Co-facilitator Zaheer Fakir, South Africa, opened the session and introduced the topic: scaling up adaptation finance. Co-facilitator Dany Drouin, Canada, discussed the context of the workshop and outlined its objectives: exploring opportunities for scaled up and enhanced action on adaptation finance; feeding discussions into the broader process of scaling up climate finance; and generating concrete ideas.
Urging the in-session participants not to “fall into simplistic thinking,” Christiana Figueres, Executive Secretary, UNFCCC, said there was a need to think about how to make investments in adaptation attractive and discussed investment in insurance as an example of a profitable activity that could support adaptation.
Thematic bodies of the UNFCCC presented on scaling up finance to foster adaptation actions in developing countries.
Adaptation Committee member Klaus Radunsky, Austria, discussed, among others, challenges to adaptation finance, including: identifying adaptation versus business-as-usual finance needs; coordination of adaptation finance from different sources at the national level; engagement of the domestic private sector, especially in the LDCs; and oversubscription of the Least Developed Countries Fund (LDCF), Special Climate Change Fund (SCCF) and the Adaptation Fund (AF) during a period of transformation to larger project funding. He also discussed recommendations, including: the need for a long-term strategic framework with National Adaptation Plans (NAPs) as a key tool in this regard; maintaining momentum of National Adaptation Programmes of Action (NAPA) implementation and paying close attention to the link between NAPs and Intended Nationally Determined Contributions (INDCs) and clarifying roles and responsibilities of different operating entities at the international level.
Discussing the role of the LDC Expert Group (LEG) in providing technical support and advice on NAPAs and other elements of the LDC work programme, Batu Uprety (Nepal), Chair, LEG, emphasized the importance of a scaled up programmatic and integrated approach to adaptation at the national level to achieve transformational change. He also said there were ongoing discussions with the Green Climate Fund (GCF) to align the strategies between the GCF and the NAPA and NAPs. He expressed concern about the lack of funding for the LDCF, noted that the deceleration in NAPAs would also slow down formulation of NAPs, and urged the Global Environment Facility (GEF) to mobilize funds to support NAPA projects this year.
Standing Committee on Finance Co-chair Outi Honkatukia, Finland, provided input on the basis of the ongoing work of the SCF. She highlighted lessons learned from the 2014 Forum on adaptation finance, including: integration of adaptation into development planning, coherence and complementarities among different sources of finance, and the need to support communities to access funds. On the 2014 biennial assessment and overview of climate finance flows, she noted: a convergence among data collectors and aggregators in the operational definition of "climate finance;" the increasing but small share of adaptation finance within climate finance; and a need to further develop impact assessment methods for adaptation. On the fifth review of the financial mechanism, she highlighted the need for: accessibility of funding; country ownership; and complementarity between operating entities of the financial mechanism of the UNFCCC.
Introducing the Technology Executive Committee (TEC) as the policy arm of the Technology Mechanism, Kunihiko Shimada, TEC Chair, discussed TEC’s work and inputs to the UNFCCC bodies. On enabling environments for and barriers to adaptation, he stressed the importance of addressing economic, financial and capacity barriers, and pointed to the need to increase availability of and access to finance and build institutional capacity. Noting that research and development (R&D) costs for adaptation technologies were often reflected in project costs given the site specificity of adaptation, he emphasized the need to increase R&D on adaptation and further highlighted the role of close stakeholder collaboration to overcome policy, financial, technology and related challenges.
During the plenary session, participants discussed two topics: the role of collaborative arrangements for managing climate risks; and strengthening institutions' capacity to access climate finance.
On the role of collaborative arrangements for managing climate risks, Isaac Anthony, Caribbean Climate Risk Insurance Facility (CCRIF), presented on the CCRIF. He identified relevant lessons learned, including: the need for continued dialogue between experts and stakeholders to engage all interests and prevent information asymmetries; donor support, particularly in the initial phase and to market insurance products at reasonable prices; and good governance of the mechanism.
Mandy Barnett, South Africa National Biodiversity Institute (SANBI) and Ubaldo Elizondo, Latin American Development Bank (CAF) presented on strengthening institutional capacity to access climate finance.
Discussing the role of various access modalities in promoting adaptation, Barnett discussed examples from South Africa including: a direct access experience at Nhlazuka; and the first enhanced direct access modality in two target areas. She identified several lessons for scaling up, including: taking the time to design quality projects and engage stakeholders; supporting capacity development and readiness at all levels; and supporting institutional strengthening and bringing in new players.
Discussing CAF’s work on vulnerability mapping, Elizondo highlighted the diagnostic capabilities of such mapping exercises and noted factors that could increase the susceptibility of the population to harm such as poor health, poverty, lack of infrastructure, and conflict. He emphasized the importance of strengthening the capacity of institutions at the local level to identify areas for intervention and noted that financial institutions could design financial products to suit various circumstances once the environment was ready.
Participants then met in two breakout groups each on the two topics.
Herman Sips, Netherlands, and Laetitia De Marez, Climate Analytics, facilitated the two groups on collaborative arrangements for managing climate risks, and Mikko Ollikainen, Adaptation Fund Board Secretariat, and Shyla Raghav, Conservation International, facilitated the two groups on accessing climate finance: strengthening institutional capacity. Participants met in plenary to discuss results from the breakout groups and the group facilitators presented discussion summaries.
Sips discussed the role of collaborative action to improve individual schemes and investor pooling, achieve economies of scale, promote affordability, and hasten insurance payouts. He also highlighted the potential opportunity to link individual and regional schemes to achieve greater diversification of risks.
De Marez discussed the advantages and disadvantages of financing instruments based on whether they addressed climate risk or broader factors. She noted the need for broad and continuous resilience building strategies in areas of high vulnerability. She also highlighted the UNFCCC’s role in: catalyzing adaptation finance; connecting actors; and engaging in outreach via the Standing Committee on Finance.
Ollikainen highlighted numerous capacity-related challenges faced by developing countries in accessing and managing adaptation finance. He said that implementation at the usually bureaucratic sub-national level could be problematic but pointed out that communities were often highly effective once funds were available. Noting the lack of technical expertise at the national level in many countries, he recommended creating a national-level roster of experts and using a network approach to create platforms to access climate finance.
Raghav noted her group had identified bottlenecks by linking existing access modalities with various objectives on the ground. She noted that building capacity for direct access was a part of an incremental process and that room for mistakes was vital. She also emphasized the need to think of both readiness and adaptation as long-term processes.
The second half of the in-session workshop will take place on June 5, 2015.