Transcript Investment and financial flows needed for adaptation

Financing Adaptation in the
Water Sector
Water and Climate Change Adaptation
Workshop
Sandra Valencia
Sustainable Energy & Climate Change Unit
March 22nd, 2011
Port of Spain, Trinidad and Tobago
Investments and financial flows needed for adaptation
Sector
Costs for developing countries
(US$bn per annum by 2030)
Agriculture
7
Globally: Several tens of billion $ per
year will be required for adaptation
(estimates between 40 to 170 billion $
globally by 2030)*
Water
9
 Amounts are large in absolute terms,
Human Health
5

Coastal Zones
4
Infrastructure
2-41
TOTAL
27-66

but small relative to global GDP and
investment
Existing climate change funds would
need to be enhanced at a greater scale
Creating a safe future with climate
change will require:
 Shifts in investment patterns,
 Scaling up funding,
 Optimizing the allocation of
existing funds.
*Source: UNFCCC, Assessing the costs of adaptation to climate change;
a review of the UNFCC and other recent estimates, 2009
Difficulties and limitations in estimating the exact costs
of adaptation
• Differences in adaptive capacity between countries
• Most adaptation measures must be implemented not only in the
context of climate change
• Uncertainties associated with the methods used to calculate costs of
adaptation
• The existence of an adaptation “deficit ”
Funding for adaptation for developing countries
•
UNFCCC Funds:
 GEF:

Enabling activities: adaptation in the context of national
communications

SPA (funding as part of the GEF trust fund - projects shall have global
benefit
 Special Funds under the Convention:

