodiversity, including 760 bird
species; 28 rivers
• 2000: $21,000 start-up
• 2008: $6,000,000
• 2008: provided $700,000 for conservation in
watersheds: park guards, environmental
education, sustainable livelihoods.
• EMPAAQ (Quito’s water agency); Quito Electric
Company; TNC; USAID; Swiss Development
Corporation; Cerveceria National (beer company);
Tesalia Springs Co.
http://www.fonag.org.e
Why water funds and Protected Areas
are a good adaptation strategy?
Water Funds Multiple Benefits: Conservation, Social, Economic Adaptation
 Maintain regular water supply
•Conserving ecosystems that are biologically adapted to store and regulate water release
 Maintain Integrity and Resilience of the ecosystems and watershed system
•PA and landscape focus – improved connectivity, threat abatement (cattle ranching), soil stabilization
 Enhance people’s resilience to change
•Best management practices on productive systems (soil stability-fertility-water retention, etc)
•Income diversification
Why water funds are a good
adaptation strategy?
Water Funds Multiple Benefits: Conservation, Social, Economic Adaptation
 Economic Benefits
Cost-effectiveness (ex. sedimentation costs)
Ensuring viability of economic development (ex. sugarcane industry)
 Multi-sectoral Governance Structure
•Decision-making board that includes representatives from multiple user groups of water resources
•Long term mechanism – good framework to work on climate change
Water fund / EBA Proof of Concept
“Agua para La Vida Fund”
EAST CAUCA VALLEY NEAR CALI, COLOMBIA
WATERSHEDS: TULUÁ-MORALES, NIMA, AMAIME, BOLO, DESBARATADO, FRAYLE,
GUABAS, PALO AND ZABALETAS EN EL DEPARTAMENTO DEL VALLE DEL CAUCA
(CUENCA DEL MAGDALENA) – PARQUE NACIONAL LAS HERMOSAS