Latest update on adaptation finance

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

 

Adaptation Finance Update: Number of Climate Adaptation Projects Increases, So Must Their Quality

According to the Global Environment Outlook (GEO-6), launched at the fourth session of the UN Environment Assembly (UNEA-4), climate adaptation programmes have not effectively dealt with multiple slow and rapid onset hazards, such as floods, droughts, tropical cyclones and sea level rise. Instead of addressing the underlying causes of vulnerability, they are often undertaken through sectoral programmes in, for example, agriculture, health and disaster management.

Less than 5% of global climate finance is spent on adaptation, and less than 1% goes to coastal protection, infrastructure and disaster risk management (DRM). Seeking to enhance the quality of adaptation actions, the Adaptation Fund launched new grant funding windows totaling USD 5 million, and received a record of USD 268.2 million in project submissions. This Update discusses these and other financing activities around the world for sectoral adaptation programmes announced over the last month.

Adaptation Fund Reviews Project Submissions Amounting to a Record USD 268.2 Million

During its 33rd meeting, held from 12-15 March in Bonn, Germany, the Adaptation Fund Board (AFB) elected Sylviane Bilgischer (Belgium) as its new Chair, and Ibila Djibril (Benin) as Vice-Chair. Emphasizing the need to facilitate the up-scaling of the Adaptation Fund’s high-quality projects, Bilgischer called for strengthening cooperation and linkages with other funds and institutions.

The AFB also reviewed new funding requests and 40 projects submissions totaling USD 268.2 million. These include 27 single-country project proposals, covering over USD 170 million, and eight regional proposals amounting to around USD 97 million. Single-country proposals include eight accredited national implementing entity (NIE) proposals under Direct Access in countries including Armenia, the Dominican Republic, Tanzania and Indonesia, and one regional implementing entity (RIE) proposal by the Caribbean Development Bank (CDB) in Saint Lucia to build agricultural climate resilience. Among regional project proposals, six come from multilateral implementing entities and two from RIEs.

New submissions also include five first-time proposals submitted through the Fund’s new funding windows, launched in December 2018 to provide grants to scale up effective projects, share knowledge of effective actions and accelerate innovation in adaptation. These new grant windows are available to NIEs in addition to regular funding channels. New funding window submissions include funding requests to tap into innovation, project scale-up and learning grants that foster innovation in adaptation, scaling-up of localized concrete adaptation activities and effective gathering, management and dissemination of knowledge within domestic and international climate communities to advance adaptation actions on the ground.

Climate-resilient Agricultural Projects in Sri Lanka, Egypt and CAR Reach USD 235 Million

Sri Lanka is implementing a project that aims to improve the productivity and climate resilience of smallholder agriculture in selected provinces. Support for the project comes from the World Bank, which approved a USD 125 million International Development Association (IDA) credit, with 27 years of maturity and a grace period of 12 years. The ‘Climate Smart Irrigated Agriculture Project,’ totaling USD 140 million, will be implemented by the Government of Sri Lanka, which is contributing USD 10 million and six provinces most exposed to climate impacts, which are expected to contribute USD 5 million.

In Egypt, a USD 81.6 million project titled, ‘Promoting Resilience in Desert Environments’ (PRIDE), aims to address two key challenges in the lower Nile region – the impact of climate change and malnutrition – by building climate resilience in disadvantaged communities and offering a variety of nutrition-sensitive activities. The International Fund for Agricultural Development (IFAD) and the Government of Egypt signed a financing agreement in February, including a USD 61.9 million loan and a USD 1 million grant from IFAD, as well as government contributions of USD 14 million. Private sector investments are expected to cover the remaining financing needs to implement PRIDE, which focuses on increasing agricultural productive capacities by: establishing rainwater harvesting infrastructure; planting fig and olive trees; and introducing new technologies, such as electronic tablets, to improve water quality monitoring and management among women and men.

IFAD also signed a financing agreement with the Government of the Central African Republic (CAR) for a USD 29 million ‘Project to Revitalize Crop and Livestock Production in the Savannah’ (PREPAS). Funding for the project includes: a USD 12.4 million grant from IFAD; government funding of USD 0.9 million; USD 3 million from beneficiaries themselves; as well as future IFAD resource allocation cycles for the country to cover the remaining financing gap of USD 12.6 million.

