The thesis examines what adaptation finance means and why it is needed for developing countries.
Parties under the UNFCCC recognize that developing countries will need more adaptive measures if global temperature continues to increase. The IPCC Fourth assessment report confirms that
“adaptation will be necessary to address impacts resulting from the warming which is already unavoidable due to past emissions”.217 COP 21 at Paris requested the IPCC to deliver a special report on the impacts of global temperature of 1.5°C above pre-industrial levels.218 In response to this task, the IPCC in 2018 released its special report termed ‘summary for policymakers’ and reports that a global temperature of 1.5°C is more climate friendly for the most vulnerable.219 Some of the consequences of climate change in developing countries, particularly coastal regions, include sea-level rise that will be harmful to habitable land, human settlements and infrastructure.
It is projected that “by 2100, global mean sea level rise is projected to be around 0.1 meter lower with global warming of 1.5°C compared to 2°C (medium confidence). Sea level will continue to rise well beyond 2100 (high confidence), and the magnitude and rate of this rise depends on future emission pathways. A slower rate of sea level rise enables greater opportunities for adaptation in the human and ecological systems of small islands, low lying coastal areas and deltas (medium
217IPCC 2007, p. 18.
218Decision 1/CP.21 para. 21.
219IPCC, Special Report on Global warming of 1.5, Summary for policymakers, 2018, p. 11.
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confidence).220 However, the IPCC in its 5AR, stated that such target of below 1.5°C will reduce the risk of dangerous sea level rise, but will still come with a high risk of extreme events and threats to ecosystems and significant impacts on poor communities.221 Furthermore, the report states that the world must achieve a reduction in GHG emissions of up to 40% to 70% by 2050 to enable warming below 2°C, while 70% to 95% reduction is crucial to meet the 1.5°C target.222 Although, the IPCC when it released its 3AR in 2001, claimed that the 2°C target was suitable for the climate.223
Wind storm will be rampant in some areas while some communities are exposed to drought, heat from higher temperatures, flooding from increased rainfall and malnutrition.224 The likely negative impacts of climate change will affect poorer communities which mostly depend on their natural environment and this will increase poverty and disease.225 The global average temperature will surely determine the level of adaptation finance that developing countries will need to survive.
However, it has now been discovered that a 2°C global temperature target will still be harmful to the climate.226 The 2°C global temperature would still have a negative effect on SIDs and vulnerable countries.227 Developing States pushed for a global temperature target of below 1.5°C, at COP 15 in 2009.228 In essence, the higher the global temperature, the higher the level of impacts of climate change.
Developing nations suffer more impacts of climate change because of their high level of vulnerability and low adaptive capacity.229 The poverty rate in developing countries is high and the impact of climate change will impede development in these areas.230 The impacts of climate change in developing countries require adaptation finance because of their vulnerability. As noted by some scholars, they referred to the impacts of climate change “as a threat to international peace
220Ibid
221IPCC 5AR 2014, p. 8.
222Ibid. P. 11.
223IPCC 3AR 2001.
224Caney CRISPP 2010, p. 203.
225Quinn et al 2018, p. 147.
226Richardson et al. 2009, p. 12.
227Schleussner et al. Earth System Dynamics 2016, p. 328.
228IISD summary of COP 15, Earth Negotiations Bulletin 2009, p. 3.
229Huq et al. IIED 2003, p. 6.
230Kameri Mbote 2016, p. 743.
