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Anand Patwardhan
Indian Institute ofTechnology-Bombay
Email: anand@iitb.ac.in
Adaptation: status and prospects
Why adaptation?
Asymmetry in distribution of impacts
Disproportionately larger impacts may be experienced in developing
...
Evolution as reflected in the IPCC
assessments
Gradual evolution in emphasis from biophysical changes to
impacts to vulne...
Some relevant findings from the AR4
 Adaptation is necessary in the short and longer term to address impacts
resulting fr...
Some relevant findings from the AR4 –
contd….
 More specific information is now available across the regions of the world...
Anand Patwardhan, IIT-Bombay6
Adaptation in the UNFCCC and KP
 According to Article 4.1 of the UNFCCC, Parties are commit...
Adaptation is addressed under
different agenda items
SBI
Financial mechanism of the Convention (guidance to the GEF rega...
August 28, 2009Anand Patwardhan, IIT-Bombay8
Multilateral response on adaptation
Based on the two pillars of
National and ...
Effective financing and resource delivery is
key
July 31, 2009Anand Patwardhan, IIT-Bombay9
 Resource generation
 Adequa...
August 28, 2009Anand Patwardhan, IIT-Bombay10
Elements
Demand
What are the needs and their characteristics and resource
...
August 28, 2009Anand Patwardhan, IIT-Bombay11
Supply
Characteristics
Adequacy
Predictability
Automaticity
New & addit...
12
Rationale for enhanced financial flows
Sector Areas / Adaptation measures
considered
Global
(billion USD)
Developing
co...
13
Rationale for enhanced financial flows – cont.
UNDP HDR 2007/2008: adaptation investment needs will
be USD 86 billion ...
14
Generation of financial resources - options
Funding
source
Current
Proposed
Public funding Private funding
Voluntary Co...
15
Current available and pledged funding in USD million
Source Estimated level
of funding
Period Nominal
annual level
of f...
16
Potential of proposed options in USD billion
Proposed by Source Nominal annual level of
funding
G77 and
China
0.25 to 0...
August 28, 2009Anand Patwardhan, IIT-Bombay17
Demand: what to support?
 The adaptation = development conceptualization ha...
18
Characterization of adaptation
 Adaptation may be examined and characterized along two
dimensions:
 Nature of additio...
19
Characterization of adaptation – cont.
 Nature of the intervention in line with the Bali Action Plan
 Context of inte...
August 28, 2009Anand Patwardhan, IIT-Bombay20
Examples of adaptation interventions (from NAPA’s)
Intervention
Additionalit...
August 28, 2009Anand Patwardhan, IIT-Bombay21
Delivery arrangements
Institutional arrangements
Governance
How much to f...
22
Current institutional arrangements
August 28, 2009Anand Patwardhan, IIT-Bombay
23
Proposed institutional arrangements
Call for adaptation funding being structured and governed
under an umbrella financ...
24
Current access
For whom?
All developing country Parties to the Convention
SPA under the GEF Trust Fund (for global en...
25
Proposed access
For whom?
 All developing country Parties to the Convention with a possibility of prioritization
regar...
26
Disbursement considerations
Current disbursement
Under the SPA
2 increments: one for GEB and one for adaptation, dev...
27
Examples of disbursement for adaptation
Intervention
Additionality
Type of intervention Context of intervention
Researc...
28
Disbursement – cont.
Way of disbursement
Project support, as currently practised
Appropriate for piloting adaptation...
Beyond financing
Expert support for adaptation
Adaptation Committee of Experts
Regional centers and global and regional...
Anand Patwardhan, IIT-Bombay30
Contact information
Anand Patwardhan
Shailesh J Mehta School of Management
Indian Institute...
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Anand Patwardhan Adaptation Cse Briefing 280809 Final

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Adaptation: status and prospects

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Anand Patwardhan Adaptation Cse Briefing 280809 Final