SCCF

LDCF
 Adaptation Fund under the KP
 Green Climate Fund
• Multilateral Funds:
 Climate Investment Funds, MDBs (example of SECCI at IDB), etc.
• Bilateral Funds
• Other UN Conventions
 Wetlands – Ramsar Convention- Wetlands for the Future Fund
 a Small Grants Fund for Wetland Conservation and Wise Use
• Risk transfer Mechanisms
Decisions tend to identify SIDS, LDCs and Africa as most vulnerable and
priority countries for finance
Special Climate Change Fund (SCCF)
Eligibility and framework to allocate
funds
Governance
Support
services
All developing countries that are Party
to the Convention
Council under
the GEF
Implementation Source and
levels of
funds
Through GEF
framework –
implementing
GEF secretariat
SCCF priority is adaptation planning and
agencies
/
measures in climate-sensitive sectors.
GEF
implementing
Co-financing required
and executing
agencies
Voluntary
contributions
by donors
About $ 100
million
pledged
Least Developed Country Fund (LDCF)
Eligibility and framework to allocate
funds
Governance
Support
services
Under LDCF, LDCs receive support for
the preparation of NAPAs as a
framework for further funding of
immediate needs
Council under
the GEF
Prioritizes “urgent and immediate”
adaptation needs
Supports priority NAPA activity
implementation.
Implementation Source and
levels of funds
Through GEF
framework –
implementing
GEF secretariat
agencies
GEF
implementing
and executing
agencies
Voluntary
contributions
by donors
About $200
million
pledged
SCCF and LDCF – Lessons learned
•
Experience in designing climate change projects in relation to the development
baseline.
•
Delivering funding through the GEF-managed SCCF and LDCF has been challenging, but
has resulted in enhanced national capacity to identify climate change risks and develop
projects that complement baseline development activities.
•
Linking climate change risks with development challenges requires experience that is
often limited.
•
Climate change risks must be translated into the context and language of existing
management challenges to have greatest resonance with stakeholders.
SCCF and LDCF - Lessons learned
•
Project proponents draw heavily on existing climate change assessments such as
NAPAs and NCs for developing adaptation projects and initiatives, but there are
limitations to their usefulness.
•
A critical role for development agencies lies in establishing relationships and brokering
consultations among actors in climate risk management that may not be familiar
collaborators.
•
Stakeholder-determined adaptation responses are not always the most appropriate
middle- to longer-term adaptation strategies.
•
Existing adaptation deficits and maladaptation to climate risks pose major hurdles to
managing climate change risks – there is a clear need for integrated approaches, and
for government agencies to work collaboratively on development challenges linked by
climate.
Adaptation Fund
Eligibility and framework to allocate funds
Governance
Support
services
Adaptation
Fund Board
All developing countries that are Party to the Kyoto
Protocol
Concrete adaptation projects or programs
Allocation of resources take into account:
GEF secretariat
• Level of vulnerability
• Level of urgency and risks arising from delay
World Bank as
• Ensuring access to the fund in a balanced and
trustee
equitable manner
• Lessons learned in project and program design and
implementation to be captured
• Securing regional co-benefits to the extent
possible, where applicable
• Maximizing multi-sectoral or cross-sectoral
benefits
• Adaptive capacity to adverse effects of climate
change
Implementation
Through
“Accredited
executing
agencies”
“Direct access” to
National
Implementing
Entities (NIE)
Source and
levels of funds
2 % share of
proceeds of
CDM
Voluntary
contributions by
donors
Depending on
quantity and
price of CERs
(until 2012).
Assumingly
$ 80−300 million
per year
Fast-start 2010-2012
US$ 30 billion/ year
Criteria
Balanced funding
between adaptation
and mitigation
EU member states & EU Commission:
EUR 2.2 billion mobilized towards its
2010
New
Countries such as UK & USA counting
previous commitments to CIF
Additional
Funds should be additional to
development aid
Disbursement through
international
institutions
Most vulnerable
developing countries
prioritized
Source: WRI
EU pledges 2010
16.4%
Mitigation
48.1%
33.4%
Adaptation
REDD+
- pledges are clear, their delivery is
uncertain
- CIFs and GEF are the primary
multilateral institutions of choice
least developed countries, small
island developing States and Africa
http://www.faststartfinance.org/
Green Climate Fund
Decision from Cancun Negotiations 2010
Transition Committee
The GCF
In charge of developing the operational
documents and making recommendations to
the COP in Durban
Fund Board: equal representation of developed and
developing countries
25 developing countries and 15 developed
countries
Fund Board: 24-member board - who will be part of
the board?
Tasks:
• Legal and institutional arrangements
• Fund Board Rules of Procedure
• Financial instruments, funding windows
and access modalities
• Complementarity with other funds and
institutions
• Role of secretariat
• Independent performance evaluation
• Standards, safeguards and accountability
• Expert and technical advice mechanisms
• Stakeholder input and participation
Capacity to provide “direct access” to national
institutions, without the intervention of
international implementing agencies
Trustee with competence to administer the fund
and adhere to fiduciary standards:
• WB invited to serve as interim Trustee subject to
review after three years
A Standing Committee has also been established to
ensure the Fund does not sit empty, by assisting the
COP in mobilizing financial resources and
measuring, reporting and verifying their delivery
Possible Sources of Funding for GCF
Source: Report of the Secretary-General’s High-level Advisory Group on Climate Change Financing,
2010.
CIF: Structure of the Funds
Climate Investment Funds (US$ 6.1 Billion)
Clean Technology Fund (CTF)
Strategic Climate Fund (SCF)
(US 5.1 Billion)
(US 1.0 Billion)
Objective: To promote investment in clean
energies
Pilot Program for Climate
Resilience (PPCR)
Objective: to support targeted programs
aimed at providing financing to pilot new
approaches at a specific climate change
challenge or sectoral response.
Forest Investment Program
(FIP)
Program for scaling-up
renewable energy in low
income countries (SREP)
PPCR – Caribbean Pilot
Activities will proceed along two tracks:
• Country-based investments in highly vulnerable countries: Haiti, Jamaica and four small
island states from the Organization of Eastern Caribbean States (Dominica, St. Lucia, St.
Vincent and the Grenadines, and Grenada)
• Region-wide activities: focused on climate monitoring, institutional strengthening,
capacity building and knowledge sharing
Implementation of a regional PPCR pilot should be
characterized by:
• Participating countries should share a similar range of
climate risks
• Enable pilot activities to focus on building responses
to climate threats of high relevance to region &
countries
• Build on existing collaboration on climate sensitive
development issues and/or regional programs
• Type of regional activities likely to depend on degree
of ongoing regional collaboration, capacities, and
degree of regional political support of an existing
regional institution
Jamaica
program
Haiti
program
Dominica
program
Regional
program
St. Lucia
program
St. Vincent &
Grenadines
program
Grenada
program
Bank Response and Lessons Learned
SECCI:
An effective initiative to identify opportunities
and channel assistance for climate mitigation
and adaptation activities
Has evolved into a critical tool for:
•
Mainstreaming CC into Bank
activities
•
Developing innovation and
policy instruments
•
Scaling-up financing for public
and private sector investments
Need to articulate better the SECCI support to Bank’s country
programming and investment instruments, and improve cross-sectoral
coordination
Case study: Peru- Olmos Project
IDB-NCAR Partnership
Olmos project: The project aims to promote
regional agricultural activity through the
development of cultivable lands in the Olmos
Region (Northwest Peru), by diverting water
from the Huancabamba river through a tunnel
across the Andes
IDB’s support: Assess the potential impacts of CC
and climate variability on the Olmos project and
provide the government with decision support
systems to manage the project under climate
uncertainties
Project Diagram
Main activities:
 Development of novel climate scenarios
developed through dynamical downscaling
using the WRF model, coupled to the land
surface model PARFLOW-Noah
 Results from climate scenarios will be used to
develop a water resource planning model of
the Olmos project –looking both at supply and
demand in an integrated decision support
planning process
 Training to technical staff of local govt on a
water evaluation and planning tool
Study is currently being developed by NCAR
AquaFund
Fund for innovative solutions in water and sanitation
Facilitates investment in:
• water supply and sanitation
• water resources management
• solid waste management
• wastewater treatment
Contributes to make these services
sustainable and accessible to the poor
Goal: Finance 100 cities and 3000 communities by 2011
Who is eligible to receive AquaFund grants?
National, sub-national, and local government entities, water and
sanitation service providers (public, private, mixed-capital, cooperatives),
and academic and research institutions are eligible. NGOs may be eligible
at the request of governments.
Sources of investment and financial flows
• Private sources of funding can be expected to cover a portion
of the adaptation costs in several sectors. In particular in the
Infrastructure sector where investment in privately own physical
assets would be needed.
• However, public resources are expected to play a
predominant role in all adaptation sectors.
• National measures will be needed to encourage/support
private sector adaptation and additional sources of funding
dedicated to adaptation will be needed.
18
THANK YOU!
www.iadb.org/secci
Sandra Valencia, [email protected]