Funding Architectures for Adaptation Ian Noble The World Bank

2 Poor countries and communities are already highly vulnerable to variability in climate. They will suffer most from adverse impacts of climate change. The Adaptation Challenge DroughtFloodStormCoastal 1mCoastal 5mAgriculture Malawi BangladeshPhilippines All low-lying Island States Sudan Ethiopia ChinaBangladeshVietnamNetherlandsSenegal Zimbabwe IndiaMadagascarEgyptJapanZimbabwe India CambodiaVietnamTunisiaBangladeshMali Mozambiqu e MoldovaIndonesiaPhilippinesZambia Niger LaosMongoliaMauritaniaEgyptMorocco Mauritania PakistanHaitiChinaBrazilNiger Eritrea Sri LankaSamoaMexicoVenezuelaIndia Sudan ThailandTongaMyanmarSenegalMalawi Chad VietnamChinaBangladeshFijiAlgeria Kenya BeninHondurasSenegalVietnamEthiopia Iran RwandaFijiLibyaDenmarkPakistan Middle IncomeLow Income Source: World Bank

Study Date released Estimate US$ billions/ annum Basis Various Academic 1990s on Various Usually sectoral and long term – e.g. end of century – and with widely differing assumptions CEIF 04/ – Investment to climate proof ODA and concessional finance – near term As above but for all adaptation related activities in developing countries Stern Review 11/ Revision of CEIF estimates done in cooperation with WBG IPCC 4/2007 No new estimates, but argue that most studies show a high benefit-cost ration for adaptive actions Oxfam 5/2007 > Revision of CEIF calculations Costs (not annual) of immediate priorities similar to those in NAPAs applied to all developing countries UNFCCC 10/ Investment needs for adaptation activities in 2030 – all sectors, private and public IDA Replenishment 11/ Increment in IDA resources to offset the effects of climate change (6% to 21% based on Stern Review) How much is needed?

4 Existing Instruments for Adaptation IDA is a strong platform to promote climate-resilient development. The 30% increase in the IDA-15 replenishment was partly testament to that. MDBs have already begun incorporating adaptation concerns into their programs GEF Trust Fund Strategic Priority on Adaptation - $50M (complete) GEF Voluntary Funds: c. $300M Special Climate Change Fund Least Developed Countries Fund Adaptation Fund (GEF provides secretariat) could reach: $ million through 2012 and could increase to $2 billion per year after 2012 Bilateral donors providing additional resources through EC, UN Agencies and directly to developing countries (few $100Ms through to 2012) ca. $300 million

Suggested Instruments for Adaptation Funding Principles – New and additional to existing ODA funding Should it be countable as ODA? – Predictable & equitable – Adequate – Multiple streams or a few super funds Role of lending – What is to be supported? Agreed full incremental costs of measures (Art 4.3) Suggestions – CDM levy ($1B) – Global GDP levy ($46B) – Global carbon tax ($14B) – Auctioning of allowances ($2B) – Hybrid schemes ($2B) – Levies on (e.g.) airfares; bunker fuels; etc ($1B to $15B) 5

6 The Adaptation Fund Regarded as the UNFCCC mechanisms although actually under Kyoto Protocol Funded by 2% tax on most CDM transactions and possibly voluntary contributions; needs to encash CER credits Governed by a Board of alternates with strong developing country majority To fund concrete adaptation activities Initially GEF to provide secretariat services : World Bank trust fund services Board still in formative stages Have yet to set priorities and operating modalities

Climate Investment Funds Clean Technology Fund Target $4B to $5B for low carbon technologies Strategic Climate Fund – Goals Promote collaboration and synergies between MDBs on climate issues Promote initiatives for scaling up of investment needs and for integrating the investments in core lending Opportunity for targeted programs Strategic Climate Fund – Pilot Program for Climate Resilience Target $0.5B for national development that is climate resilient – {Forest related fund - later} – {Renewable energy related fund - later}

An urgent need to go beyond assessments and relatively small scale project by project approaches Goal of PPCR – – Move to scale in some pilot countries – To explore practical ways to integrate climate resilience into core development planning and budgeting – Build on National Adaptation Programs of Action (NAPAs), Pilot only – will not continue beyond 2012 Share lessons learned with developing countries, donors, the Board of the Adaptation Fund, IDA and similar programs in MDBs Governance through a committee with balanced donor / recipient representation 8 Proposed Pilot Program for Climate Resilience

9 Identification of pilot countries (5-10) based on transparent vulnerability criteria; preparedness to move to strategic approach; distribution across regions and hazards Expert group to be established to provide advice on country selection Board of the Adaptation Fund invited to nominate experts to be members of the group

10 Proposed Pilot Program for Climate Resilience Grant and optional concessional lending components The PPCR is to support development planning and implementation that is climate resilient Additional costs attributable to climate change will be supported by grant funding Additional concessional lending will be available to support development actions that increase climate resilience