Spending adaptation money wisely

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  • This article was downloaded by: [University of Southern Queensland]On: 10 October 2014, At: 07:54Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office:Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

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    Spending adaptation money wiselySamuel Fankhauser a & Ian Burton b ca Grantham Research Institute and Centre for Climate Change Economicsand Policy, London School of Economics , Houghton Street, London, WC2A2AE, UKb University of Toronto , 105 George Street, Toronto, MSA 2N4, Canadac International Institute for Environment and Development , 4 EndsleighStreet, London, WC1H 0DD, UKPublished online: 23 May 2011.

    To cite this article: Samuel Fankhauser & Ian Burton (2011) Spending adaptation money wisely, ClimatePolicy, 11:3, 1037-1049, DOI: 10.1080/14693062.2011.582389

    To link to this article: http://dx.doi.org/10.1080/14693062.2011.582389


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  • Spending adaptation money wiselySAMUEL FANKHAUSER1*, IAN BURTON2,3

    1 Grantham Research Institute and Centre for Climate Change Economics and Policy, London School of Economics,

    Houghton Street, London WC2A 2AE, UK2 University of Toronto, 105 George Street, Toronto MSA 2N4, Canada3 International Institute for Environment and Development, 4 Endsleigh Street, London WC1H 0DD, UK

    Discussions about adaptation finance have largely concentrated on process: how money should be raised and how adaptationspending should be governed and monitored. This article seeks to move the focus of the debate towards the substance ofadaptation by asking what good adaptation in developing countries would look like. It is argued that the best use of funds in theshort term may be for soft, less tangible developmental activities that increase adaptive capacity. Building a minimum level ofadaptive capacity everywhere is central to efficient, effective and equitable adaptation, and yields immediate benefits irrespectiveof future climate regimes. A number of operational challenges in delivering this kind of adaptation are discussed, including apreoccupation with additionality which makes the integration of adaptation and development harder and a preference forconcrete and more readily visible adaptation projects. Although the question of whether and how the adaptation regime that isemerging from the Cancun Agreements will be able to deliver wise adaptation decisions is left open, the presented analysisrecognizes that further institutional development is required.

    Keywords: adaptation finance; climate change and development; economic efficiency

    Les discussions au sujet de la finance pour ladaptation ont surtout porte sur les procedes: comment lever les fonds et commentgouverner et controler les depenses liees a ladaptation. Cet article tend a reorienter lobjet du debat vers ladaptation ensubstance, en demandant ce a quoi ressemblerait une bonne adaptation dans les pays en developpement. Nous avanconsque la meilleure utilisation des fonds a court terme serait dans des activites de developpement douces ou moinstangibles, qui favorisent la capacite adaptive. Creer un minimum de capacite adaptive en tout lieu est essential a une adaptationefficace, reelle et equitable, et rapporte des benefices immediats, quel que soit le futur regime climatique. Nous abordons unnombre de defis operationnels dans la realisation de ce type dadaptation, y compris une preoccupation portant surladditionalite rendant lintegration entre adaptation et developpement plus difficile et une preference pour des projetsdadaptation concrets et plus facilement visibles. Nous laissons ouverte la question de savoir si et comment le regimedadaptation emergent des Accords de Cancun sera a meme dengendrer de bonnes decisions sur ladaptation, mais notreanalyse reconnat la necessite dun developpement institutionnel plus approfondi.

    Mots cles: changement climatique et developpement; efficacite economique; financement de ladaptation

    1. Introduction

    The debate about climate change finance has so far been as much about trust (or, more accurately,

    about the lack of trust) as it has been about finance. The protracted UN Framework Convention on

    Climate Change (hereafter referred to as the Convention) negotiations under the Bali Action Plan

    (agreed in December 2007) have devoted much time and energy to the discussion of process: how

    funds should be raised, through which channels they should be disbursed, how spending decisions

    n research article

    n *Corresponding author. E-mail: s.fankhauser@lse.ac.uk

    CLIMATE POLICY 11 (2011) 10371049

    doi:10.1080/14693062.2011.582389 # 2011 Taylor & Francis ISSN: 1469-3062 (print), 1752-7457 (online) www.climatepolicy.com




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  • should be governed and how activities are to be monitored, reported and verified. This preoccupation

    with monitoring and governance is a direct reflection of the low and apparently declining level of trust

    among and between the Parties to the Convention. To what extent this decline in trust has been

    reversed by the Cancun Agreements remains to be seen, but there appear to be grounds for some cau-

    tious optimism. Among other factors, the origins of this lack of trust can be traced back to a string of

    donor promises of financial support that have not been fully met or were long delayed, and to a lack

    of confidence among donors in the reliability of some developing countries in managing funds.

    The process questions are important. Adaptation to climate change will require substantial amounts

    of money (UNFCCC, 2007; Fankhauser, 2010; World Bank, 2010a; Narain et al., 2011), and funding is

    beginning to become available. The World Bank reckons that between US$2.2 billion and US$2.5

    billion in adaptation finance has so far been committed (World Bank, 2010b). This could be topped

    up with a portion of the US$30 billion in fast-start funding pledged in Copenhagen at the end of

    2009 and a share of the annual $100 billion in climate finance promised by 2020 (AGF, 2010). In

    light of these magnitudes, getting the process right is critical.

    The decision at COP-16 to establish the Green Climate Fund under the guidance of the Conference

    of the Parties (COP) is generally seen as a step in the right direction. The Board has 12 members from

    developed countries and 12 from developing countries, the latter group including seats for the least

    developed countries and small island developing states. A Transitional Committee with a developing

    country majority will design the Green Climate Fund during 2011. The World Bank will act as interim

    trustee, subject to review 3 years after the operationalization of the Fund. These encouraging develop-

    ments leave open many questions about how the Fund, as well as other channels of investment in adap-

    tation, will work to ensure successful adaptation.

    There is a danger that, instead of getting on with the urgent tasks of adaptation, the Parties will

    become increasingly embroiled in debates about governance, monitoring and additionality. It will be

    unfortunate and counterproductive if these concerns are allowed to overwhelm equally or more impor-

    tant questions relating to the efficient, effective and equitable use of funds. To a large extent, the

    decision on adaptation priorities belongs to national governments. However, nothing is likely to under-

    mine progress on adaptation in the developing countries more than evidence, or even suspicion, that

    the funds are being diverted or used wastefully, and are not reaching those most in need of assistance.

    In this article, the focus of the debate is moved away from process issues and back towards the sub-

    stance of adaptation. We try to answer the question of what good adaptation in developing countries

    might look like, and what kind of adaptation measures should therefore be financed as