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  • 1. CITIES AND CLIMATE CHANGE INITIATIVEPOLICY NOTE 1Adaptation Finance:Are Cities in Developing CountriesSlipping Through the Cracks?Much of the investment required toadapt to climate change must takeplace in urban areas.Two points are becoming clear regard-ing the challenge of adapting to cli-mate change: the total bill is going tobe enormous, and much of the invest-ment required will have to occur in ur-ban areas. The World Bank recently putthe global costs of adaptation at US$70to 100 billion a year for 2010 – 2050(World Bank 2010c).World Bank economists esti-mate that more than 80 percent of adaptation costs willbe borne by urban areas. Flooding in Kalerwe, Kampala, Uganda ©UN-Habitat/Nicholas KajobaWhile it is hard to gauge accurately theportion of those needs that correspond to tergovernmental Panel on Climate Change in the urban context” (McGray et al 2007).cities, economists recently estimated that concludes, such communities “can be es- This general pro-rural finding holds true inurban areas will need to absorb “more pecially vulnerable…. The poor tend to live the specific case of National Adaptationthan 80 per cent” of total adaptation in- in informal settlements, with… substand- Programmes of Action (NAPAs), the mostvestments (World Bank 2010b). Engineers ard houses, lacking adequate water, drain- concerted attempt to date to help leastwill need to ‘climate-proof’ vital urban age and other public services and ofteninfrastructure, while local authorities and situated in risk-prone areas” (IPCC 2007). “We need to adapt….others must build the resilience of ur-ban households. In particular strategies To date, however, adaptation finance Funding needs to be a lotmust assist the urban poor in developing has largely overlooked urban areas. more accessible…. Not allcountries who live in areas that are sensi-tive to climate change impacts. In 2000, Although the brunt of adaptation require- cities are aware of fundingfor example, some 229 million (mostly ments will fall on urban settlements, to opportunities, and havepoor) persons lived in urban areas in low date relatively few adaptation projectselevation coastal zones in low- and lower- have occurred in those areas. For example, access to it.”middle income countries that were at risk in 2007 the World Resources Institute re- – Elana Keef, Nelsonof sea level rise; their numbers are grow- viewed 135 adaptation activities in devel-ing (McGranahan et al 2007). Other poor oping countries. The authors found: “By Mandela Bay Metropolitanfamilies cling to steep hillsides along rivers, far the majority of cases [reviewed] had a Municipality, South Africaor live in areas threatened by water scarcity rural focus”. They concluded: “Little atten-or other climate change impacts. As the In- tion has been paid thus far to adaptation (ICLEI 2010).
  • 2. POLICY NOTE 1: ADAPTATION FINANCEdeveloped countries (Least Developed It is unfortunate if cities indeed are slip- ment them effectively will be necessaryCountries Fund, or LCDF) to identify and ping through the cracks of adaptation to allow local authorities to more fullymobilise funding for adaptation priorities. finance – and not only because so much harvest these low-hanging fruit.A review of the initial batch found that needs to be done in urban areas. As“few NAPA projects have an urban focus” the closest and most responsive level of “As local governments, we(Satterthwaite et al 2007). To update this government, local authorities possessfinding, in 2011 UN-Habitat reviewed a both the incentive and the local knowl- are often ready to act butsample of a quarter of all submitted NA- edge needed to find cost-effective solu- need funding. With morePAs (12 of 45). We found that only around tions that respond to the needs of their14 per cent of the resources called for by constituencies. ICLEI argues that, in the direct access to resourcesthose NAPAs were for projects that largely same way that local authorities have for climate mitigation andor exclusively targeted urban areas. been able to reduce greenhouse gas emissions at a substantially lower cost adaptation actions weTo date, relatively few of than initial top-down models indicated, could relieve the planet so they should be able to find the mostthe adaptation projects cost-effective means to increase climate from stress and help gov-undertaken