Financing and Governing Adaptation in a Future Climate Regime: Issues, Perspectives and Way Forward

Event: IGES-NIES-UN ESCAP Policy Forum on Towards a Copenhagen Consensus: Opportunities and Challenges, 9-10 October 2008, Hotel El Inn, Kyoto, Japan
Date: 9-10 October 2008
Financing and Governing Adaptation in a Future Climate Regime: Issues, Perspectives and Way Forward

The Bali Roadmap, agreed in COP 13, has brought the adaptation financing and governance issues to the fore front. It also effectively liked the issue of climate change with disaster risk reduction indicating various measures to be taken in a future climate framework in order to reduce climate risks effectively. This presentation, made at IGES-NIES-UN ESCAP Policy Forum on ‘Towards a Copenhagen Consensus: Opportunities and Challenges’, dwells into important aspects such as existing bottlenecks in securing finances for adaptation, governance of adaptation actions at various levels, and linking climate change and disaster risk reduction initiatives outside UNFCCC. A way forward in terms of raising international and domestic finances, means to improve adaptation governance, and linking disaster risk mitigation efforts with processes under UNFCCC was discussed in this presentation. Some key points emerged out of this session include the following:

• Since adaptation costs are huge, a mix of pubic and private funding is to be promoted in the future climate regime. Mainstreaming adaptation and identifying win-win solutions could reduce the financial costs to a greater extent and shall be promoted at all levels of adaptation.
• Any future adaptation funding mechanism should result in additional and sustained supply of finances. Management of these funds could ideally be on the lines of Adaptation Fund Board constituted under UNFCCC-KP, to manage the Adaptation Fund, since it is represented by majority developing countries leading to greater ownership and decision making powers. Multilateral financial institutions can play an important role but the regime should make sure that they do not dominate the decision making process and do not result in atomization of funds.
• Differentiation among developing countries was observed to be a possible scenario and could have favorable results in the future adaptation framework. However, the participants opined that the discussion on these lines has not been taken forward to a significant level. Many participants felt that the developing countries could ideally be differentiated based on their vulnerabilities. Development of climate vulnerability and adaptation index to this extent could help to a greater extent.
• The most significant incentive for developed countries to invest in adaptation might be securing sustained services from the global south. Developing countries do have incentives to adapt in the form of additional finances and technologies, help them to build efficient institutional systems and capacity to make adaptive policies. The co-benefits of adaptation in developing countries are also significant.
• Risk insurance in developing countries could be quite costly due to the insufficient risk mitigation mechanisms (e.g. incorporating better structural standards in high risk prone areas and integrating disaster risks with the land use zones). Hence, any future climate regime should promote risk mitigation in association with risk transfer mechanisms to reduce high risk insurance costs. A mix of public and private financing should be involved in future risk transfer mechanisms. Risk transfer mechanisms based on country-specific circumstances rather than a single global risk transfer mechanism should be promoted. The future climate regime should ensure scaling up of innovative and existing insurance schemes.


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