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TRANSCRIPT
Financial and Inv’t Flows for Climate Action
in Developing Countries
Source: Atteridge et al. (2009). Bilateral Finance Institutions and Climate Change: A Mapping of Climate Portfolios, Stockholm
Environment Institute.2
A few main channels we are
describing here…
Financing Climate Change Adaptation
World Bank
GEF
Others
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Efficient combination of resources can
maximize and leverage public and
private sources
Each source may address different set
of needs, risks or barriers
GEF
Least Developed Country Fund
Special Climate Change Fund
The Adaptation Fund
The World Bank
Pilot Program for Climate Resilience
Global Facility for Disaster Reduction
& Recovery
Risk Instruments
IDA/IBRD
Other TF
DonorsRecipients
Pilot Program for Climate Change Resilience (PPCR)
Governance Structure
Unique governance structure of CIF Trust Funds (i.e. CTF and STF) fostering inclusion and consensus-based decision making
◦ Equal representation of donors and recipients
◦ a broad array of Observers
Implementing bodies: AfDB, ADB, EBRD, IDB, IBRD, and IFC
PPCR Subcommittee :
◦ Six donor and six recipient countries, plus a high-level representative of the Adaptation Fund Board
Objective
Help highly vulnerable countries pilot anddemonstrate ways to integrate climate riskand resilience into core developmentplanning (national and sectoral);
Funding public and private sectorinvestments identified in those plans;
Complementing other ongoing activities.
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Improved low carbon, climate resilient development
Improved integration of resilience into country
development strategies, plans, policies, etc
Increased capacity and consensus on
integration of climate resilience into country
strategies
Increased knowledge & awareness of CV & CC effects (e.g. CC modeling, CV impact,
adaptation options) among government / private sector / civil society
Investments (e.g., in agriculture, water,
coastal areas, infrastructure, etc)
Increased other public & private
sources of financing / investment
Capacity Building
Policy Reform / Development / Enabling Environment
New & additional resources supplementing existing ODA flows
Increased learning and knowledge about
climate vulnerability & adaptation
New & additional
resources for climate
resilience
Enhanced integration of learning / knowledge into climate resilience
development
Global - CIF Final Outcome(15-20 yrs)
Project/Program -PPCR Outputs & Outcomes(2-7 yrs)
Program –PPCR Inputs
Project/ Program-PPCR Activities(1-7 yrs)
CIF Program
InvestmentsKnowledge
Management
Increased resilience in investment
program/project specific agriculture, water, coastal areas,
priority infrastructure, etc
Country - PPCR Catalytic Replication Outcomes(5-10 yrs)
Improved institutional structure and
processes to respond to CV & CC
Scaled-up investments in resilience and
their replication
Regional level:Replication of PPCR
learning in non-PPCR countries
Country - PPCR Transformative Impact (10-15 yrs)
Improved quality of life of people living in areas most affected by climate variability (CV) & climate change (CC)
Increased resilience in economic, social, and eco-systems to CV & CC through transformed social and economic development
Leveraging
PPCR Logic Model – flexible FW to track progress on program level
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PPCR-Conditions and Eligibility Requirements
Country eligibility based on:
(a) ODA-eligibility (according to OECD/DAC guidelines); and
(b) an active MDB country program.
Priority to highly vulnerable Least Developed Countries eligible for MDB concessional funds, including the Small Island Developing States.
Fulfill the criteria of the respective trust funds.
Countries submit ‘country investment strategies’.
Financing processed through the MDBs selected by the country with the operations following their policies and procedures.
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Country Pilot Programs
Regional Pilot Programs
Bangladesh, Bolivia, Kingdom of Cambodia , Republic of Mozambique, Nepal, Republic of Niger, Republic of Tajikistan, Yemen, Zambia
Caribbean Dominica , Grenada , Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines Pacific Papua New Guinea, Samoa , Tonga
PPCR- Design/Process
Phase I
• Development of Strategic Program for Climate Resilience (SPCRs)
• Funding: Up to $1.5 million, with an advance grant of up to 25% of the request amount
Phase II
•Implementation of the SPCRs•Technical assistance •Investments to support climate resilient investments in key/priority sectors (such as agriculture, water management, infrastructure..)
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• PPCR provides both grants and highly concessional loans (equal or more than IDA terms), with significant portion expected to be in form of grants. Countries may choose to only access PPCR grant resources.
•Total Fund Deposited (as of Feb 2011): $ 305.85 mill•Grants:
Preparation Activities Preparation of SPCR: $ 1.5 mil max.Project preparation grants: No cap (included in envelope requested for SPCR)
AllocationCountry Pilots Allocation: USD 40-50 million per country Regional pilot programs allocation: USD 60-75 million per program
PPCR-Allocation of Resources
Concessional loans
Countries eligibility for borrowing, based on their financial and macro-economic circumstances:• Some eligible to borrow on standard MDB loan terms.• Some may access only subsidized credit through a variety of windows• Some eligible through country strategy assistance cycle for a mix of credit and grant financing• Some only eligible for grant financing.
