Financing Climate Change Adaptation and Mitigation in the Pacific

Coral Pasisi, 1 November 2012

Financing Climate Change Adaptation and Mitigation in the

Pacific

“Poverty and climate change are the two great challenges of the 21st century. Our responses to them will define our generation, and because they are linked to each other, if we fail on one, we will fail on the other.” Lord Nicholas Stern, 2010“Poverty and climate change are the two great challenges of the 21st century. Our responses to them will define our generation, and because they are linked to each other, if we fail on one, we will fail on the other.” Lord Nicholas Stern, 2010

Overview1. What is climate change funding? – sources and

financing landscape2. Challenges for PICs in accessing and managing CCF

(from any source)3. Leaders direction4. Multi-tiered response

i. Practical examplesii. How to determine optimal mix of modalities and sources –

Country and task specificiii. Capacity supplementation

5. ConclusionCoral Pasisi, 1 November 2012 2

What is climate change funding?1. Climate financing no globally agreed definition – OECD

definition2. Funds to address climate change – Domestic, CCF,

ODA, financing institutions, private sector3. Lots of grey area – development and climate change

discourse are interlinked as are their resources. 4. Comparability and accountability very difficult. 5. Definition of CCF most meaningfully defined at country

level.

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Funds for CC LandscapeProjected ODA by 2020 = USD117 billion per annum; Pledged Climate Change funding by 2020 = USD100 billion per annum

ODA equate to a significant part of PICs economies (68% of Niue’s 2011/12 budget is ODA, 33% of Samoa’s 2011/12 budget is ODA (loans and grants) 18.6% of ODA is climate change funding and 75% of that is project based) . Hence the need for significant engagement by central line Ministries of financing, planning and aid management

ODA access and management: Pacific region faces significant challenges with effective donor coordination, aid effectiveness and overall development effectiveness [The Compact].

Focus on strengthening national systems for effective access to and management of these resources combined with national resources. Work to increase donor harmonisation and use of country systems (Compact reporting found = Only %25 of ODA using country

systems. 180 individual projects in Solomone Islands, 46 different development partners operating in Samoa)

Climate Change funding 80% mitigation funding, 20% Adaptation so far. Complex requiring specialist knowledge to access. Adaptation funding should accrue to PICs and not be diverted to larger countries with bigger capacity to access and develop projects; Largely globally allocated, lowest common denominator (size and focus often not PIC compatible) Fast start funds accounted for differently so not comparable.

No doubt significant ‘new and additional’ resources are required. This does not mean that climate funding should be provided as a separate stream of investment, with an eruption of self standing projects, policies and initiatives. It should rather be integrated with existing national planning financing processes, imperfect as these may be.

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1. Supported key findings of SPREP commissioned report of 2010 – technical backstopping and potential for regional fund

2. Challenges for Pacific Island Countries and Territories

3. General assessment of options at:i. national, level - budget support, trust fund

arrangements, NIEii. sub-regional, regional levels - technical

backstopping mechanism (PCCR), sub-reg or regional fund potential; and

iii. international level – SIDS friendly Green Climate Fund design, SIDS friendly modalities

Climate Financing Options Paper 2011

KEY CHALLENGES FOR PICS Access to international financing. The Global funding structure and architecture is messy,

complex and requires specialist knowledge and capacity to access. Mitigation focused.

Access to bilateral funding - Improving development effectiveness and donor harmonisation. Significant source of funding for CC from bilateral donors. Highly fragmented, many players and outside country systems (75%).

Enabling environment – policy and institutional and strength of national systems. effectively mainstreaming climate change, including in M&E.

Capacity constraints in the region – PICs internal; donor capacity; regional organisations.

Maximising mitigation ,adaptation and development efforts. Mitigation efforts and resources offer clear co-benefits in key development areas

Climate Finance

to Country

X

World Bank

ADB

CTF

Climate Investmen

t FundsSCF

PPCR

SPREPSPC PIFS

Adaptation Fund

GEF

SCCF

LDCF

Australia

ICCAI

UNDP

MDGF

UN-REDD

Other UN agencies

‘Green Fund’

Japan

JICA

‘Cool Earth’

New Zealand

EU

USAID

UAE

Turkey Israel

MinENV

MinAGR

MinHSS

MinFIN

MinFA

MinFIN

Complexity of accessing and managing/utilising Climate Change resources

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Leaders Direction1. Help improve PICs access to and management of climate change

financing2. Relevant policy papers considered by Forum Leaders and Economic

Ministers in 2011• Climate change and development effectiveness• Budget support and trust fund arrangements• Regional funding arrangements• Capacity supplementation and institutional strengthening

3. Leaders tasked the Pacific Islands Forum Secretariat to detail of how national and regional options could work in practice.

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Multi-Tiered Approach

1. Documenting practical experiences with a range of modalities

2. Country specific assessment of options – Pacific Climate Finance Assessment Framework and Nauru case study

3. Regional Technical Support Mechanism4. Pacific Solutions Exchange5. Potential regional funding arrangements6. Improved access to international climate financing

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1. Budget support – Samoa2. National Trust Fund – Tuvalu3. Sub-regional Fund – Micronesia4. National Development Bank – Palau5. National Implementing Entity – Cook Islands6. Regional Implementing Entity – SPREP7. Multilateral Implementing Entity – Solomon

Islands and UNDP

Practical Experiences with Modalities Relevant for Climate Financing

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1. Build on existing global and regional assessment tools and frameworks

2. Further refined through Nauru Case Study, exploring 6 key dimensions: • Sources of Climate Finance• Policies and Plans• Institutions• Public Financial Management and

Expenditure• Human Capacity• Development Effectiveness

Pacific Climate Finance Assessment Framework

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1. Technical assistance – increasing absorptive capacity of Pacific Island Countries and Territories

2. RTSM and associated rapid response fund – funded by Climate Investment Fund

3. Pacific Regional Organisations, ADB and World Bank to develop by mid 2013

Regional Technical Support Mechanism

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Conclusions Consideration must be given to complexities at the source as well as to country

systems and capacity to implement. Country specific analysis necessary. The ability to harness and effectively use climate change financing will benefit

from strengthened national systems and increased use of those systems by development partners.

Capacity constraints in the Pacific region present a significant challenge which we must collectively and innovatively try to address.

Donors are likely to continue to use a range of modalities to deliver climate change resources. PICTs will therefore need to draw on a range of options to improve access to and management of these resources.

Project based implementation is likely to remain a significant access requirement no matter the modality of disbursement.

New and additional resources are necessary to respond to climate change. The way in which these are delivered is equally important as are the volumes.

Thank You

Coral Pasisi [email protected]