Assessing Investment & Financial flows for Adaptation in the LAND-USE CHANGE Sector

UNDP I&FF Methodology Guidebook: Adaptation

Relevance of the Land-use change sector

In terms of the national GHG inventories forestry mitigation options belong to the AFOLU sector, namely Agriculture, Forestry and Other Land Uses

Previously, forestry options were included in the LULUCF sector (Land Use, Land Use Change & Forestry)

This presentation considers both forest-based mitigation options: Those integrated in the current mitigation regime (LULUCF in the Kyoto Protocol) & those under discussion in the negotiation process for a post 2012 climate change mitigation regime

In Namibia, LULUCF accounts for 10 560 Year 2000 Carbon Dioxide Equivalent Removal (Gg)

Characteristics of the Land-use change sector in Namibia

Agriculture is dominated by livestock production & dry-land crop production & contributed 5.6% of the GDP (2000), of which almost 90% was from the production of cattle and small stock

Majority of Namibians depend on subsistence agriculture, farming pearl millet, sorghum, livestock & fruit. Commercial crop production includes maize, pearl millet, sunflowers & wheat. Grapes, vegetables & dates are grown under irrigation where water from rivers, dams or artesian water sources is available

Forest & wood resources are used under permit control

Define scope for the assessment Define the institutional framework Specify the time horizon for the

analysis: 2005-2030 recommended, base year 2005 recommended

Build on existing model for the sector where possible

1. Establish key parameters of the assessment

Define boundaries for the assessment1. Establish key parameters of assessment

Decision needed - What will be included in the sector?

Agriculture? – What exactly? Livestock / crop production? Only production or also processing of

products? Irrigation? …

Scoping the land-use change sector

Define boundaries for the assessment1. Establish key parameters of assessment

Decision needed - What will be included in the sector?

Forestry? – What exactly? Managed / unmanaged forest? Plantations? Soils? …

Scoping the land-use change sector

Define boundaries for the assessment1. Establish key parameters of assessment

Decision needed - What will be included in the sector?

Tourism? – What exactly? Scoping by infrastructure: Hotels etc. Scoping by type of tourism: Safari tourism,

cultural tourism etc. …

Scoping the land-use change sector

Data collection, rely on national accounts data The System of National Accounts (SNA) constitutes the

primary source of information about the economy Systems of integrated environmental and economic

accounts (SEEA) were developed to address statistical gaps Other sources: National agricultural & forestry plans,

National Communications etc.

2. Compile historical I&FF data and other input data for scenarios

2. Compile historical I&FF data and other input data for

scenarios

Data collection, rely on national accounts data

Data sources complementing national sources

Agriculture: http://faostat.fao.org/site/291/default.aspxhttp://www.fao.org/nr/water/aquastat/main/ index.stm

Forestry:http://www.fao.org/forestry/fra/enhttp://faostat.fao.org/default.aspxhttp://www.fao.org/statistics/countrystat/

2. Compile historical I&FF data and other input data for

scenarios

Examples of I&FF in the land-use change sector

Type of flow

Type of physical asset

Investment flows

Agricultural & forestal developmentAgricultural & forestal land resources & water resourcesAgricultural & forestal inputsFood crop & cash crop production, collection of foresty goodsLivestock & gameAgricultural & forestal alternative development

Financial flows

Agricultural extension & reformPolicy & planningEducation/trainingAgricultural & forestry research & servicesPlant/post-harvest protection & pest controlAgricultural financial servicesAgricultural co-operativesLivestock/veterinary services, forest management, soil management

Define the physical basis for the Baseline Scenario

A baseline scenario: description of what is likely to occur in the absence of ADDITIONAL policies to address climate change; expected socioeconomic trends (e.g., population growth & eating habits), technological change (if relevant), and expected business-as-usual investments in the sector

3. Define Baseline Scenario

3. Define baseline scenario

Baseline scenario reflects Current sectoral and national plans Expected socioeconomic trends Expected investments in the subsectors

Information should be disaggregated by Year (starting 10 years before the assessment’s

Base Year) Source (by corporations and government) Type (national funds, foreign direct investment,

official development assistance)

Define baseline scenario

3. Define baseline scenario

Important to be considered when developing scenarios on the LULUCF sector in Namibia

Large amount of uncertainty associated with the LULUCF sector due to the following reasons: The LUCF IPCC category, compared to the

other IPCC categories, has the highest level of uncertainty associated with the default methodology and values provided

Very limited country-specific data on the following are available.

Define baseline scenario

3. Define baseline scenario

Define baseline scenario

Type of flow Type of physical asset

Official development assistance ($) Investment ($)

Bilateral Multilateral

Private

Government

Investment flows

Livestock production        

Crop products

Fuel wood/charcoal development        

Management for promoting environmental services (e.g. enhancements of sinks)

Enterprise development

Infrastructure (including GIS systems, road infrastructure)

Financial flows

Policy & Institutional management        

Forest protection

Research activities        

Ecosystem services        

Education and training        

Compile annual estimates, disaggregated by investment entity, source, investment flow type, and financial flow type

Calculate the total investment cost in real, unannualized terms over the planning period.

