Download Financing Adaptation to Climate Change

Financing Adaptation to Climate Change:
A Development Practitioner‘s View
Climate Talks - Water Day
Bonn - June 2, 2010
Dr. Manuel Schiffler, KfW Development Bank
The old challenges have not gone away:
The example of water
● Low capacity in some countries, especially in Least
Developed Countries
● Perception of poor governance
● Low levels of cost recovery
● Population growth and chaotic urbanization
● Droughts and floods
● Pollution
● Inefficient water use
● Groundwater overuse
● Lack of Integrated Water Resources Management (IWRM)
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„…must be tackled as an integrated whole“
● “If we try to separate projects or programmes into those which are
development and those which are climate change, or even to try to be
precise about elements which are one or the other, we risk confusion,
disruption and incoherence. We must be committed to both issues,
analyze them together carefully, and act in a way that integrates them
into projects and programmes.”
● “Attempts to build strongly separate adaptation funding arrangements
and institutions would be very damaging. (…) The two great challenges
of the 21st century, fighting world poverty and tackling climate change,
must be tackled as an integrated whole by a united world.”
Nicholas Stern, IG Patel Professor of Economics and Government, at the London School of Economics
and former Chief Economist of the World Bank, in: A Blueprint for a Safer Planet, 2009
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Adaptation funding is already happening
● About 38 % of KfW‘s new commitments for water already support
adaptation
- Flood protection, e.g. in Bulgaria
- Loss reduction, e.g. in Jordan
- Water conservation and reuse, e.g. in Peru
- Watershed management, e.g. in India
- Protection of water resources through wastewater treatment and
sanitary landfills (worldwide)
● Systematic climate auditing (mitigation potential and adaptation needs)
is now being undertaken for all new projects at the appraisal stage
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Public Climate Financing: Committed Grants &
Concessional Loans in 2008
EIB, $1.1 bln,
6%
IDB, $1.1 bln,
6%
ADB, $1.5 bln,
9%
EBRD,
$0.9 bln, 5%
JICA, $6.3 bln,
0.36
36%
World Bank,
$2.0 bln, 11%
GEF, $0.5 bln,
3%
AFD, $1.8 bln,
10%
KFW, $2.4 bln,
14%
Source: Estimates
based on SEI, GEF &
German Parliament
18 billion USD (12 billion €) of new commitments for mitigation & adaptation
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Copenhagen Accord
● „new and additional resources (…) approaching USD 30 billion for the
period 2010 – 2012 with balanced allocation between adaptation and
mitigation.“ (Fast Start)
● „Funding for adaptation will be prioritized for the most vulnerable
developing countries, such as the least developed countries, small
island developing States and Africa.“
● „In the context of meaningful mitigation actions and transparency on
implementation, developed countries commit to a goal of mobilizing
jointly USD 100 billion dollars a year by 2020 to address the needs of
developing countries.“ (from private and public sources)
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Fragmentation vs. Consolidation
Trend towards
fragmentation:
Commitment to
consolidation:
● Existing multilateral and
● Paris Declaration of the
bilateral development
financing
● WB Strategic Climate Funds
● UNFCC Adaptation Fund
● Possible new EU Climate
Facility
● Bilateral Facilities
● Etc.
OECD on Aid Effectiveness
● Accra Declaration
● EU Investment Facilities (16
European financing
agencies join forces)
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Implementing Bodies
Trustees
Sources
International Climate Financing: Multi-Channel System
National Budgets & International Sources of Finance
Channel 1
CIFs
CTF
SCF
NEW?
Channel 2
Channel 3
UNFCCC
Climate Funds
GEF, AF & NEW?
Others
IFIs
BFIs?
BFIs?
BFIs
IFIs?
Developing Countries: Budgets, Programmes, Projects, Companies, Civil Society
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What does this mean?
● Need to ensure sector expertise in water projects financed through
Climate Funds
● Commitments to adaptation must be channeled via experienced
financing institutions
● Accreditation of bilateral financing institutions such as AFD and KfW to
GEF and Climate Funds
● Further fragmentation should be limited as much as possible
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Analytical work at KfW
● “River Basin Snapshots” to summarize research on water impacts at
the basin level: Souss (Morocco), Rimac (Peru), Niger (West Africa),
Aras-Kura (Caucasus), others
● Identification of pilot adaptation projects, e.g. in Morocco, India, West
Africa, Guatemala etc.
● New financing mechanisms
● Cost-benefit analysis of adaptation, incremental cost analysis
● Working closely with GTZ and relevant federal Ministries in the
preparatory process for Cancun and beyond
● Working with other development Banks (World Bank, EIB, AFD etc.),
e.g. through a seminar on financing adaptation to climate change at
World Water Week 2010
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