The project aims to strengthen the production, processing and marketing of maize, cassava, groundnut, red beans, poultry, goats, sheep and pigs. It will promote sustainable practices that help farmers adapt to climate change impacts, particularly droughts and floods. To reduce tensions and promote long-term sustainability, the project will also focus on encouraging dialogue between crop growing farmers and livestock producers.

India, Suriname Receive USD 131 Million in Loans for Post-disaster Recovery, Risk Management

According to the World Bank, natural disasters cost India an average of USD 9.8 billion annually. In June 2013, a heavy deluge caused devastating floods and landslides in the Himalayan state of Uttarakhand, which hit more than 4,200 villages and killed 4,000 people. The World Bank has since supported the ‘Uttarakhand Disaster Recovery Project,’ and signed in March 2019 another financing agreement with India and the government of Uttarakhand (GoUK). An additional USD 96 million loan from the International Bank for Reconstruction and Development (IBRD) has a five-year grace period, and a final maturity of 15 years. It will be used for the reconstruction of bridges, road and river bank protection works, and the construction of a training facility for the State Disaster Response Force (SDRF). The aim is further to increase the technical capacity of the state entities to respond promptly and more effectively to crises in the future.

The World Bank also approved in February a USD 35 million loan for a flood risk management project in Suriname, one of the most vulnerable countries to floods, as 30% of the country is within a few meters above sea level. To reduce flood risks, the ‘Saramacca Canal System Rehabilitation Project’ will: upgrade critical drainage infrastructure in the Canal; optimize the overall maintenance of the Canal and navigation; reduce the inundation time for property and businesses; develop a flood forecasting service; and implement an emergency response in the event of a natural disaster. The loan from the IBRD has a final maturity of 30 years including a grace period of six years.

Adaptation Efforts in the Pacific Region Benefit from EUR 15 Million in EU Support

With EUR 15 million, the EU is funding the ‘Global Climate Change Alliance Plus: Scaling-up Pacific Adaptation’ programme (GCCA+ SUPA), to be implemented by the Pacific Community (SPC), in partnership with the Secretariat of the Pacific Regional Environment Programme (SPREP) and the University of the South Pacific. The project is about scaling up climate change adaptation measures in specific sectors, supported by knowledge management and capacity building. The four-and-a-half year project (2019-2023) aims at strengthening the implementation of sector-based, but integrated, climate change and DRM strategies and plans. During his visit to Suva, Fiji, in March, the EU Commissioner for International Cooperation and Development, Neven Mimica, also signed off on a EUR 16.5 million the Pacific-EU Waste Management Programme, to aid the Pacific region to address issues relating to health and well-being, marine litter and biodiversity conservation.

Implementing Climate Change Adaptation: A Matter of Responsibility or Opportunity?

Among its findings, GEO-6 highlights human rights implications stemming from insufficient climate adaptation. Tropical cyclone Idai confirmed these concerns when it hit Southern Africa in mid-March, with the ensuing humanitarian crisis in Mozambique, Zimbabwe and Malawi affecting more than 2 million people. With the death toll in the hundreds, emergency relief support is pouring in, with USD 20 million from the UN Central Emergency Response Fund (CERF), GBP 18 million in aid from the UK and EUR 3.5 million in initial relief support from the EU.

Recognizing the increasing finance needs for climate adaptation and resilience globally, the World Bank Group (WBG) announced already in January its plan to increase direct adaptation climate finance to USD 50 billion over 2021-2025. During the third One Planet Summit in Nairobi, Kenya, in March, WBG further specified its plans to scale up climate action in Africa through USD 22.5 billion in new finance for that period, with more than half of the financing to support Africa’s adaptation and resilience.

Whether framed in terms of investment opportunities – or recognized as a human right to a healthy environment to be protected, as several non-governmental organizations (NGOs) submitted to the second Substantive Session of the Ad Hoc Open Ended Working Group (OEWG) Towards a Global Pact for the Environment – addressing the rising implementation needs of countries to adapt to climate change impacts will require the international community to take collective action.

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