United Nations Development Programme Climate Change and the Most Vulnerable Countries – the Imperative to Act Veerle Vandeweerd United Nations Development Programme July 2008

Why integrate climate risks into development? The point is development effectiveness, since climate change impacts could stall or reverse development gains – A few specific arguments for integrating climate change risks: Development that also reduces vulnerability to climate pressures can reduce risks better than interventions of more limited scope Given its Poverty Reduction and Crisis Prevention and Recovery roles, this is a key area for UNDP. Addressing climate-related drivers of vulnerability and risk will make Poverty Reduction and Disaster Prevention more effective. Institutions and systems that integrate Climate Change Risk Management can adapt to climate over time This is about sustaining capacity to adaptive, rather than delivering ‘one-off’ solutions. UNDP supports the institutional capacity and relationships necessary to manage climate change risks over time. Cost-effectiveness: Preventing damage is cost-effective versus recovery (See annex slide on reconstruction in Caribbean) Risks: World Bank estimate of 40% of portfolio at risk, OECD estimates for various countries’ ODA = ~30-60% *UNDP’s particular risks and opportunities for vulnerability reduction - see ahead 3 slides* Poverty reduction and MDG achievement, Strengthening institutions for democratic governance Managing disaster risks and preventing crisis Environment and energy… Why integrate climate risks into development? Adaptation is central to development effectiveness: Climate change could stall or even reverse development gains Addressing climate change impacts can make poverty reduction, disaster prevention, etc. more successful (win-win) Effective institutions are those that manage climate change risks on an ongoing basis Preventing climate damages is cost-effective versus recovery

The HDR 2007: Focus on adaptation Impact of climate change can be a one way ticket to absolute poverty. Action is needed and is needed now. International Action: Deliver on commitments; Climate proof official development assistance; Pay more attention to silent catastrophes and impact of climate change on development aid; Scale up and coordinate funds;

HDR 2007: Focus on adaptation National Action: Mainstream adaptation Enhance climate resilience of development process; Secure new and additional financing. Adaptation needs mainly to occur at the community level.

What does it mean to integrate climate risks into development? Principles Climate change scenarios systematically incorporated (looking forward, rather than behind) Socioeconomic climate vulnerability assessed (addressing factors creating vulnerability to climate change) ‘Adaptive systems’ created for managing evolving risks (managing climate risks on an ongoing basis, rather than ‘one-off’ / ‘quick fix’ / technological solutions) Institutional capacity & cross-agency relationships strengthened (because climate change risks are cross-cutting) Considerable challenges remain to integrating adaptation into development assistance Awareness and capacity are low Mainstreaming fatigue and transaction cost at the beginning of the learning curve Convincing economic case hasn’t been made for adaptation as cost effective What does it mean to integrate climate risks into development? UNDP defines adaptation as maximizing development benefits by integrating climate change into strategies, policies, and measures Key Actions Climate change scenarios systematically incorporated Socioeconomic climate vulnerability assessed Cost effective alternative responses assessed and implemented (development and poverty reduction dividend) ‘Adaptive systems’ created for managing evolving risks Institutional capacity & cross-agency relationships strengthened

UNDP Programmes climate-proofed National Systems created* Across Scales UNDP Programmes climate-proofed Bilateral National Systems created* Japan Programme GEF LDCF SCCF SPA 1. CC integrated risks into poverty reduction policies and measures 2. Financing options expanded to meet national adaptation costs Disaster Risk Coastal zone Water Agriculture Project Project Project Project Project Project 3. Community-based adaptation enhanced * includes enabling activities

Expanding financing options to meet national adaptation costs Expanded financing options for meeting national adaptation costs Baseline: Ongoing development funding and national programmes National Budget ODA At Risk New and additional resources Assessing costs, financing options Private sector involvement Local - - - - National

Multilaterals: e.g. WB SCF, UNDP Japanese funded pilot Financing adaptation Adaptation financing is dependent on public resources and international support Ongoing initiatives GEF: SCCF, LDCF, … Bilaterals Multilaterals: e.g. WB SCF, UNDP Japanese funded pilot UNFCCC: Adaptation Fund New and additional resources needed Up to 50 billion US$/year Learning by doing

Sources of investment and financial flows: Adaptation Private sources of funding can be expected to cover a portion of the adaptation costs in several sectors. In particular in the AFF and the infrastructure sector where investment in privately owned physical assests will be needed. However, public resources are expected to play a predominant role in all adaptation sectors and in particular in the coastal zone and water sector Measures will be needed to encourage/support private sector adaptation and additional sources of funding dedicated to adaptation will be needed. Adaptation = good development policy

Adaptation Learning Mechanism – www.adaptationlearning.net

Trends and priorities Most importantly priorities should be identified by developing countries themselves in accordance to their specific national conditions and needs.

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