•Countries' risk of debt distress is assessed
•MDBs will seek to use PPCR funds for concessional loans in private sector markets as well
Grants
$ 614 mill
Concessional Finance
$ 357.75 mill
Total Pledges
$971.75 mill
(as of Feb 2011)
PPCR- Project Example
The requested PPCR funds (US$50 million grant, US$60 million loans) will leverage an additional US$515 million from ADB and the World Bank
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Bangladesh SPCR
Investment Plan Components MDB Requested PPCR
Amount ($million)
Investment Project 1: Promoting Climate
Resilient Agriculture and Food Security IFC 13.1
Investment Project 2: Coastal Embankments
Improvement and Afforestation WB 25
Investment Project 3: Coastal Climate
Resilient Water Supply, Sanitation, and
Infrastructure Improvement
ADB 71
Technical Assistance 1: Climate Change
Capacity Building and Knowledge
Management
ADB 0.5
Technical Assistance 2: Feasibility Study for a
Pilot Program of Climate Resilient Housing in
the Coastal Region
IFC 0.4
GFDRR (Global Facility for Disaster Risk Management)
Structure
Administered by: The World Bank
3 tracks:
Track I – Global and Regional Cooperation
Track II- Disaster Risk Reduction Mainstreaming
Track III- Sustainable Recovery
Objective:
To help developing countries reduce their vulnerability to natural disasters and adapt to climate change
Total Amount: $258 million pledges and contributions (as of Dec 30, 2010)
Since GFDRR’s inception in 2006, more than $27 million or 2/3rd of financial assistance has primarily focused on climate change adaptation
Eligibility: From under $100,000 (individual grants) to over $1 million (country programmes)
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GFDRR – Project Example
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Fiji: Integrated Flood Management in the Pacific-Nadi Flood Pilot ($1,399,000)
Objective: Pilot an integrated flood management approach in the Nadi basin as a measure to reduce disaster risk that can be replicated in other watersheds in Fiji and other Pacific countries
Components: 1) Institutional Strengthening of Flood Forecasting and Warning Systems:
• Develop a standard operating procedure for coordination, monitoring and response to flood events including data collection, management and dissemination and
• Integrate the flood forecasting and warning system with meteorological services and arrangements
2) Flood Risk Assessment, Identification of Mitigation Measures and Dissemination:
• Acquire baseline data of sufficient quality to enable local level flood risk modeling and identification of the most appropriate flood mitigation measures
3) Institutional Strengthening for Integrated Flood Management:• Develop or strengthen the policy, institutional and regulatory framework that
support integrated flood management
GFDRR – Project Example
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Strengthening of Flood and Drought Early Warning System for Cambodia ($100,000)
Objective: To support the Ministry of Water Resources and Meteorology to strengthen its
capacity to develop a fully operational flood and drought forecasting centre for Cambodia in
cooperation with Mekong River Commission (MRC)/Regional Flood Management and
Mitigation Center (RFMMC) and Department of Meteorology (DoM)(TRACK II: Mainstreaming DRR; Ongoing Project)
Components:
1) Assessment of existing hydro-met network and recommendation for
improvement • Detailed inventory of stations, equipment and their conditions;
• Recommendations for improvement and upgrading.
2) Assessment of Institutional capacity and preparation of capacity building plan • Integrated capacity development program (on-the-job training, specialized training
courses, workshops, higher studies, etc),and capacity building of the private sector.
• Institutional capacity building plan and program for DoM and DoH and other specialized
agencies.
• Staff development plan based on a training needs assessment.
3) Development of strategy and program of flood and drought monitoring,
forecasting, and dissemination of early warning: • Rainfall data from all real time / near real time reporting stations;
• Estimate catchment rainfall over the forecast period;
• Obtain Mekong river levels and flows from RFMMC, both observed and forecasted for
WBG-
Risk Instruments
Catastrophe Risk Insurance Facilities (help the poor cope with economic repercussions of disasters before they happen)
MultiCat Program (fixed income securities that insure sponsor of bond against pre-defined set of natural disasters)
Index Based Weather Derivatives (to provide risk management products to member countries, transferring the weather risk to the market.
