Paul Watkiss ECBI fellowship programme Adaptation Funding

 Kyoto Protocol’s Adaptation Fund  Aid agencies have woken up to climate change  E.g. 53% of total donor expenditure in Bangladesh has been estimated by the OECD to be at risk from climate impacts  World Bank and DFID looking at very seriously at adaptation funding  Emerging issue is which projects to fund, how to assess suitability  Where should we focus?

Adaptation Policy / Frameworks Starting to see emergence of adaptation policy frameworks and plans… UNDP/GEF Adaptation Policy Framework (APF) World Bank ‘look before you leap’ DFID ‘linking climate risk and adaptation’ – possible country programme FINADAPT UK CIP + UK Defra Adaptation Policy Framework (APF) Canadian Climate Change Australian Government - National Climate Change Adaptation Programme European Commission to publish Adaptation Green Paper 1 st December 2006

General Approach General approach to adaptation frameworks are similar… Risk screening – assessing current and future vulnerability to climate risks Including assessment of socio-economic trends Identification of a set of adaptation policy options or measures Prioritisation of options using some form of decision analysis

Adaptation – the broader policy question  What level of adaptation is appropriate?  There is a high level need for a vision on what is successful adaptation  Do everything – ‘climate proof’ – very expensive and inefficient  Do nothing – ‘live with the risk’ – unacceptable  Aim for something between, i.e. ‘climate resilience’  aiming for adaptation that is cost-effective and proportionate?  Or narrower economic (cost-benefit analysis) – only when benefits exceed costs – or optimality  Link with development goals?

Adaptation and economics  What are the impacts (risks) and costs of climate change?  What options (and costs of options) are available to adapt to impacts?  What does adaptation achieve – what are the residual impacts (costs) after adaptation, i.e. net benefits of adaptation? How do these compare to the costs?  What level of adaptation is appropriate between competing priorities for action?  Priorities between adaptation funding and development?

Mal-Adaptation Recognition need to avoid mal-adaptation  Inefficient use of resources compared to other options, i.e. some adaptation has no benefits, or costs exceed benefits  E.g. increasing road design to cope with future rainfall intensity - increase road construction costs now - but road design lifetime less than expected event probability horizon, or costs exceed likely benefits  Ineffective (scenarios that do not appear or appear in far future)  E.g building reservoir with added capacity to cope with flood volumes that not expected for years (and might not still occur)  Displacing vulnerability from one actor to another  E.g. Flood protection shifting the vulnerability from one zone down-stream

Possible Vision for Successful Adaptation (Funding) 1. Prepare to adapt by building capacity  Research  Awareness  Policies  Monitoring 2. Alter existing plans to manage climate risks and take advantage of new opportunities  Urgent and high priority  Win-win, Low cost  Existing frameworks  Disaster responses 3. Implement adaptation actions  Cost-effective/Cost benefit analysis  Additional criteria-existing frameworks  Modify infrastructure  Alter processes

Adaptation – some extra issues  Equity weighting and adaptive capacity - focus adaptation on protecting those less able to adapt ? And equity or distributional weighting?  Discount rate - how discount long-term impacts CC vs costs of adaptation now  Timing - anticipatory vs. reactive  Capturing non-technical options properly, looking at action vs. insurance, capturing ancillary effects (especially development)  Whether to weight impacts that irreversible, or low adaptive capacity (ecosystem)

Different levels of uncertainty with: Average temperature and sea level rise Precipitation Extreme events (floods/drought/storm) Major climate shifts (e.g. major sea level rise) Climate Uncertainty

Key Issues for Discussion  Overall aim of adaptation  Climate proofing or climate resilience  Capacity, no regrets, action  Cost-effectiveness or Cost-Benefit Analysis  Developed or Developing country framework  Avoiding mal-adaptation  Development – including ancillary effects  Discounting and equity  Irreversibility, timing, approach  Climate uncertainty

Additional Material

UNDP/GEF The United Nations Development Programme (UNDP) and Global Environment Facility (GEF) comprises five components: 1.Scoping and designing an adaptation project to ensure that a project – whatever its scale or scope – is well integrated into the national policy planning and development process. This is the most vital stage of the APF process. The objective is to put in place an effective project plan so that adaptation strategies, policies and measures can be implemented. 2.Assessing current vulnerability by responding to several key questions: Where does a society stand today with respect to vulnerability to climate risks? What factors determine a society’s current vulnerability? How successful are the efforts to adapt to current climate risks? 3.Assessing future climate risks by considering the development of scenarios of future climate, vulnerability, and socio-economic and environmental trends as a basis for considering future climate risks. 4.Formulating an adaptation strategy in response to current vulnerability and future climate risks. This involves the identification and selection of a set of adaptation policy options and measures, and the formulation of these options into a cohesive, integrated strategy. 5.Continuing the adaptation process involves implementing, monitoring, evaluating, improving and sustaining the initiatives launched by the adaptation project.

1a. Define policy aim 1b. Propose generic adaptation objectives 2. Determine priority sectors for action 3. Characterise priority risks and opportunities 4. Propose adaptation objectives 5a. Define targets 5b. Select indicators 9. Link up policy framework 10. Review and Revise 7. Appraise options 8. Identify cross sectoral overlap and possible conflicts 6. Identify adaptation options SECTORAL POLICY DEVELOPMENT ADAPTATION POLICY VISION

Coverage of the Impacts - Risk Matrix Source: Tom Downing and Paul Watkiss Market Non Market (Socially Contingent) Projection (e,g, sea level Rise) Bounded Risks (e.g. droughts, floods, storms) System change & surprises (e.g. major events) Coastal protection Loss of dryland Energy (heating/cooling) Loss of wetland Heat stressRegional costs Investment Agriculture Water Variability (drought, flood, storms) Ecosystem change Biodiversity Loss of life Secondary social effects Comparative advantage & market structures Above, plus Significant loss of land and resources Non- marginal effects Higher order social effects Regional collapse Irreversible losses Regional collapse Uncertainty in Valuation Uncertainty in Predicting Climate Change