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and security; and the region seen as most likely to suffer its worst effects is Africa”.231 While some writers have associated the vulnerability of developing countries to “geographical factors, reliance on agriculture and the lower adaptive capacities”.232
Developing countries need adaptation measures to deal with these impacts.233 It is clear that the risk posed by climate change requests a pressing reaction and subsequently there is a dire need for a reasonable structure on how adaptation finance will be activated and used.234 Adaptation finance is important to developing countries considering their economic position, “many of the States most likely to be seriously affected by climate change are poorly resourced developing countries that rely heavily on developed and certain developing country States, the United Nations, and the World Bank to assemble the money and resources they need to adapt to the worst effects of climate change”.235 If adaptation fails to achieve its purpose in developing nation, there is a threat of poverty hanging over 100 million people within the next 15 years.236
Adaptation finance implies such funds from developed nations towards developing nations to adapt to the impacts of climate change, the key point here is that these developing countries need financial assistance to adapt to the changing climate. The term adaptation finance is yet to be defined by Parties to the UNFCCC, but developed countries agree to financially assist developing nations to adapt to climate change impacts.237 The UNFCCC provides thus ‘‘a mechanism for the provision of financial resources’’ under the treaty’s COP.238 The SCF developed an operational definition of climate finance which refers to adaptation as ‘‘reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts’’.239
231Brown et al. Int. Affairs 2007, p. 1141.
232Meyer – Roser 2010 p. 238.
233Adamo Revista Brasileira de Estudos de População 2015, p. 618.
234Merkouris – Marie Aure 2017, p. 377.
235Boyle – Ghaleigh 2016, Gray et al (eds.), p. 28.
236World Bank 2015.
237Hall Int. Environ Agreements 2017, p. 38.
238UNFCCC 1992, Art. 11.
239UNFCCC SCF 2014, p. 21.
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At COP 17, it was agreed by Parties that “under-development of developing countries exposes them more to impacts of climate change”.240 The need for adaptation finance continues to enjoy recognition in COP meetings, during COP 24, it was confirmed that “the urgent need to enhance the provision of finance, technology and capacity-building support by developed country Parties, in a predictable manner, to enable enhanced action by developing country Parties”.241
This funds relied upon by developing countries to adapt to the impacts of climate change could be referred to as adaptation finance. Given an idea of what adaptation finance means, it should be noted that adaptation finance aims to help developing nations adapt to the consequences of climate change. The catastrophic impacts of climate change in developing countries raises the need for adaptation finance for these developing countries.
4.1.1 Overview of the costs of adaptation to climate change in developing countries
Having discussed the impacts of climate change on developing countries, the thesis does an examination of the estimated costs of adapting to the changing climate. The purpose of this sub section is to assess these estimates and have an idea of what developing countries need in terms of adaptation finance. The definition of adaptation costs is “intuitively understood as the costs incurred by societies to adapt to changes in climate”.242 In addition, adaptation costs is said to be an addition to costs of development.243 The IPCC defines adaptation costs as “the cost of planning, preparing for, facilitating, and implementing adaptation measures, including transaction costs”.244 The estimates of adaptation costs in developing countries varies depending on the source of information. The thesis studies the first generation estimates of adaptation costs in developing countries. In 2006, the World Bank states that adaptation costs in developing countries is in the range of USD 9-41 billion annually for the period 2010 to 2015. Whereas, Stern review, in 2006, puts annual adaptation costs for developing countries at USD 4-37 billion for 2010 to 2015. In the
240Decision 5/CP. 17
241Decision 1/CP. 24 para. 15.
242World Bank Group 2010, p. 17.
243Ibid
244IPCC AR4
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year 2007, Oxfam reiterates that adaptation costs for developing countries is about USD 50 billion on an annual basis for 2010-2015. While, the UNDP in 2007, claims that adaptation cost for developing countries is in the range of USD 86-109 billion annually till the year 2015.245
The thesis looks at the methodology of the estimates above, it is clear that the figures varies. An author says this is due to difference in “underlying assumptions, time horizons and methods of calculation. Although most of the figures are generated from same methodology, which is the climate-proofing of investment flows method developed by the World Bank”.246 The World Bank explains that the methodology commences with “the core flows of development finance, makes an estimate of the proportion of the investment that is sensitive to climate risk and estimate of the additional cost to reduce that risk to account for climate change”.247 In as much as the estimates of adaptation costs highlighted above all use a common methodology, they all have different results.
