Anand Patwardhan Adaptation Cse Briefing 280809 Final

Anand Patwardhan Indian Institute of Technology-Bombay Email: anand@iitb.ac.in A daptation: status and prospects

Why adaptation?
Asymmetry in distribution of impacts
Disproportionately larger impacts may be experienced in developing countries
Mitigation is not enough
Regardless of mitigation, we are faced with a finite, and significant degree of anthropogenic climate change
This is true even if we think a 2 C target is possible, and even more important if we don’t reach it (quite likely)
Managing climate risk is important for sustainable development
We are not well adapted to current climate risks
A greater focus on adaptation (filling the “adaptation deficit”) may actually help in advancing the development agenda
August 28, 2009 Anand Patwardhan, IIT-Bombay

Evolution as reflected in the IPCC assessments
Gradual evolution in emphasis from biophysical changes to impacts to vulnerability and now to adaptation from the first to the fourth IPCC assessment reports
Gradual evolution in focus from making the case (‘why’) to guiding the response (‘what’ and ‘how’)
Gradual evolution of thinking from a largely mechanistic and sequential view of impacts, vulnerability & adaptation to a more complex, process-oriented understanding of the response process
Baselines and socio-economic development scenarios
Path dependency and the possibility of mal-adaptation

Some relevant findings from the AR4
Adaptation is necessary in the short and longer term to address impacts resulting from the warming that would occur even for the lowest stabilization scenarios assessed (WG2 SPM, p.19).
More specific information is now available across a wide range of systems and sectors concerning the nature of future impacts, including for some fields not covered in previous assessments. Key impacts would be in water, food, ecosystems, coasts and health sectors (WG2 SPM, p.11).
Though adaptation measures are seldom undertaken in response to climate change alone (WG2, Ch. 17, p.719), in several sectors, climate response options can be implemented to realize synergies and avoid conflicts with other dimensions of sustainable development (AR4 Synthesis Report, p.18).
A wide array of adaptation options is available, but more extensive adaptation than is currently occurring is required to reduce vulnerability to future climate change (WG2 SPM, p.19).

Some relevant findings from the AR4 – contd….
More specific information is now available across the regions of the world concerning the nature of future impacts, including for some places not covered in previous assessments. In addition to LDCs and SIDS (which are already acknowledged as vulnerable regions under the Convention) other regions have been identified (WG2 SPM, p.13), for example (examples extracted from WG2, Ch. 19, Sec. 19.3.3, p. 791-792):
Africa is likely to be the continent most vulnerable to climate change especially with respect to food security and agricultural productivity, particularly regarding subsistence agriculture, increased water stress, potential for increased exposure to disease and other health risks, increased risks to human health Approximately 1 billion people in South, South-East, and East Asia would face increased risks from reduced water supplies decreased agricultural productivity and increased risks of floods droughts and cholera.
Tens of millions to over a hundred million people in Latin America would face increased risk of water stress.
Low-lying, densely populated coastal areas are very likely to face risks from sea-level rise and more intense extreme events.
Human settlements in polar regions are already being adversely affected by reduction in ice cover and coastal erosion.

Adaptation in the UNFCCC and KP
According to Article 4.1 of the UNFCCC, Parties are committed to:
Formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures… to facilitate adequate adaptation to climate change (Art. 4.1. (b)); and
Cooperate in preparing for adaptation to the impacts of climate change; develop and elaborate appropriate and integrated plans for coastal zone management, water resources and agriculture, and for the protection and rehabilitation of areas, particularly in Africa, affected by drought and desertification, as well as floods (Art. 4.1 (e)).
Article 4.4 states that:
The developed country Parties and other developed Parties included in Annex II shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting the costs of adaptation to those adverse effects.
Articles 4.8 and 4.9 of the Convention make specific reference to developing country Parties, in particular least developed and most vulnerable countries. These articles explicitly mention funding and transfer of technology “to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change” (UNFCCC 1992).
The Adaptation Fund created as a part of the Marrakech Accords was finally operationalized at CMP3 in Bali. The process involved decisions regarding the basic elements of the fund (28/CMP.1), principles underlying operation and management (5/CMP.2) and giving specific form to these arrangements (1/CMP.3) under which the Adaptation Fund Board is serviced by a Secretariat and a Trustee.
The Special Climate Change Fund and LDC Fund also created as part of the Marrakech accords.
Anand Patwardhan, IIT-Bombay August 28, 2009