Estimate annual investment costs associated with the new plan

Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds)

4. Derive I&FF for baseline scenario

4. Derive I&FF for baseline

scenarioEstimate current I&FF for the sector

Category of entity

Source of funds

Iinfrastruc-ture

Orga-nic mat. & ferti-lizers

Equip-ment

La-bor

Re-sea-rch

Exten-sion servi-ces

Total

Households

Equity and debt

Government support (subsidies)

Corporations

Domestic equity

Foreign investment

Domestic debt

Foreign borrowing

Government support

Foreign aid (ODA)*

Governments

Domestic funds (budgetary)

Foreign borrowing (loans)

Foreign aid (ODA)*

Total

Adaptation scenario: a description of what is likely to occur in the sector, over the assessment period, in the presence of additional policies to address climate change

Outcomes from local national strategies The adaptation scenario should include previously

identified adaptation options, such as those used in a national communication or in a national NAPA.

5. Define Adaptation scenario

5. Define adaptation

scenarioAdaptation options in the land-use change sector

Type of Measure

Component of LULUCF Sector

Adaptation Measure

Field-level Crop Production

Change crop species/varieties

Moisture management/irrigation …

Animal Production

Change animal species/breeds

Change in animal management …

Forest management

Management of natural areas

Soil management

Research, education, assistance, infrastructure, institutional

Sector-wide Research, extension and training

Forecasting and disaster management

…

Example for adaptation options in the field of

land-use change

5. Define adaptation

scenarioAdaptation options in the land-use change sector

Adaptation options in the LULUCF sector in Namibia

Mainstreaming CCA in national policy Land use planning and promotion of

climate compatible land uses and associated production systems

Prevention of land degradation and rehabilitation

Identifying key infrastructure and development investments that require “climate change proofing”

Upscaling EWS and generally improving information on CC and CCA

5. Define adaptation

scenarioAdaptation options in the land-use change sector

Examples of land and resource management options

Crop, forage and tree species/varieties Livestock, game and fish species/breeds Crop and tree management Livestock, game, aquaculture and wild

fish management Moisture management, irrigation and

soil & water conservation Pest and disease management Management of natural areas Fire management

Compile annual estimates, disaggregated by investment entity, source, investment flow type, and financial flow type

Estimate annual investment costs associated with the alternative management plan

Calculate the total investment cost in real, unannualized terms over the planning period

Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds)

6. Derive I&FF for Adaptation Scenario

Projecting investments6. Derive I&FF for adaptation

scenario

Adding costs to adaptation scenarioCumulative

investment(2005-2030)

Funding entity category Source of funds

(billion 2005 $) (%)

Households Equity and debt

Governments

Domestic funds (budgetary)    Foreign borrowing (loans)    Foreign aid (ODA)    

Corporations

Domestic equity    Foreign investment    Domestic debt    Foreign borrowing    Government support    Foreign aid (ODA)    Total    

Subtract the baseline annual I&FF, by entity and source, from the annual adaptation I&FF, by entity and source

Subtraction of the Baseline Scenario from the Adaptation Scenario

Sum incremental amounts over all years, by entity and source

7. Estimate changes in annual I&FF needed to implement adaptation

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Subtract the baseline annual I&FF from the adaptation annual I&FF

7. Estimate changes in

annual I&FF needed to implement adaptation

For each chosen land-use change adaptation option, the analysis should identify the incremental investment (total dollars) by source (domestic funds, ODA, FDI etc.) up through 2030 to support the respective land-use change management option

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Summarizing incremental investments

7. Estimate changes in annual I&FF

needed to implement adaptation

Investment (billion 2005 $)Cumulative (2005-2030)

IncrementalFunding entity category Source of funds

Baseline scenario

Adaptation Scenario

HouseholdsEquity and debt

Baseline value

Adaptation value

Baseline minus Adaptation value

Governments

Domestic funds (budgetary)Foreign borrowing (loans) … … …Foreign aid (ODA) … … …

Corporations

Domestic equity … .. …Foreign investment … … …Domestic debt … … …Foreign borrowing … … …Government support … … …Foreign aid (ODA) … … …Total

Sum(Baseline)

Sum (Adaptation)

Sum (Baseline minus Adaptation)

Determine policy instruments and measures to encourage changes in I&FF

Identify the entities that are responsible for the significant incremental changes in I&FF

Determine the predominant sources of their funds, particularly important to distinguish between public and private sources of finance

8. Evaluate policy implications

Assess policy options and summarize the projected I&FF for the key sector

8. Evaluate policy

implications

Public sector policies on land-use change are likely to be needed to induce the relevant entities to implement the proposed measures

Adaptation can occur quickly in some sectors, but is slower in sectors with long-lived infrastructure

These characteristics suggest a mix of adaptation policies

For more information on synthesizing results, documentation & the completion of the report, please refer to the Reporting Guidelines

9. Synthesize results and complete report

Q&A CLARIFICATIONS

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