Some estimations are not restricted only to the climate-proofing method to determine adaptation costs,248 like the UNDP estimates in its adaptation costs includes “adaptation of poverty reduction programs to climate change and strengthening the disaster response system”.249 Also the result of estimates of annual adaptation costs listed above vary because, “the studies used different shares of climate-sensitive investments and/or mark-ups for climate-proofing parameters that significantly affect the estimate of adaptation costs”.250
In the second generation of estimates for adaptation costs, the UNFCCC in 2007, says adaptation costs for developing countries would be in the range of USD 27-66 billion annually till the year 2030.251 The UNFCCC 2007 estimates of annual adaptation costs for developing countries is said to be incomprehensive in terms of scope, depth and costing by a group of scholars, this makes them to conclude that the UNFCCC estimates is underestimated.252 In 2009, Parry et al. reveals in their study that estimates of adaptation costs for developing countries will be in the region of USD
245Agrawala – Fankhauser 2008, OECD.
246Syrovatka Research gate 2019, p. 62.
247World Bank 2006a, p. 144.
248Syrovatka p. 62.
249UNDP 2008
250Syrovatka p. 62.
251UNFCCC 2007.
252Parry et al. 2009, p. 8.
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54-198 billion annually for the period till the year 2030, this estimate is based on research of the UNFCCC 2007 study, although the authors modified the study to accommodate methodological concerns.253 In 2010, the World Bank released adaptation cost estimate, and states that developing countries will need about USD 75-100 billion annually between the period 2010 and 2050 for adaptation costs. This estimate by the World Bank is based on adapting to 2°C of global temperature.254 The UNEP reports that adaptation in Africa will need about USD 15 billion annually for 2016 to 2020, while it is expected to go as high as USD 50 billion to USD 100 billion for 2025 to 2050. Unfortunately, the continent’s local resources could raise only USD 3 billion annually, this is a serious financial constraint.255 South Africa reveals that the cost of adapting to the impacts of climate change for her, if global mitigation fails will be in the range of R1 120 billion in the period 2020–2030.256
The estimates of adaptation costs could be said to be in preparation of what is to come, it is said that, “adaptation cost estimates range from around USD 25 billion a year to well over USD 100 billion for the next two decades. The wide range is symptomatic for the poor state of knowledge, estimates remain indicative and incomplete”.257 The figures generated by various organizations gives an understanding that adaptation costs in developing countries will run into tens of USD billions annually, especially if the global temperature continues to rise.
4.1.2 Overview of adaptation finance provided by developed countries
The thesis takes a brief look at adaptation finance from developed countries to developing countries. For the purpose of this subsection, the thesis looks at adaptation finance provided through bilateral and multilateral climate finance in 2013-2017. The thesis here makes an attempt to bring to light how much of adaptation finance is being contributed by developed countries for developing countries.
253Ibid.
254World Bank 2010.
255UNEP Adaptation Gap Report 2015.
256Nhamo – Nhamo International Journal of African renaissance Studies 2016, p. 133.
257Fankhauser 2009, CCCEP & GRICCE, p. 9.
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According to OECD report in 2018, adaptation finance increased from USD 7.8 billion to USD 12.9 billion, which is said to represent a 65% increase. While finance for cross-cutting activities also experience a 37% increase which rose from USD 3.5 billion to USD 4.8 billion.258 The figure above represents both bilateral and multilateral climate finance. Adaptation finance from bilateral climate finance in 2013 is reported to be USD 4.7 billion which rose to USD 5.6 billion in 2017.
Multilateral climate finance attributed to developed countries towards adaptation finance rose from USD 3.1 billion in 2013, to USD 7.4 billion in 2017.259
In 2015, it was reported that public and private climate finance gathered USD 62 billion in 2014 towards the USD 100 billion goal, while 77% was channeled to mitigation, and adaptation secured 16%, then 7% dealt with both.260 The above report was rejected by governments and civil society.
It was argued that more than half of the adaptation projects failed to deal with climate vulnerability.
