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CCXG Forum, March 2023, Sönke Kreft

  1. Understanding the current landscape of institutions and funding arrangement for L&D Input by Sönke Kreft MCII / UNU-EHS
  2. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred. Human-caused climate change is already affecting many weather and climate extremes in every region across the globe. This has led to widespread adverse impacts and related losses and damages to nature and people (high confidence). Vulnerable communities who have historically contributed the least to current climate change are disproportionately affected (high confidence). IPCC Synthesis Report 2023
  3. Focus of the L&D Finance Decision Economic L&D Non-Economic L&D Extreme Weather Events Slow Onset Processes Ex-Ante During Ex-Post including rehabilitation, recovery & reconstruction Focus of Decision 2 / CMA.4 Avert and Minimize L&D Address L&D Risk Identification Risk Prevention Risk Preparedness Risk Finance Recovery → Without action to avert and minimize L&D, addressing L&D will become unattainable → Transformation is needed: Build forward together • Address L&D while minimizing L&D • Make a business case for public and private sector investment/engagement • Make loan-based instruments really count • Prioritize the needs of the most vulnerable 3
  4. Funding Types and Sources to Address L&D Based on UNFC C C 2019 Grants Debt Finance - bonds Contingency Insurance UNFCCC Funds Multilateral Development Banks and Multilateral Climate Funds Bilateral sources of climate finance Domestic public climate and disaster expenditure Regional Risk Financing Thematic Finance • Humanitarian Finance • Disaster Risk Reduction Finance • Development Finance • Private Sector • Philanthropic Funds Decision 2 / CMA.4 6.a Current landscape of institutions (global, regional and national) and enhancing synergies 6.b. Gaps depending on type of challenge (e.g. slow onset, sudden onset, human mobility, data accesses, recovery) • Speed • Eligibility • Adequacy • Access to finance ( 6.c Priority gaps ) ( 6.d Most effective solutions especially for the most vulnerable people and ecosystems ) ( 6.e Potential sources of (innovative) funding ) Source of Funds Type
  5. Risk Finance at various levels The CDRFI instruments that will be used vary according to different levels. At the macro level, governments have a variety of tools available to them to manage disaster risk. At the meso level insurance or other services may be offered to groups (e.g., cooperatives) or risk takers (e.g., MFIs). Individuals of households make up the micro level and may access insurance, savings, or credit. • Sovereign risk insurance, often regional pools • Other government tools, such as social protection instruments Macro • Company or group insurance • Targeted at MFIs, cooperatives Meso • Individual level policies • Market-based or subsidized • May include savings or credit services Micro
  6. Benefits of Diversifying / Pooling Risk • Premium reduction = less cost • More and improved risk information • Increased sustainability • Works for adding risks and regions Based on World Bank 2017
  7. Thank you! MCII is hosted at the United Nations University Institute for Environment and Human Security (UNU-EHS) UN CAMPUS, Platz der Vereinten Nationen 1, D-53113 Bonn, Germany