What future for climate adaptation finance?

This month saw the launch of two initiatives that both aim to reduce the impact of climate change. A joint initiative by the World Bank, the African Development Bank and the World Meteorological Organization, Strengthening Climate and Disaster Resilience in Sub-Saharan Africa focuses on strengthening meteorological and hydrological services in sub-Saharan Africa. The Public-Private Partnership on Climate Data and Information for Resilient Development meanwhile aims to improve early warning systems for natural disasters in developing countries. The PPP comprises bilateral donors like the United Kingdom and United States, multilateral banks such as the Asian Development Bank and the Inter-American Development Bank, and companies like tech giant Google. Both initiatives come as the deadline to seal a new climate deal in Paris, France, to replace the Kyoto Protocol draws near. But progress on the negotiations over this new agreement has been slow and “difficult,” according to climate experts. There remain no clear steps on what the emission targets are and how they will be achieved, nor is there clarity on how the international community plans to mobilize $100 billion in climate financing that is needed annually through 2020. While it is crucial to address both concerns, financing is especially important given that several climate instruments are about to close, are nearly depleted of funds, or both. Further, most pledges to these funds have already been earmarked for specific projects and programs. The U.K. International Climate Fund for example is proposed only until 2016, although the fund’s operations may extend beyond this period. As of December 2014, only 45 percent of its 3.87 billion pounds ($6.14 billion) in funding has been spent, according to an Independent Commission for Aid Impact review. Still there are others — including the Pilot Program for Climate Resilience that was only supposed to run until 2012 — that continue to work and are now only expected to wind down operations once the Green Climate Fund is fully operational. Many are hoping the GCF would eventually become the climate “fund of funds,” according to Charlene Watson, senior research officer within the Climate and Environment Program at the Overseas Development Institute. Adaptation finance Among the nearly depleted climate funds are those dedicated to adaptation purposes. The Special Climate Change Fund and the Least Developed Countries Fund, both managed by the Global Environment Facility, for example, have only a few millions left. Most of their pledged funds, $347.30 million and $914.47 million, respectively, have already been approved and earmarked, according to latest the available data from the Climate Funds Update, a platform that keeps track of major dedicated funds focused on climate change and with which Watson is involved. This is concerning not just because there are only a few climate funds focusing on adaptation. Activities focusing on adaptation measures are generally not prioritized in the global climate finance architecture. For instance, only 18 percent of the $28 billion in climate finance that the six biggest multilateral development banks claimed to have committed in 2014 went to adaptation projects. Not enough is going to hydromet services as well, according to Clare Nullis. WMO’s media officer is however unable to provide ballpark figures on how much of the available climate funds are being channeled to hydromet services. But as these are tools and infrastructure that can help communities prepare for events related to climate change, hydromet services are also considered to be part of climate adaptation activities. Watson says there are current discussions on whether the Adaptation Fund, a financial instrument under the U.N. Framework Convention on Climate Change, will operate in the near future as “part of or joined to the GCF.” Being subsumed into the GCF however has its own pros and cons. One disadvantage of having too many climate funds, according to Watson, is higher transaction and administrative costs, which may be reduced if the Adaptation Fund were to be made part of GCF. But streamlining climate funds may inadvertently leave countries most vulnerable to the effects of climate change facing greater difficulties in accessing the money, such as when they do not have the capacity to meet the conditionalities set by the fund, a challenge Lucille Sering, vice chairperson of the Philippine Climate Change Commission, highlighted in a previous interview with Devex. “If you’re asking me personally, I don’t think it would be ideal to just put [climate finance] in one [fund] because there’s so many countries who might be wanting it, and you might be creating another bureaucracy,” she said, noting that most developing countries are already complaining about the many conditionalities attached to a number of climate funds. “It might be good in efficiency so that you just talk to one person … but is it fast enough? So based on experience, no,” she added. And going by data on the five biggest adaptation-focused climate funds listed under CFU — and for which the figures below are based — some least-developed countries and those highly prone to the effects of climate change appear to have been facing difficulties gaining access to these funds. CFU notes that least-developed countries and small island developing states received an overwhelming proportion of adaptation finance for disaster risk reduction purposes from 2003 to 2014. But a number of individual middle-income countries continue to receive bigger allocations for adaptation finance, as the tables below show. One high-income country, Uruguay, also made it among the top recipients of the Adaptation Fund. But this is not always the case. SCCF approved only $6.36 million for the Philippines, a middle-income country that is also one of the most vulnerable to the effects of climate change. In fact, approved funds for many SCCF recipient countries are around the same level — or lower, even for low-income countries. Ethiopia was only approved $1 million, and Mozambique was earmarked with even less than that. As there is no clear information on how much money has been disbursed, due to lack of updates and clear information on the part of the fund managers, the figures below are based only on approved amounts. Adaptation Fund Adaptation for Smallholder Agriculture Program Least Developed Countries Fund Pilot Program for Climate Resilience Special Climate Change Fund Watson notes that the “nuts and bolts of the GCF are still being worked out at the various board meetings.” Once these are sorted out and GCF becomes fully operational, it would be interesting to see how this ambitious fund will be able to meet its commitment to balance its portfolio between mitigation and adaptation activities. 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