urban climate change adaptation - catalysing the private sector
TRANSCRIPT
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2011 Intellecap. All rights reserved
www.intellecap.com
Urban Climate Change Adaptation Catalysing the Private Sector
Financing Future Cities, Asian Urban Forum 2011, ADB (Nov 17, 11)
Manju Mary George, Intellecap
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Rockefeller Foundation and Intellecap: Study Questions
What are the vulnerabilities a changing climate poses for the urban poor?
Is there a case for private sector participation in build their resilience to
cope with these vulnerabilities?
What can be done to support private sector involvement?
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Bangkok Floods the latest reminder of the climate vulnerabilitiesfacing Asian cities
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The poor in these cities are the most vulnerable to such risks; helpingthem adapt is critical
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Asian cities are expected to
account for more than 60% of
global population growth in the next
30 years creating immense
pressure on urban infrastructure
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Case: Rag pickers and waste management, Surat, India
Ironically this is a group that is responsible for cleaning up the city, improving sanitaryconditions
Exposure to toxins and hazardousmaterial
Poor working conditions
Incomes fall by a factor of 4 during themonsoons
Exploited by middle men
Irregular incomes
Illegal slums
Poor living conditions
No social security Not part of the formal economy
Pariah of society
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Funds required for CCA by 2015 Source of funds for CCA
Climate
proofing
infrastructure
($ 40 bn)
Protecting
poor against
climate
change
($ 44 bn)
Strengthening
Disaster
Response
($ 2 bn)
Govt self-
expenditure
(0.5% of GDP
of all L&MIC*)
Private sector
funds:
1) investment,
2) self-finance,
3) philanthropy
Aid from
OECD
countries
(10x of
current)
Total: $ 42 bn
* Lower and Middle Income Countries. Source: Human Development Report 2007/2008: Funding Climate Change, UNDP
Private sector funds are critical to help build resilience of the Asiancities and their poor
Total: $ 86 bn
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Private sector businesses and investors have opportunities to createblended financial and social returns
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Business Activity
Corporation
Social Enterprises
Investments
Commercial Investors
Social Investors
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Business opportunities to build resilience amongst the poor existacross sectors
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Reduced Food & Water Security
Decline in Sanitary Conditions
Life & Asset Loss
Loss of livelihood
Disease and health issues
Impact on Energy supply
Water Management
Waste Management
Affordable Housing
LivelihoodPromotion
Affordable Healthcare
EnergyManagement
Microfinance
Micro-insurance
Technology
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Illustration: Rag pickers can ensure better waste management anddrainage, while increasing their incomes
Equity/ DebtIntegratedWaste Mgmt.
Company
Rag Pickers
WasteProcessing/
Recycling
Revenues Waste
WasteCollected/Segregated
Regular Income % of profit
Credit Support
HouseholdCollection
Waste
RevenuesHousehold
monthlyfees
CommercialCapital
Better Drainage and Waste
Management in Surat
Increase in Income for Rag Pickers
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Many social entrepreneurs and investors in India areparticipating in these emerging opportunities
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3 S/Shramik (www.3sindia.com) GV Meditech (www.gvmeditech.com)
Kanak Skymet (www.skymet.net)
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Climate Change increasing frequency andseverity of deadly floods in Jakarta
Case: Flood micro-insurance pilot in Jakarta
Need for Micro Insurance Flood Cover
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Private sector insurers, Munich Re, Asuransi Wahana Tata, GTZ, piloted flood insurance in sub-districts of
Jakartato provide economical and simple-to-understand flood insurance to low income households.
If water level reaches or exceeds 950 cm, a one off payment of Rp 250,000 can be obtained per card
Despite an innovative product, the scheme faced a lukewarm response onaccount of the following:
Design Issue: Flood instances vary; payments not enough
Adverse selection: High risk individuals buy insurance; buy at 5-year cycle
Basis Risk: Payouts not commensurate to expected loss
Poor consumer awareness: unwilling to pay; mistrust of insurance company
Feasibility challenges: High transaction costs; low volumnes
Water level measurement Manggarai gate
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Many market-making efforts are needed to realise theseopportunities
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Opportunities in emerging and under-developed pro-poor sectors
Trigger is business opportunity or social impact; resilience not an understood goal
No magic bullets need solutions that are context specific, creates redundancies
Local issues call for local innovation; social entrepreneurs likely to lead the way
Limited engagement owing to poor awareness of issues and opportunities
Relevant data on poor for business functioning is not widely available
Climate change impacts on rural poor more direct and relevant in peoples minds; Urban
resilience needs more nuanced approach
Focus on mitigation overshadows adaptation/resilience building discussions
Limited willingness and capacity to pay
Funding for enterprises in the space has been limited
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Way Ahead: Market making for building resilience to climate change inAsias Cities
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Showcase the role businesses have played in urban resilience building
Identify and promote champions among key private sector segments
Demonstrate proof of concepts in vulnerable cities; encourage businesses to engage
Engage the funders patient capital to commercial capital
Integrate resilience building agenda into government and city development plans
Influence policy to create a facilitative eco-system for urban resilience building
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Thank You
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There are many more cities across Asia vulnerable to climate changeimpacts
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Photos: blog.ratestogo.com; holidayiq.com. Text: Intellecap research
Surat, the worlds diamond capital, is wedgedbetween the Tapti River and the Arabian Sea.
Its in danger of climate change induced floods
and seal-level rise.
Climate Change isexacerbating:
Poor sanitary conditions
Malaria incidence
Water scarcity
Loss of livelihoods