Adaptation Fund

HistoryGovernance

FundingProgramsMeaning

Legal History

• COP3 (1997) – Conception: The Kyoto Protocol– KP must “assist developing country Parties … particularly vulnerable to

… climate change to meet the costs of adaptation."

• COP7 (2001) – Birth: The “Marrakech Accords” to the KP– “[T]he Adaptation Fund shall finance concrete adaptation projects.”

• COP13, CMP.3 (2007) – Christening: Bali Roadmap, Decision 1– Launches the AF into the world with structure and legal bona fides

Legal History• Late 2009: AF becomes operational

• Early 2010: AF approves its first projects– Senegal– Honduras– Nicaragua– Pakistan

• February 2011: host country Germany confers international legal personality status, allowing AF to:– Enter into contracts with recipients– Manage finances independently– Monetize CERs

AFB Governance• Adaptation Fund Board – 16 members

– Ten representing developing countries– Six representing developed countries

• Decision-making by consensus– Failing that, a 2/3 majority vote– One member = one vote

• All Board meetings are open to observers

• Board is weighted towards LDCs

Direct Access• Fund-recipient relationship designed to:

– Increase national involvement in adaptation– Increase national ownership of projects– Simplify and strengthen accountability to Fund

• NIE vs. MIE: Sophie’s Choice?– NIEs accredited: 3– MIEs accredited: 7– Cap on allocation to MIEs: 50%– No direct financing of NIE capacity-building

A Role for Civil Society?• National level

– Work with local communities in the project region– Arrange independent field visits– Promote dialogue between NIEs and national AF focal points– Advise and monitor NIE’s work and help in capacity-building

• International level– Attend meetings to observe performance of the AFB & AF – Submit written materials (letters, briefs, memos) to the AFB– Provide independent analysis of the AFB – Raise public awareness

Who Funds the Fund?

• Donations by Kyoto parties initiated funding— US$85.59 million donated— Largest Donation: Spain with US$57 million

• Mechanism for “independence” from donations— Two percent of Certified Emission Reductions (CERs)

through the Clean Development Mechanism (CDM)of the Kyoto Protocol (KP)

is transferred directly into the Adaptation Fund (AF).— CERs are then monetized by exchange on a carbon market

CERs and the MarketTOTAL CER ISSUANCE BY MONTH

CER PRICES SINCE MAY 2009

The Books

62%

38%

0.003%

Origin of Fund Monies

Sale of CERsDonationsInvestment Income

Total deposits as of 31 Jan 2011

Project Funding

• Board has approved US$23.72 million in projects and programs

• Board has endorsed projects worth $81.67 million

• Approved projects range in cost from $3.91M to $8.62M

• At March meeting, Board has $187 million in funding available for project approval

Program Review Process

Detailed application process, including a 50+ page proposal.

Four-step process, with an additional step for those projects using the one-step approval process, rather than the two-step process. 1. Country Eligibility

2. Project Eligibility3. Resource Availability4. Eligibility of NIE/MIE5. Implementation Arrangement

Program Review Process

AF Strategic Priorities specify a consideration of:• level of vulnerability• risks arising from delay• ensuring equitable access to the fund• lessons learned in project and program design• maximizing regional co-benefits • maximizing multi- or cross-sectoral benefits• adaptive capacity to the adverse effects of climate change

SenegalImplementing Entity: Centre de Suivi EcologiqueTotal project cost: $8.619 million

Program Objective:• Contribute to the implementation of Senegal’s National Adaptation Plan of

Action on Climate Change (NAPA)

Specific Objectives:• Protect coastal infrastructure from erosion • Fight salinization of agricultural lands (anti-salt dikes)• Assist coastal communities (esp. women) in handling fish processing operations • Communicate, sensitize, and train on best practices• Develop and implement appropriate regulations for coastal management

Additional Programs ApprovedHonduras – Addressing Climate Change Risks on Water Resources in

Honduras: Increased Systemic Resilience and Reduced Vulnerability of the Urban Poor• Implementing Entity: UNDP• Total project cost: $5.698 million

Nicaragua – Reduction of risks and vulnerability based on flooding and droughts in the Estero Real river watershed

• Implementing entity: UNDP• Total project cost: $5.5 million

Pakistan – Reduction of Risks and Vulnerability from Glacier Lake Outburst Floods in Northern Pakistan

• Implementing entity: UNDP• Total project cost: $3.9 million

Concepts Endorsed (not yet Approved)

Cook Islands –Integrated Climate Change Adaptation and Disaster Risk Management• Total project cost: $4.9 million

Ecuador –Adverse Effects of Climate Change on Food Security• Total project cost: $7.4 million

El Salvador –Infrastructure Development in San Salvador Metropolitan Area• Total project cost: $5.4 million

Georgia –Flood and Flash Food Management Practices to Protect Vulnerable Communities• Total project cost: $5.3 million

Maldives –Integrated Water Resource Management Programme• Total project cost: $8.9 million

Finding MeaningMONIES DISBURSED TO ADAPTATION-SPECIFIC PROJECTS

(Dedicated Bi- and Multilateral CC Funds, data as of 01/2011)

Since 2010

Fund ActivityTOTAL DEPO

SITS (USD M

ILLION

S)

FUND SIZE AS OF 02/2011

Now Some Ups and Downs

• NIEs and MIEs: numbers re proposals

The Good and the Less Good• Direct access model• Dominance of MIEs• Other ways to improve NIE accreditation?

– “Peer-to-peer” partnerships between accredited NIEs – Alternative sources of funding from bilateral streams for capacity-

building• AFB has not explicitly defined the role of CSOs in the project

application and approval process• Gender

– Project design & proposal– Direct vs. indirect access– Scale of projects (community vs. industrial / national)

More of the Same

• Incredibly speedy model: look how quickly projects have been funded

• What happens when the KP evaporates?

More - Legitimacy

• Developed countries favor existing institutions (think development banks)

• Developing countries prefer new institutions• Promoting direct access for developing countries– NIEs, e.g. Center for Ecological Monitoring in Senegal

• Funds drawn from proceeds of the CDM rather than contributions from developed countries

More - Money

• CER Price and Issuance Volatility• CER Market Security• Equitability in Project Funding– Country Cap, Regional Allowances, Individual Country

Characteristics?

• End of Kyoto

• No mechanism for equitable funding to date