globally have resilience (ICLEI 2011). And indeed, ernments meet their na- some of the means for adapting to cli-had an urban focus. mate change that promise the greatest tional targets.” net benefits lie within the purview of ur- – David Cadman, PresidentWhy this relative lack of funding for ban policy-makers..adaptation projects in those areas that of ICLEIneed it most? Two organisations have Amongst such measures are improvedcome up with strikingly similar expla- building codes and community early There are some encouraging signsnations for this mismatch. According warning systems – both of which can that the international community isto ICLEI – Local Governments for Sus- help to strengthen resilience in urban beginning to heed the needs of cities.tainability: “At present, the ability of areas (ECA 2009). Another important In 2010, for example, the first projectlocal governments to leverage funding means to increase climate resilience in approved by the newly-established Ad-is largely affected by their interaction cities is through improved basic land use aptation Fund targeted mostly urbanwith national governments vis-à-vis in- planning. The World Bank advises: “Be- areas (in Senegal). And at the close ofternational funds…. The architecture of cause the majority of the capital stock in the 2010 Conference of Parties to theavailable funds privileges the national 2050 remains to be installed, land use UN Framework Convention on Climatelevel” (ICLEI 2010). The World Bank con- planning that channels investment into Change (UNFCCC) in Cancún (COP-curs: “All of this international climate lower risk locations can substantially 16), States recognized local authoritiesfunding will be channelled through na- reduce risk at low cost” (World Bank as key “governmental stakeholders”tional governments, and city access to 2010c). Other measures such as slum in global climate change efforts. Muchfunding remains uncertain, especially upgrading also may yield important more, however, needs to be done.as climate change activities are usually benefits. Of course capacity-building toassigned to Ministries of Environment, empower local officials so that they can Empowered local leaderswhich do not traditionally focus on ur- select the most cost-effective actions,ban issues” (World Bank 2010c). optimize their sequencing and imple- can take effective action.“Funds at the internationallevel are difficult to access,because normally[implementing institutions]hardly give loans to localgovernment. They shouldchange the rules of theinternational game, givemore credit to localauthorities.”– Queretaro, Mexico(ICLEI 2010) Construction in the coastal area of Maputo, Mozambique ©UN-Habitat/Ricardo Rangel
  • 3. POLICY NOTE 1: ADAPTATION FINANCEWhat we should do about it.The Green Climate Fund should pro-vide cities (with the support of nationalgovernments) with access to a portionof the adaptation resources channelledthrough this facility. Greater access forcities to these resources would promotegreater financial autonomy for local gov-ernments per the decentralization poli-cies of a number of countries. It wouldalso provide for the development ofcost-effective solutions in a ‘bottom-up’manner that responds to local needs andreflects local conditions.Greater access for cities could occur inone of two ways. Firstly a special win-dow could be created to which local Protective seawall in Sorsogon, Philippines ©UN-Habitat/Bernhard Barthgovernments could apply directly foradaptation (as well as mitigation) re- cal role in financing adaptation activities. “We, African Mayors, callsources. The original terms of reference At present, however, very few if any suchfor this Fund would permit this: they funds provide for periodic open calls on the UNFCCC Parties to:allow for financial resources to be pro- for proposals to which local authoritiesvided “through a variety of financial in- can directly apply. Resources from suchstruments, funding windows and access funds could help local governments to Realise a visible commitmentmodalities, including direct access…” mobilize other resources, including from and adequate resources to-(UNFCCC 2011). Recent reports, howev- the private sector. Such opportunitieser, indicate that the number of windows would help cities to begin to adapt to wards adaptation commen-in the Green Climate Fund will be quite climate change. surate with the