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Adaptation and Development Cooperation

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Theme: Possible work of the Task Team in the 2015/16 biennium: Adaptation, Development Planning, Policy and Co-operation …

Theme: Possible work of the Task Team in the 2015/16 biennium: Adaptation, Development Planning, Policy and Co-operation
Presentation of the work in this area, with attention to the political economy of adaptation planning and engagement of key stakeholders, including the private sector, in developing countries.
Presented at the Meeting of the OECD Joint DAC-EPOC Task Team on Climate Change and Development Co-operation, April 2014, Zürich, Switzerland. For more information, please contact Michael Mullan (michael.mullan@oecd.org) & Jan Corfee-Morlot (jan.corfee-morlot@oecd.org).

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  • 1. Adaptation and Development Cooperation The role of ODA in financing adaptation: Findings from Bangladesh, Ethiopia, Nepal and Rwanda, Kenya, The Gambia and Zanzibar
  • 2. 1. Supporting public policy responses for climate resilient development: Evolution of discourses that shape policy responses to CRGE and Finance 2. Political economy analysis: Understand the knowledge base of actors shaping policy responses + Facilitate reflection and dialogue 3. Case studies: Ethiopia, Rwanda, Bangladesh and Nepal 4. Government Group: Bangladesh, Nepal, Kenya, The Gambia and Zanzibar BACKGROUND
  • 3. STUDY OVERVIEW ETHIOPIA Climate Resilient Green Economy THE GAMBIA Low Emission Climate Resilient Development KENYA Climate Resilient Green Economy RWANDA Climate Resilient Green Growth ZANZIBAR Low Carbon Climate Resilient Development BANGLADESH Climate Resilient Low Carbon Development NEPAL Low Carbon Climate Resilient Development
  • 4. 1. Gap in demand and supply of climate finance: 1. 2012: Estimated USD 359 for investment into adaptation and mitigation (CPI, 2013). 2. Ethiopia: In excess of USD 150 billion over the next 20 years. Approximately USD 7.5 billion per year. In 2012 OECD USD 43.31 million for investment into adaptation and mitigation 2. Investments into adaptation a priority ……but 94 per cent of money invested in 2011 targeted mitigation (CPI, 2013) 3. Public sources of finance support investment into adaptation…..but private investments dominate climate finance accounting for 62 per cent of the total (CPI, 2013) 4. “How can the existing governance and institutional arrangements for climate finance deliver the scale of ambition?” – same old; project based; fragmented….. FINANCING ADAPTATION: THE CONTEXT
  • 5. Sources of climate finance •International and national public finance •International and national private finance •Carbon finance •Philanthropic climate finance Intermediaries •Multilateral banks and agencies •Bilateral agencies •National agencies •National financial institutions (development & private banks; micro finance institutions) •Multilateral , bilateral and national climate funds Economic & Financial instruments •Finance Enhancing Instruments (PPA/Warranties) •Risk Management Instruments (guarantee; insurance) •Carbon offset flows •Grants •Concessional loans •Capital (equity, debt financing) Financial planning systems • Institutional arrangements • Budget and planning systems (budget code; MTEF) • Financial planning tools Uses & Users of climate finance •Types of action: adaptation, mitigation, resilience, green economy •Type of access: private sector, public sector, civil society organisations Instruments for mobilising, managing and disbursing climate finance
  • 6. Source Intermediary Instrument Use & Users FINANCING CRGE: TRENDS IN DESIGN CHOICES International and national public finance International and national private finance Carbon finance Multiple financial intermediaries {National financial institutions} National CC Funds {programmatic financing} Mix of economic and financial instruments Financial instruments to match investment needs Sequencing in deployment Types of action: adaptation, mitigation, resilience, green economy Type of access: private sector, public sector, civil society organisations Planning systems Financial Policy Legislation & Operational manuals Institutional arrangements Financial management: Bangladesh, Ethiopia, India Resource allocation: Bangladesh, Rwanda Planning and budgeting Nepal CC Budget Rwanda on-budget Rwanda: Phased & targeted approach to choice of intermediary FONERWA: Public entity (MINIRENA)- Development Bank- Venture capital fund Ethiopia: IRM Rwanda: Sequenced approach to deployment of instruments 0-1: Grants & performance-based grants 2-5: guarantee; concessional loans >5: equity investment
  • 7. 1. Merged objectives at national level: How can money targeted at mitigation ensure adaptation co-benefits 2. Public finance (ODA) plays a key role in supporting investment into adaptation 3. Choose intermediaries that have the potential to leverage additional financial resources and disburse to identified investors and investments 4. Support economic and financial instruments that will incentivise investment into adaptation {look for sequencing} 5. Support financial planning systems that leverage synergy in investment outcomes 1. Build on institutions with existing mandates and capacity 2. Use budget and planning systems DEVELOPMENT COOPERATION AND ADAPTATION

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