In addition the USD 10.1 billion purported to be adaptation finance in 2012 was also rejected, while it was suggested that USD 7.7 billion was not strictly on adaptation.261 The claim made by developed country Parties to have met the fast start finance was refuted.262 The report of OECD-CPI in 2015 was said to have failed to establish if financial resources provided by developed countries are new and additional, hence the funds provided had been diverted from ODA.263 In terms of instruments for climate finance, during the period 2013-2017 there was an increase of 25% in grant financing, which rose from USD 10.3 billion to USD 12.8 billion. Loans increased from USD 20.0 billion in 2013 to USD 40.3 billion in 2017, this includes concessional loans which are mostly bilateral loans and non-concessional loans that are mostly multilateral.264 The thesis finds that when reporting bilateral public finance to the UNFCCC, financial commitments and/or disbursements may be reported by Parties providing funds. While the reporting of multilateral public finance is made to the OECD DAC statistical reporting system.265
258OECD 2018, p. 5.
259Ibid.
260OECD 2015, p. 10.
261Adaptation Watch 2015.
262Ciplet et al. IIED 2012.
263Nakhooda et al. OCN 2013, p. 25.
264OECD 2018, p. 10.
265Ibid, p. 17.
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In 2017, some authors asserts that a major part of adaptation finance approved for funding of projects comes from the PPCR of Climate Investment Funds (CIFs) and LDCF.266 Although the authors also recognize the increasing approval of adaptation projects from the GCF. According to the authors, “the amount of cumulative finance approved for adaptation finance from key climate funds tracked by CFU has grown to USD 3.9 billion in 2017”.267
The GCF’s initial resource mobilization received pledged contributions from 23 developed countries in 2014, including contributions from 8 developing countries and some cities in the sum of USD 10.3 billion.268 By 2017, USD 10.1 billion of the total USD 10.3 billion pledges have been concluded as signed contributions.269 In 2017, the GCF approved nine adaptation projects with the sum of USD 400 million, and five cross-cutting projects with USD 210 million.270 As of June 2019, the GCF is said to have funded adaptation projects with the sum of USD 1.2 billion, while cross-cutting projects have received the sum of USD 1.6 billion.271
4.1.3 Recipient of adaptation finance
Between 2008 and 2012, the better part of adaptation finance were expended on regional projects.272 In terms of regional basis, from 2003 to 2017, approved adaptation finance has been allocated in the following order, starting with the most received region, “Sub-Sahara Africa, East Asia and the Pacific, and Latin America and the Caribbean, followed by programmes and activities in South Asia”.273 Adaptation finance has been directed at under privileged and susceptible countries mostly in Sub-Saharan Africa and South Asia.274 These two regions are highly susceptible to climate change, including disasters associated with climate extremes.275 The top
266Bird et al. ODI 2017, p. 1.
267Ibid.
268Waslander – Vallejos WRI 2018, p. 5.
269Schalatek et al. ODI 2017, p. 1.
270Bird et al. ODI 2017, p. 2.
271Salazar Research gate 2019, p. 8.
272Donner et al. Environ. Res. Lett. 2016, p. 5.
273Bird et al. ODI 2017, p. 3.
274Wittneben 2012, p. 1-3.
275Nakhooda ODI, 2015.
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recipient of adaptation finance are Niger, Bangladesh, Cambodia, Tanzania, Mozambique, Bolivia, Zambia and Nepal are among the principal recipients of climate funds, mainly for adaptation.276 The Small Island States (SIDS) such as Samoa, the Maldives, Jamaica, and St. Lucia are among the largest recipients of adaptation finance for disaster risk reduction due to the level of risk.
Although it is important to mention that not all poor and vulnerable countries have been able to access adaptation funds.277 The GCF funding decisions reflect its goal of supporting projects in priority countries: African states, 43 projects; LDCs, 38 projects; and SIDS, 22 projects. Of the approved adaptation projects, majority come from vulnerable countries.278