Latest update on adaptation finance

Beate Antonich from the SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides the October update on global developments in adaptation finance.


Adaptation Finance Update: Adaptation Fund Approves New Funding, Reports Explore Fund’s Future under Paris Agreement

During the month of October, we saw the Adaptation Fund Board (AFB) approve new grant funding windows as well as funding of new projects in the African, Indian Ocean and Eastern Europe regions. Specifically, the project funding will benefit Armenia, Benin, Burkina Faso, Cote d’Ivoire, Ghana, Mali, Togo as well as Mauritius and Seychelles. Reports examined the future of the Adaptation Fund under the Paris Agreement on climate change. The World Bank and the Caribbean Development Bank (CDB) announced support for building resilience to weather-related shocks in Dominica and the Bahamas.

Adaptation Fund Approves New Funding

The AFB approved new project funding of almost US$20 million at its 32nd meeting held from 9-12 October 2018 in Bonn, Germany. Among these projects are:

  • a US$1.4 million Direct Access project in Armenia to manage floods and pit waste through closed stone facilities;
  • a US$7.9 million regional project to manage flood, drought and early warning systems in Benin, Burkina Faso, Cote d’Ivoire, Ghana, Mali and Togo; and
  • a US$10 million regional project to restore marine ecosystems in Mauritius and Seychelles by rehabilitating coral reefs.

Three new small grant funding windows carrying an initial funding total of US$5 million were also approved by the Board. They are considered “additional to” funding amounts each country can currently access through the Fund for concrete adaptation project needs. The new funding windows are:

  • US$2 million for innovation grants, aimed at the Fund’s accredited national implementing entities (NIEs) and eventually outside entities, that will allow NIEs to submit proposals directly to the Fund starting later this year;
  • US$1 million for project scale-up grants that will be made available to NIEs over the next five years to provide readiness funding to NIEs for scaling up Adaptation Fund projects currently under implementation, with the implementation phase of these scaled-up designs expected to be funded by other sources; and
  • US$2 million over five years for learning micro-grants that will assist NIEs to better capture and disseminate adaptation experiences and knowledge.

To support adaptation knowledge dissemination, the Fund hosted, on 25 October, its seventh Climate Finance Readiness webinar for NIEs to exchange knowledge on managing change in adaptation projects.

In addition, the Board enhanced its accreditation process by approving a fast-track Adaptation Fund accreditation process for implementing entities that have already been accredited by the Green Climate Fund (GCF). The Board also decided to add specific references to anti-money laundering and countering the financing of terrorism in supporting documentation.

Securing Future for Adaptation Fund under the Paris Agreement

An October 2018 report titled, ‘The Future Role of the Adaptation Fund in the International Climate Finance Architecture,’ by Germanwatch, a Germany-based think tank, examines negotiations on adaptation finance in anticipation of the Katowice Climate Change Conference in December. Specifically, the paper addresses expected decisions on the Adaptation Fund’s governance, safeguards and operating modalities, including future mobilization of sources of finance.

The authors recommend that Parties further explore the linkages between adaptation finance and Paris Agreement Article 6 (cooperative approaches) while addressing relevant limitations. They advise Parties to emphasize the need for additional and diverse sources of finance, such as earmarked proceeds from national emission trading schemes, carbon taxes and possibly a levy on maritime emissions, while emphasizing the need for further government contributions.

The specific issue of a levy of share of proceeds towards adaptation under Paris Agreement Article 6 was addressed in an earlier Asian Development Bank (ADB) report titled, ‘Decoding Article 6 of the Paris Agreement,’ published in April 2018. The Bank’s report identifies options for and implications of implementation of provisions contained in Article 6: “cooperative approaches” under Article 6.2; a new sustainable development mechanism under Articles 6.4-6.7; and a framework for non-market approaches under Articles 6.8 and 6.9.

MDBs Support Building Resilience to Weather-related Shocks in Dominica, Bahamas

The CDB announced its support of a US$106.5 million assistance programme for the Bahamas’ 2018-2022 strategy on environmental protection and infrastructure enhancement, inclusive social development, and improved governance and productivity. The Bank’s support will go to interventions, among others, to build economic resilience to weather-related shocks, and energy efficiency and renewable energy projects.

The World Bank’s Board of Executive Directors approved US$31 million in additional financing to an ongoing project in Dominica for building resilient infrastructure and strengthening the government’s capacity to manage disaster risks. The Dominica Disaster Vulnerability Reduction project is part of a larger US$115 million package of support from the World Bank for hurricane response. Hurricane Maria hit Dominica just over a year ago.

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