anticipatedlimited, and that national developmentplanning processes should institutional- These recommendations are fully con- impacts and associatedise the use of these resources. If this is sistent with collective calls by local offi- costs…at the local level.indeed the case, a second option would cials (e.g., expressed through the Localbe to encourage national governments Government Climate Roadmap Process,to engage with local authorities on this including the African Mayors’ Climate Establish an adaptationtopic, and then to endorse and forward Change Declaration of 2011) for accesstheir adaptation priorities to the Green to climate finance. framework that is flexible,Climate Fund – even if those priorities accessible, supportive ofdid not surface earlier through the na-tionally-oriented NAPA processes. long-term, sustainable development andFinally, looking ahead: while the pro-cess of developing NAPAs essentially responsive to the Africanhas ended and it is thus too late to think local governmentabout integrating ‘Local Adaptation Pro-grammes of Action’ into that process, reality…”any future support to national adapta-tion planning should explicitly providefor the engagement of the local govern- – African Mayors’ Climatement sector via such mechanisms. Change Declaration 2011Other adaptation funds should: (i) con- (excerpts)sider projects that benefit the vulnerableurban poor to be strategic priorities,and (ii) permit and even encourage localgovernments to apply directly for suchfunds, while leveraging other financingsources. Besides the emerging GreenClimate Fund, other climate funds (ad-ministered by multilateral and bilateralagencies, foundations and so on) are Landslide in Esmeraldas, Ecuadorplaying and will continue to play a criti- ©UN-Habitat/François Laso
  • 4. POLICY NOTE 1: ADAPTATION FINANCE“We, Mayors of the “We, representatives of This Policy Note was developed by the UN-Habitat Cities and Climate ChangeWorld, coming from 35 cities from all regions of Initiative (CCCI), generously financedcities in 30 countries… the world gathered in by the Government of Norway and other sources. It was prepared by Rob-recognise the need for Gwangju commit to ... find ert Kehew, with inputs and commentsfinancial institutions to ways and means of better from Raf Tuts, Bernhard Barth and De- bashish Bhattacharjee (UN-Habitat),fund locally relevant and access to finance mecha- Monali Ranade (World Bank) and Yu-appropriate development, nisms such as the Clean nus Arikan (ICLEI).rather than conventional Development Mechanism.”global financing mecha-nisms determining which – Gwangju (Korea) Cities’local projects are eligible Declaration (2011)for funding…. We furtheradvocate for… developingspecialized financial instru-ments for comprehensivelocal adaptation and resil-ience upgrading projectsin urban areas and sys-tems known to be highlyvulnerable”.– Bonn Declaration ofMayors 2011 (excerpts) Bridge washed out by flooding and its rebuilt replacement on the Teaone River in Esmeraldas, Ecuador ©UN-Habitat/François LasoReferencesEconomics of Climate Adaptation and Urbanization 2007. UN-Habitat. 2011. Global Report on(ECA) Working Group. 2009. Shap- Human Settlements 2011: Cities anding Climate-Resilient Development: A McGray, Heather, Anne Hammill and Climate Change.Framework for Decision-making. Rob Bradley. 2007. Weathering the Storm: Options for Framing Adaptation World Bank. 2010a. “Cities and Cli-ICLEI. 2010. Cities in a Post-2012 Cli- and Development. World Resources In- mate Change: An Urgent Agenda”.mate Policy Framework. stitute. World Bank. 2010b. “Climate finance inICLEI. 2011. Financing the Resilient City. Satterthwaite, David, Saleemul Huq, the urban context”. Issues Brief No. 4. Mark Pelling, Hannah Reid, PatriciaIntergovernmental Panel on Climate Romero Lankao. 2007. “Adapting to World Bank. 2010c. Economics of Ad-Change (IPCC). 2007. Fourth Assess- climate change in urban areas: the pos- aptation to Climate Change: Synthesisment Report. sibilities and constraints in low- and Report. middle-income nations”. InternationalMcGranahan, Gordon, Deborah Balk Institute for Environment and Develop-and Bridget Anderson. 2007. “The ris- ment (IIED).ing tide: assessing the risks of climatechange and human settlements in low Transitional Committee of theelevation coastal zones”. Environment UNFCCC. 2011.

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