Catastrophe Deferred Drawdown Option (A contingent loan that provides immediate liquidity following a natural disaster)
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IDA (International Development
Association)
One of the largest sources of assistance for the world’s 79 poorest countries
Replenished at the end of 2010 (Total $ 49.3 billion) = IDA 16
‘Achieving Climate Resilient Development’ as IDA 16’s ‘Special Theme 3’ with an objective to Support Climate Resilience in IDA Countries
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IDA’s strategy in CC
Five closely linked areas:
(i) discussing in 100 percent of IDA CASs CC vulnerabilities, and including activities in CC mitigation and adaptation areas when requested by the recipient country;
(ii) scaling up IDA Analytic and Advisory Activities on adaptation and mitigation
(iii) establishing coding system to measure the share of IDA investments that provide climate adaptation and mitigation co-benefits, and reporting on the number of projects that aim at climate change co-benefits in their design by Mid-Term Review.
(iv) analyzing in all projects in climate change sensitive sectors the potential climate impact of project activities to ensure that they are consistent with the climate change mitigation and adaptation strategies of the country;
(v) providing expertise to and continuing dialogue with development partners(including OECD/DAC and MDBs) on Rio-Markers with the objective of developing and agreeing on quantitative measures of global financing for climate adaptation and mitigation actions
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Climate Change Adaptation Co-benefit Coding- Agriculture, Fishery, and Forestry
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Code Activities with Adaptation Co-benefits
AB: Agricultural extension and Research
•Develop, test and introduce practices or techniques more resilient to CC&CV in farming systems, plant breeding, and livestockbreeding.•Develop, test and introduce management systems for commons better adapted to CC&CV.•Forestry research on increased and new threats resulting from CC&CV.•Ex situ conservation of species and germplasm adapted to CC&CV.•Support extension services to incorporate CC&CV in their programs.
AH: Crops
•Recover degraded areas for crop production through innovative management practices.•Soil management practices that control soil erosion, nutrient loss and improve the water regime in the soil profile (e.g. minimum tillage).•Crop storage facilities designed to reduce vulnerability to CC&CV.•Develop and introduce weather or climate indexed crop insurance programs.
AI: Irrigation and drainage
•Change watershed, wetland and irrigation management systems and practices to reduce vulnerability to CC&CV.•Integrated ecosystem management approaches for watersheds and wetlands to reduce vulnerability to CC&CV.•Construct dams and water storage systems to manage changes in the water cycle due to CC&CV.
AJ:Animal Production
•Change management practices or techniques to reduce vulnerability to CC&CV in animal health service, pasture management, fodder production and storage practices, •Change fish farming and aquaculture practices or techniques to reduce vulnerability to CC&CV (e.g due to changes in water quality or variation in fishing season).
AT: Forestry
•Restore or maintain environmental services (including watershed functions). •Maintain resilience of forest systems.•Maintain productivity of forest systems.•Increased use of trees, woodlots, forests, wood and non-wood products in rural adaptation strategies.
AZ:General agriculture, fishing and forestry
•Safeguard biodiversity as a resource to cope with CC&CV.•Establish protected areas for species migration responding to CC&CV. •Increase landscape connectivity in response to CC&CV.•Conserve threatened and endangered species ex. Situ.•Invasive species management responding to CC&CV.•Use of ecosystem functions to cope with CC&CV.•Integrated Coastal Zone Management responding to CC&CV.
The Global Environmental
Facility (GEF) Funding for the preparation of Non-Annex I countries’ national communications
Can cover incremental costs of projects with global climate benefits.
Supports capacity-building and demonstration projects related to adaptation.
Strategic Priority on Adaptation (SPA) Trust Fund
Secretariat Support for The Adaptation Fund
Manages
◦ Least Developed Country Fund (LDCF)
◦ Special Climate Change Fund (SCCF)
GEF replenished in June 2010 as GEF 5 (climate change allocated the largest funding- USD 1.35 billion- a 32% increase), but does not include LDCF and SCCF
Objectives:
Operating entity of the financial mechanism of the UNFCCC
Eligibility: Parties to UNFCCC, non-Annex I Parties or eligible to borrow from the WB (IBRD and/or IDA) or eligible recipient of UNDP technical assistance.
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GEF-Least Developed Countries Fund (LDCF)
Structure
Operating entity: GEF
Objective
Focus on the unique, urgent, and immediate adaptation needs as identified in National Adaptation Programs of Action (NAPA)
Resources: Around $100 mill available for new projects
Ceiling - $10 mill per country (recently up scaled)
Eligibility:
48 Least Developed Countries (LDCs) that have completed a NAPA
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Project Example: LDCF
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Increasing resilience to climate change and
natural hazards in Vanuatu
GEF Agency: WB
LCDF Grant: $ 3 mill Co financing: $3.21 mill
Designed to:
(i) address the main climate and weather related hazards
(ii) address immediate priorities already identified through the
NAPA, NAP and other consultation processes (GFDRR stock-take)
(iii) support the country’s sustainable development priorities
(iv) take account of the existing and potential capacity for
implementation
(v) The likelihood of achieving results.