Adaptation is addressed under different agenda items
SBI
Financial mechanism of the Convention (guidance to the GEF regarding SCCF and LDCF)
1/CP.10 (Buenos Aires programme of work) and Art 4.8
SBI (CMP)
Adaptation Fund
SBSTA
Nairobi Work Programme
AWGLCA
One of the pillars of the BAP
AWGKP
Extending share of proceeds

August 28, 2009 Anand Patwardhan, IIT-Bombay Multilateral response on adaptation Based on the two pillars of National and local adaptation responses Technology Financing Generation Delivery
Criteria for project selection and cost-sharing
Methodologies
‘ How’ to support ‘ What’ to support
Adequacy and predictability of source of funds
Scale of funds
Research : utilize S&T cooperation
Development: approaches for joint technology development
Deployment: and appropriate financing models
Should support and enable
Institutional structure
Financial instruments
Mechanisms for development & transfer What technology
Technology in the broadest sense
Traditional knowledge capture

Effective financing and resource delivery is key
Resource generation
Adequacy and predictability of resources
Scale of resources required: chronic vs. acute change
Resource delivery
What to support?
Making the space of potential projects tractable: criteria and parameters for additional cost, baselines and project outcomes / benefits
Need standardized, simplified methodologies
How to deliver?
Institutional structure for delivery, including governance of mechanism
Appropriate financial instruments for delivery
Recognize that in the case of adaptation (unlike mitigation), for most sectors, the actions being supported will be those of public entities
Difficulty with directly applying ideas from mitigation (baselines, additionality, incremental cost, global / local benefits)
July 31, 2009 Anand Patwardhan, IIT-Bombay

Elements
Demand
What are the needs and their characteristics and resource requirements?
Supply
How do we generate the resources for meeting these needs?
Delivery
How do we deliver the resources effectively? What are the appropriate institutional arrangements and modalities?

Supply
Characteristics
Adequacy
Predictability
Automaticity
New & additional
Meeting demand characteristics
Options
Contributions
Levy on transactions
Others….

Rationale for enhanced financial flows
UNFCCC, 2007: Additional investment and financial flows in 2030 for adaptation amount to tens of billions of USD, estimates depend on underlying scenarios
Adaptation costs depend on level of mitigation activities
August 28, 2009 Anand Patwardhan, IIT-Bombay Sector Areas / Adaptation measures considered Global (billion USD) Developing countries (%) Agriculture, forestry and fisheries Production and processing Research and development Extension activities 14 50 % Water supply Water supply infrastructure 11 80 % Human Health Treating increased cases of diarrhoeal disease, malnutrition and malaria 5 100 % Coastal zone Beach nourishment and dykes 11 40 % Infrastructure New infrastructure 8  130 25 %

Rationale for enhanced financial flows – cont.
UNDP HDR 2007/2008: adaptation investment needs will be USD 86 billion by 2015
Evolution from adaptation costs studies at the global level towards studies that will likely develop more information on adaptation needs at regional and national levels
UNDP project to estimate adaptation costs for agriculture, water resources, human health, forestry, and tourism in 10 countries
Regional Economics of Climate Change Studies, e.g. by ECLAC and ADB
However there are big questions about the adaptation cost numbers, including
Assumptions (e.g.,10-20% of investments for climate-proofing)
Limited sectors and adaptation
‘ Nebulous nature’ of adaptation or what are we exactly estimating costs of?

