FOCUS: Adaptation Funding sources available and how to access them

1. FOCUS: AdaptationFunding sources available and how to access them Louis Perroy, ClimatEkos 30 August 2011, Vientiane, Lao PDR

2. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

3. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

4. What is climate change adaptation? ‘The adjustment in natural or human systems in response to actual or expected climatic effects, which moderates harm or exploits beneficial opportunities’ IPCC Glossary What does it mean? • Climate change will have impacts on both natural and human systems; • Impacts are expected to be largely negative; • Climate change adaptation consists in taking initiatives and measures to make both natural and human systems less vulnerable to those impacts.

5. Climate change adaptation glossary • Impacts of climate change: The effects of climate change on natural and human systems. The effects may be direct(e.g., a change in crop yield) or indirect (e.g., damages caused by an increase in the frequency of coastal flooding due to sea-level rise). • Vulnerability: The degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change. Vulnerability is a function of the character, magnitude, and rate of climate change and variation to which a system is exposed, its sensitivity, its resilience, and its adaptive capacity. Adaptation aims to reduce vulnerability. • Adaptive capacity: The ability of a system to adjust to climate change by taking adaptation measures that moderate potential damages, take advantage of opportunities, and cope with the consequences (e.g., the access to technology and know-how for changing farming systems).

6. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

7. Impacts of climate change and possibilities for adaptation actions

8. Impacts of climate change on the agricultural, forestry and land use sector

9. Vulnerability of the agricultural, forestry and land use sector to climate change • Climate change vulnerability can be exacerbated by other stresses such as poverty and unequal access to resources, food insecurity and conflicts • Farmers and those dependant on forests and their products in developing countries, and especially in the least developed countries are therefore likely to be among the most vulnerable to the impacts of climate change • Future vulnerability will depend largely on the chosen development pathway of those countries

10. Adaptation in the agricultural, forestry and land use sector to climate change

11. Adaptation meets Mitigation of climate change Within the Agriculture and LUCF numerous Adaptation projects are also Mitigation projects: • This is the case for Advantages of using Mitigation projects for Adaptation purpose: • Complement finances (faster?!) • Improve the MRV of the projects and therefore conforts donors,

12. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

13. Adaptation in the global climate change discussions UNFCCC and Kyoto Protocol: • All Parties shall: • ‘Formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change […], and measures to facilitate adequate adaptation to climate change’; (UNFCCC, Art. 4.1b; KP, Art 10b) • ‘Cooperate in preparing for adaptation to the impacts of climate change’; (4.1.e) • ‘The developed country Parties […] shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects’; (UNFCCC, Art 4.4; similar in KP, Art. 12.8)

14. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

15. National Adaptation Programmes of Action • Established by the Parties to the UNFCCC when negotiating the adaptation funds • Provide a process for countries to identify priority activities that respond to their urgent needs with regards to climate change adaptation • First step towards accessing funding from one of the adaptation funds (LDCF) • Document prepared by authorities in least developed country (usually Ministry of Environment) with the help of usually UNDP, GEF and consultants, and funds from the Least Developed Countries Fund (LDCF) • Focus on adaptive capacity to climate change variability • Take into account existing coping strategies and build upon those to identify priority activities • Include short profiles of projects/activities to address immediate adaptation needs of that country So far, 45 least developed countries have submitted their NAPAs to the UNFCCC; including Cambodia and Lao PDR.

16. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

17. Potential sources of adaptation funding • UNFCCC Funds • Special Climate Change Fund (SCCF) • Least Developed Countries Fund (LDCF) • Adaptation Fund (AF) • Other Bi-lateral and multi-lateral funding, such as • Climate Change Adaptation in Africa (CCAA) • GEF Small Grants Programme (SGP) • Global Facility for Disaster Reduction and Recovery (GFDRR) • Private sector funding

18. Sources of adaptation funding • In addition to ODA financing comes from numerous climate funds, such as • Dedicated funds: Global Environment Facility’s (GEF) Trust Fund, Special Climate Change Fund (SCCF), Least Developed Country Fund (LDCF), the Adaptation Fund, Clean Technology Fund (CTF), Strategic Climate Fund (SCF), Asian Development Fund (ADF); • Multilateral development institutions such as: Asian Development Bank (ADB), • Multilateral financial Institutions: International Fund for Agricultural Development (IFAD), European Commission (EC), World Bank (WB), • Bilateral organizations: United States Agency for International Development (USAID), The Deutsche GesellschaftfürInternationaleZusammenarbeit (GIZ), Swiss Agency for Development and Cooperation (SDC), Swedish International Development Cooperation Agency (SIDA), Danish International Development Agency (DANIDA), Japan International Cooperation Agency (JICA), Korea International Cooperation Agency (KOIKA), governments of Finland and the Netherlands, French AgenceFrançaise de Developpement (AFD).