  1. 1. Anand Patwardhan Indian Institute ofTechnology-Bombay Email: anand@iitb.ac.in Adaptation: status and prospects
  2. 2. 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, 20092 Anand Patwardhan, IIT-Bombay
  3. 3. 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 August 28, 2009Anand Patwardhan, IIT-Bombay3
  4. 4. 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). August 28, 2009Anand Patwardhan, IIT-Bombay4
  5. 5. 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. August 28, 2009Anand Patwardhan, IIT-Bombay5
  6. 6. Anand Patwardhan, IIT-Bombay6 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. August 28, 2009
  7. 7. 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, 2009Anand Patwardhan, IIT-Bombay7
  8. 8. August 28, 2009Anand Patwardhan, IIT-Bombay8 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
  9. 9. Effective financing and resource delivery is key July 31, 2009Anand Patwardhan, IIT-Bombay9  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)
  10. 10. August 28, 2009Anand Patwardhan, IIT-Bombay10 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?
  11. 11. August 28, 2009Anand Patwardhan, IIT-Bombay11 Supply Characteristics Adequacy Predictability Automaticity New & additional Meeting demand characteristics Options Contributions Levy on transactions Others….
  12. 12. 12 Rationale for enhanced financial flows 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 %  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, 2009Anand Patwardhan, IIT-Bombay
  13. 13. 13 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? August 28, 2009Anand Patwardhan, IIT-Bombay
  14. 14. 14 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  15. 15. 15 Current available and pledged funding in USD million Source Estimated level of funding Period Nominal annual level of funding Funding under the Convention SPA LDCF SCCF 50 172 91 As of Oct 21, 2008 As of Oct 21, 2008 n.a. n.a. Adaptation Fund 400-1 500 2008-12 80-300 Multilateral PPCR 640 2009-12 160 Bilateral Japanese Cool Earth Partnership 1 000 2008-12 200 German International Climate Initiative 385 2008-12 77 GCCA of the European Commission 84 2008-10 28 Spanish MDG Fund 143 2008-11 36  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 August 28, 2009Anand Patwardhan, IIT-Bombay
  16. 16. 16 Potential of proposed options in USD billion Proposed by Source Nominal annual level of funding G77 and China 0.25 to 0.5 % of GDP from Annex I Parties 100.5–201 Switzerland 2 USD/t CO2 18.4 Norway 2% levy on auctioning AAUs 15–25 Mexico contributions based on GDP, GHG and population and markets 0.2 EU 2% levy on SOP from CDM 0.25–2.5 Pakistan 3-5% levy on SOP from CDM 0.375–6.25 LDCs 2% levy on SOP from JI and ET 0.03–2.25 LDCs Levy on international air travel (IATAL) 4–10 LDCs Levy on bunker fuels (IMERS) 4–15  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 August 28, 2009Anand Patwardhan, IIT-Bombay
  17. 17. August 28, 2009Anand Patwardhan, IIT-Bombay17 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)
  18. 18. 18 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 1. 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 2. Expanding adaptive capacity to deal with future and not only current risks to harness development and adaptation benefits, e.g. crop insurance 3. Directly addressing observed impacts from climate change to harness adaptation benefits, e.g. changing Malaria zones August 28, 2009Anand Patwardhan, IIT-Bombay
  19. 19. 19 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  20. 20. August 28, 2009Anand Patwardhan, IIT-Bombay20 Examples of adaptation interventions (from NAPA’s) 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)
  21. 21. August 28, 2009Anand Patwardhan, IIT-Bombay21 Delivery arrangements Institutional arrangements Governance How much to fund? Matching demand and supply Methodologies for additional cost determination How to disburse? Access to resources
  22. 22. 22 Current institutional arrangements August 28, 2009Anand Patwardhan, IIT-Bombay
  23. 23. 23 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  24. 24. 24 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  25. 25. 25 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: o Circumstances o Respective capabilities o Level of associated risk o Physical impacts How?  Direct and easy access with streamlined and transparent procedures August 28, 2009Anand Patwardhan, IIT-Bombay
  26. 26. 26 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) August 28, 2009Anand Patwardhan, IIT-Bombay
  27. 27. 27 Examples of disbursement for adaptation 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  28. 28. 28 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 August 28, 2009Anand Patwardhan, IIT-Bombay
  29. 29. 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 August 28, 2009Anand Patwardhan, IIT-Bombay29
  30. 30. Anand Patwardhan, IIT-Bombay30 Contact information 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

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