Generation of financial resources - options Funding source Current Proposed Public funding Private funding Voluntary Contributions Defined Contributions Contributions though levies on market instruments/commodities Multilateral Bilateral International National
Convention Funds under the GEF (SPA, SCCF and LDCF)
PPCR
ODA, including
GCCA
Japanese Cool Earth Partnership
Spanish MDG Fund
Fixed % of GNP or based on criteria such as GDP, GHG and population
CDM levy for AF
EU ETS
Investments
Financial risk management instruments, including insurance
Market finance, including
venture capital,
commercial loans
revolving credits
Share from global carbon tax
Expansion of CDM levy to 3-5%
SOP from JI and ET
Auctioning allowances
Levies on international air travel and bunker fuels

Call for resources to be:
Adequate and sustainable to address identified needs
Predictable to enable proper planning or sequencing of adaptation actions
New and additional to not divert funds from ODA
Current available and pledged funding in USD million August 28, 2009 Anand Patwardhan, IIT-Bombay

Private sector will likely play a critical role in funding adaptation investments and will at some stage undertake adaptation out of self-interest
Need to identify levers to further encourage the private sector to optimise and shift its investments towards more climate-resilient activities, for example
Public-Private-Partnerships for infrastructure projects or financial risk management, including insurance, where public takes over risks and ensures a certain economic rate of return
Potential of proposed options in USD billion August 28, 2009 Anand Patwardhan, IIT-Bombay

Demand: what to support?
The adaptation = development conceptualization has led to an unfortunate paradox:
Because adaptation = development, “normal” development actions ought to take care of the problem, as long as agents (and decisions) are “fully informed”
If adaptation = development, donor countries fear that “normal” development cam get put under adaptation projects, thus “opening the floodgates” in terms of demand on resources
To move forward we will need to recognize that adaptation to climate change:
Poses a distinct, additional burden
The costs of responding to this additional burden would need to be met through (grant financing) under the financial mechanism of the Convention
That while mainstreaming or integration is an approach for putting adaptation into practice, and not a means for removing the needs for funding
Given that the estimation of these additional costs in practice may be rather difficult we may need (a) better characterization of adaptation demand, (b) a process for determination and (c) negotiated levels of co-financing
Our response will need to address chronic and acute hazards (reinsurance)

Characterization of adaptation
Adaptation may be examined and characterized along two dimensions:
Nature of additionality, and
Nature of the intervention
Nature of additionality and primary drivers
Integrating climate risk into socio-economic activities to ‘climate-proof’ a current or future socio-economic activity to harness development benefits, e.g. airport in coastal zone
Expanding adaptive capacity to deal with future and not only current risks to harness development and adaptation benefits, e.g. crop insurance
Directly addressing observed impacts from climate change to harness adaptation benefits, e.g. changing Malaria zones

Characterization of adaptation – cont.
Nature of the intervention in line with the Bali Action Plan
Context of intervention at national and sectoral level
Policies
Programmes and plans
Projects
Type of intervention
Capacity-building
Research and assessments
Disaster risk reduction and risk management, including insurance
Technology
Specific adaptation action (e.g., infrastructure, cultivating drought-resistant crops)
Economic diversification

Examples of adaptation interventions (from NAPA’s) August 28, 2009 Anand Patwardhan, IIT-Bombay Intervention Additionality Type of intervention Context of intervention Research and assessments Disaster risk reduction Programmes Projects Integrating climate risk into socio-economic activities Research on micro hydro-power production (Burundi) Introduce drought tolerant crop varieties (Comoros) Incorporate adaptations from NAPAs in Ministry Operational Plans (Kiribati) Increase water supplies to combat increasing drought (Comoros) Expanding adaptive capacity to deal with future and not only current risks Research on drought, flood and saline tolerant crop varieties (Bangladesh) Strengthen early warning systems (Zambia) Integrated protection and management of coastal zones (Cape Verde) Plant vegetation to reduce risks from storms (Cambodia) Directly addressing impacts from climate change Improve understanding of groundwater resources in light of persistent drought (Mauritania) River flood warning system (Bhutan) Mainstreaming adaptation into sectoral programmes (Bangladesh) Lowering of water levels in the Thorthormi Lake to reduce risk of a future GLOF (Bhutan)