19. Sources of adaptation funding • Financing of adaptation initiatives have also been done directly by the UN, and by the private sector. • The majority of financing comes in form of grants, technical assistance, and loans. • Majority of the initiatives involves two or more financing mechanisms, with a share of country participation, as well. • The region will also be targeted with financing from the emerging global Green Fund, and many other mechanisms in the future. An up to date, exhaustive list of such funds can be found from: http://www.climatefundsupdate.org/listing/hatoyama-Initiative http://www.climatefinanceoptions.org/cfo/Funding%20Sources

20. UNFCCC Funds - SCCF • Objective: • Implement long-term adaptation measures that increase the resilience of national development sectors to the impacts of climate change • Administrator: GEF • Eligibility: • All Non-Annex 1 countries are eligible to apply for funding under the SCCF, although the most vulnerable countries in Africa, Asia and the Small Island Developing States (SIDS) are given priority • Status: • USD 148 million pledged to the SCCF, of which USD 110.48 deposited (as of May 2010). • USD 105 million have been allocated to 30 approved projects (as of January 2011) • South East Asia relevance: • Potential source of adaptation funding • Thailand: Strengthening the Capacity of Vulnerable Coastal Communities to Address the Risk of Climate Change and Extreme Weather Events

21. UNFCCC Funds - LDCF • Objective: • Address the special needs of the Least Developed Countries which are especially vulnerable to the adverse impacts of climate change , including preparing and implementing the NAPAs • Administrator: GEF • Eligibility: • All least developed countries are eligible to apply for funding under the LDCF. Funding is disbursed based on a series of criteria drawn from the COP guidance • Status: • USD 221 million pledged, of which USD 169 million deposited (as of May 2010) • USD 147 million have been allocated to 94 approved projects, including the preparation of 48 NAPAs (as of January 2011) • South East Asia relevance – • Relevant to South East Asia, including 2 NAPAs

22. UNFCCC Funds – LDCFrelevance to SE Asia Cambodia: Strengthening the adaptive capacity and resilience of rural communities using micro watershed approaches to climate change and variability to attain sustainable food security Lao PDR: Effective Governance for Small Scale Rural Infrastructure and Disaster Preparedness in a Changing Climate Cambodia: Vulnerability Assessment and Adaptation Programme for Climate Change in the Coastal Zone of Cambodia Considering Livelihood Improvement and Ecosystems Lao PDR: Improving the Resilience of the Agriculture Sector in LAO PDR to Climate Change Impacts

23. UNFCCC Funds – Adaptation Fund • Objective: • Finance projects that will provide concrete support to adaptation activities that reduce the adverse effects of climate change facing communities, countries and sectors • Administrator: Adaptation Fund Board • Eligibility: • Kyoto Protocol Parties that are particularly vulnerable to climate change impacts, such as low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems • Status: • Roughly USD 250 million, including ~USD 150 million from the sale of CERs (2%), ~USD 100 million from donor countries, + some investment income • Central Africa relevance: • Potential source of adaptation funding • No projects financed in the sub-region to date, only nine projects financed to date in total

24. Other bi-lateral and multi-lateral funding

25. Adaptation Private Sector Initiative • The “Adaptation Private Sector Initiative” (UNFCCC initiative) aims to catalyze the involvement of the private sector in the wider adaptation community • It provides a platform for business to further engage with adaptation in order to address three threads of work • Contribution that the private sector is making and can make to adaptation • The contribution that international organizations and governments can make to the adaptation of affected businesses • The strategies that should be put in place by business in ensuring that their own adaptation efforts are sustainable • Activities carried out by these companies span a variety of businesses and sectors, including insurance industry, consultancies, environmental management, infrastructure and transportation sector, water sector and financial sector, and are described in more detail below. • 33 companies have so far joined this initiative, including Allianz, Caisse des Depots, Deutsche Bahn, McKinsey, PwC…

26. Content • Definition of climate change adaptation • Climate change impacts, vulnerability and adaptation options • Adaptation and the global climate change regime • National Adaptation Programmes of Action (NAPAs) • Adaptation funding • Outlook for post-2012

27. Adaptation in the Cancun climate talks The Cancun Agreements for adaptation: • Creation of a new Climate Adaptation Framework and associated Adaptation Committee • Raise the importance of adaptation in the UNFCCC agenda • Should make a more coherent, action-oriented treatment of adaptation possible • Identification of a broad set of priority areas for action on adaptation: • The development of plans, projects and programmes; • Strengthening institutions; • Improving research, observation and information management systems; • Impact, vulnerability and financial needs assessment; • Adaptation technology • Establishment of a ‘Green Fund’ Remaining unresolved issues: • Allocation of adaptation finance among developing countries • Fast-start finance priority to the most ‘vulnerable countries’ (LDCs and countries in Asia) • Long-term finance (e.g. from Green Fund) to ‘most vulnerable countries’ (= not defined!)

28. Green Fund • Country ownership in the context of CC adaptation finance entails a strong role for governments. • In many cases the adaptation finance is often channeled around governments, through multiple and poorly coordinated channels, and without alignment with national adaptation or development plans or investments aiming at enhancing national capacity. The plan of the new Green Climate Fund (GCF) particularly is to make countries the drivers for the use of funding. • COP16 in Cancun formalized the commitment made by developed countries in Copenhagen to mobilize USD 100 billion a year by 2020 to address developing countries mitigation and adaptation needs. • Large parts of these funds will be administered by a newly created ‘Green Fund’, to simplify the complicated funding mechanisms and bilateral agreements

29. Green Fund • Many details of the Green Fund still remain to be clarified, but It has already been decided that the board governing it will be composed of an equal portion of developed and developing country members. • The Green Fund could potentially constitute a great opportunity to finance climate change adaptation in SE Asia. • The Green Climate Fund will support projects, programmes, policies and other activities in developing country Parties using thematic funding windows • However, the Green Fund shall only help to disburse the $100 billion a year by 2020 but is not designed to raise them. The funding is supposed to come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources.  KEEP AN EYE OPEN FOR FURTHER DEVELOPMENTS AT THE COP IN DURBAN!

30. Thank You! Louis Perroy Senior Partner and CFO ClimatEkos Louis.perroy@climatekos.com