Project Example: Kiribati Adaptation Phase III
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Objective:
To improve the resilience to the impacts of climate change
on freshwater supply and coastal infrastructure
• Total financing: USD 10.8 mill
• Estimated Board Date: July 7, 2011
• Groundwater Abstraction Systems; Water ReticulationManagement (Leakage detection and repair of real losses);Capacity Building; Community Behavior Change Campaign;Roof Rainwater Harvesting; Advisory Support for WaterProjects; Improved Water Management Governance
Improve water resource use and
management
(US$4.3 mill)
• Investments in Shoreline Protection; Advisory Support forShoreline Erosion Mitigation Measures; Asset Management ofCoastal Infrastructure; Mangrove Replanting in Outer Islands
Increase coastal resilience
(US$2.9 mill)
• Technical Support to the Strategic Risk Management Unit, OB;Coastal Management Policy and Locally Managed AdaptationPlanning; Communications & Media; Climate Change WebsiteMaintenance; Disaster Fund Small Grants Scheme
Strengthen the Capacity to Manage
the Effects of Climate Change and
Natural Hazards
(US$2.2 mill)
Ma
in C
om
po
ne
nts
KAP I
2003-2006
TA –Increase awareness
KAP II
2006-2011
Pilot Implementation Project
KAP III
Special Climate Change Fund (SCCF)
Structure
Operating Entity: GEF
Objective
To implement adaptation interventions to expand and fortify the resilience of specific
national development sectors to the expected effects of climate change.
Fund measures that take a long-term view of climate change adaptation and appropriate preemptive measures. Ideally catalyze additional resources from bilateral and/or other multilateral sources of financing.
Resources: $ 33 mill available for new projects
Eligibility
Non-Annex I countries with focus on Africa, Asia and small island states
Current requirement is 1:4 co-financing
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SCCF- Project Example
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Philippines CC Adaptation project, Phase I
Objective: Pilot project to develop and demonstrate approaches that would enable targeted communities to adapt to the potential impacts of climate variability and change. This would be achieved by strengthening existing institutional frameworks for climate change adaptation, and by the demonstration of cost-effective adaptation strategies in agriculture and natural resources management.
Main Project Components1. Strengthening the Enabling Environment for CCA2. Demonstrating CCA Strategies in the Agriculture3. Enhanced Provision of Information for climate risk mgmt
SCCF: $ 4.9
mill
Co financing:
$ 50.5 mill
The Adaptation FundStructure
First major international fund solely committed to adaptation to climate change.
Set up under the Kyoto Protocol of the UNFCCC
Grant funding- no requirement for co-financing
Operating Entity- The Adaptation Fund Board, UNFCCC
Financed from a 2% share of the CER proceeds on the Clean Development Mechanism (CDM) project activities and other sources of funding
Objective
Financing concrete adaptation activities that are country driven and are based on the needs, views and priorities of eligible Parties.
Finance :
Funding availability of $ 187.08 million, with $ 211.88 million as funds held in trust (as of January 31, 2011),
$ 353 million (medium estimate, by end-2012)
Eligibility
Developing country Parties to the Kyoto Protocol
Project types:
Small Scale (upto $ 1mill)
Regular (over $ 1 mill)
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Project Example- The Adaptation Fund
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Addressing Climate Change Risks on Water Resources in Honduras: Increased Systemic Resilience and Reduced Vulnerability of the Urban Poor
Regular Project $ 5.62 mill
Goal:
Contribute to incorporate climate change issues into the planning
processes and investment decisions of key line ministries – institution
capacity building and improving the tools of relevant institutional
structures (National Water Authority)
Safeguard Tegucigalpa and the watersheds that provision the capital city
in response to existing and projected water scarcity and to vulnerability to
extreme climate events
An Outcome of COP 16...Green Climate Fund
A decision at COP 16-Cancun
Governed by Green Climate Board
To support projects, programmes, policies and other activities
in developing country Parties using thematic funding
windows.
WB invited as interim trustee for 3 yrs
The details of the Fund will be discussed throughout the year
until the next negotiation of COP 17 in Durban, South Africa in
December 2011
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Fast Start & Long Term (1)
•Fast Start Finance (2010-12)
-To Date: $30 billion pledge legitimized at Cancun,
about $12 billion committed
•Goal to mobilize Long-term Finance of $100 billion per
year by 2020 agreed in Cancun
-Variety of sources including: public, private,
bilateral, and multilateral
-Significant share of multilateral funding for
adaptation should flow through the Green Climate
Fund
•Issue: How to leverage (multiply) public funds through
mixing with private, public, and carbon market funding
Climate Finance Challenge
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Additional investment needs in developing countries, by 2030
Source: World Bank, 2010
Cost of developing countries to
adapt to climate change between
2010 and 2050 is estimated at
US$70 billion to US$100 billion a
year at 2005 prices- World Bank
study -Economics of Adaptation to
Climate Change.