Enabling Adaptation Finance in Developing Countries Catalyzing Adaptation Finance

Anna Kaplina Regional Adaptation Specialist, ECIS

Paris, June 2014

Cambodia/LDCF Georgia/AF

Hungary/SPA Laos/SCCF

Supporting the Vulnerable and Marginalized

Where are the main funding requirements for adaption likely to arise?

“Additional” Funding Needs $2.129 b (Urgent and Immediate Priorities -NAPAs) $30-100 b/year for period 2010-2050 (WDR 2010) $290 b/year (Parry et all 2009) $326 - $355 b/year for financing adaptation options on

natural ecosystems) (Source: Berry 2007) • Mainly infrastructure • Estimates are likely an underestimate!

Catalyzing Adaptation Finance

Present Level of Assistance Approx. USD $140-175b & $70-100 b/year for 2010-2050 (mainly for mitigation) Vertical Funds (for adaptation; LDCF/SCCF/AF): less than $1.0b to-date cumulatively

Copenhagen Accord- $100b/year additional finance by 2020 (50% of this for adaptation)

Estimated Losses: $15-20 billion (Swiss Re/Munich Re) $21 billion (prop. damage); $22 billion (opp. costs) (World Bank)

Catalyzing Adaptation Finance

Scale of Damage in Thailand (2011

Catalyzing Adaptation Finance: Key Drivers

Public finance alone is not currently sufficient; Public finance alone is not going to be sufficient

Most of the investment in adaptation expected by businesses and households (end-users). Facilitating private sector investment will be necessary: – Preserving existing infrastructure, businesses and livelihoods – Developing new businesses – No-regret investments (adaptation is an ancillary benefit)

Ensuring that money is well spent, and hence maximizing its impact and effectiveness will be critical to maintaining support and realizing the transition to a low-carbon, climate-resilient future.

Catalyzing Adaptation Finance

Key Barriers to Adaptation Finance Catalyzing Adaptation Finance

• Assess needs and priorities, and identify barriers to investment

• Identify policy mix and sources of financing

• Multiple access channels

• Blend and combine finance

• Formulate project, progamme, sector-wide approaches to access finance

• Implement and execute project, programme, sector-wide approaches

• Build local supply of expertise and skills

• Coordinate implementation

• Monitor, report, and verify flows of results and funding

• Performance-based payments

Financial Planning

Accessing Finance

Delivering Finance

Monitor, Report & Verify

Mainstreaming or earmarking funding for adaptation?

Ideally full mainstreaming, BUT:

• No appropriate M&E systems in place

• How to make sure that the most vulnerable would be targeted?

• Separate funding required for capacity building and enabling conditions

• Some countries /sectors prefer to have stand-alone adaptation strategies, plans, programmes

Catalyzing Adaptation Finance

How to adapt existing regulations and policy instruments

• Clarity of the legal framework is critical

• Technical capacity and knowledge of personnel in the various sectors is a major inhibitor to adoption of new technologies and approaches

• Cross sectoral approaches may help reduce the need for additional funding

Catalyzing Adaptation Finance

to the adaptation needs? Are there opportunities to reduce public spending and support resilience?

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Focus of UNDP’s Work on Climate Finance Readiness Catalyzing Adaptation Finance

ACTION ON THE GROUND

CAPACITY ENHANCEMENT

BARRIER REMOVAL

POLICY DIALOGUE

• Policy development: How is CC policy formulated? Are national CC strategies developed?

• Provide a framework for sector-wide approaches & to incentivise private investments

• Institutional structures: What are roles & responsibilities of institutions involved in managing CC response & their interaction?

• Public financial management: How to quantify & track CC-related expenditures in the budget?

• Developing bankable adaptation projects including training on the economics of adaptation

NAP-GSP, LECB, CPEIR

LDCF/SCCF/AF/Bilateral financed projects

NAP-GSP, LECB, CPEIR, LDCF/SCCF/Bilateral financed projects

CPEIR

Economics of Adaptation

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Partnerships – A Must! Catalyzing Adaptation Finance

ACTION ON THE GROUND

CAPACITY ENHANCEMENT

BARRIER REMOVAL

POLICY DIALOGUE

LDCF/SCCF/AF/Bilateral financed projects

NAP, Climate Readiness, Economics of Adaptation, Evidence Based Result Tracking

www.undp-alm.org