Delivery arrangements
Institutional arrangements
Governance
How much to fund?
Matching demand and supply
Methodologies for additional cost determination
How to disburse?
Access to resources

Current institutional arrangements August 28, 2009 Anand Patwardhan, IIT-Bombay

Proposed institutional arrangements
Call for adaptation funding being structured and governed under an umbrella financial mechanism of the Convention
Policy choice:
Using and improving existing institutions, e.g. GEF
Establishing new ones, e.g. Adaptation Fund under the Convention overseen by a board appointed by the COP with equitable and balanced representation of all Parties

Current access
For whom?
All developing country Parties to the Convention
SPA under the GEF Trust Fund (for global environmental and adaptation benefits)
SCCF (for adaptation benefits)
Only LDCs that are Parties to the Convention
LDCF (for preparation and implementation of NAPAs)
Developing country Parties to the Kyoto Protocol that are particularly vulnerable
Adaptation Fund (concrete adaptation projects and programmes )
How?
So far only indirect access through implementing agencies, direct access to Adaptation Fund being operationalized

Proposed access
For whom?
All developing country Parties to the Convention with a possibility of prioritization regarding vulnerability
BAP: LDCs, SIDS and countries in Africa affected by drought, desertification and floods
Proposals:
“ Poorest and most vulnerable”
Vulnerability index or indicators reflecting a country’s:
Circumstances
Respective capabilities
Level of associated risk
Physical impacts
How?
Direct and easy access with streamlined and transparent procedures

Disbursement considerations
Current disbursement
Under the SPA
2 increments: one for GEB and one for adaptation, developed for each project
Under the SCCF and the LDCF
1 increment for adaptation, determined through a sliding co-financing scale based on the size of the project
Proposed disbursement
Adaptation funding to be provided based on the nature of additionality and the nature of intervention
May need negotiated levels of co-financing and possibly a process by which this may be accomplished (example: Methodologies Panel to the AF)

Examples of disbursement for adaptation August 28, 2009 Anand Patwardhan, IIT-Bombay Intervention Additionality Type of intervention Context of intervention Research and assessments Disaster risk reduction Programmes Projects Integrating climate risk into socio-economic activities Full cost Negotiated co-financing depending on sector and project/ Full costs of marginal adjustments Negotiated co-financing depending on sector and project/ Full costs of marginal adjustments Negotiated co-financing depending on sector and project/ Full cost of marginal adjustments Expanding adaptive capacity to deal with future and not only current risks Negotiated co-financing Negotiated co-financing depending on sector and project Negotiated co-financing depending on sector and project Negotiated co-financing depending on sector and project Directly addressing impacts from climate change Full cost Full cost Full cost Full cost

Disbursement – cont.
Way of disbursement
Project support, as currently practised
Appropriate for piloting adaptation actions in countries and sectors
Less suitable in delivering up-scaled financial resources
Programmatic support as envisaged by the Adaptation Fund and several Parties
Allow for implementation at scale
Support for national adaptation plans
Budget support as piloted in development assistance
Allows for integration of national budgets, climate funds and other development funds

Beyond financing
Expert support for adaptation
Adaptation Committee of Experts
Regional centers and global and regional networks
Research and capacity-building
Tools, methodologies and metrics for assessing implementation and outcomes

Contact information Anand Patwardhan, IIT-Bombay Anand Patwardhan Shailesh J Mehta School of Management Indian Institute of Technology Powai, Mumbai 400076, India Phone: 91.22.25767788 Fax: 91.22.25722872 Email: anand@iitb.ac.in August 28, 2009

Anand Patwardhan Adaptation Cse Briefing 280809 Final

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Anand Patwardhan Adaptation Cse Briefing 280809 Final — Presentation Transcript