Assessing Investment & Financial flows for Adaptation in the LAND-USE CHANGE Sector UNDP I&FF Methodology Guidebook: Adaptation

Relevance of the Land-use change sector  In terms of the national GHG inventories forestry mitigation options belong to the AFOLU sector, namely Agriculture, Forestry and Other Land Uses  Previously, forestry options were included in the LULUCF sector (Land Use, Land Use Change & Forestry)  This presentation considers both forest-based mitigation options: Those integrated in the current mitigation regime (LULUCF in the Kyoto Protocol) & those under discussion in the negotiation process for a post 2012 climate change mitigation regime  In Namibia, LULUCF accounts for Year 2000 Carbon Dioxide Equivalent Removal (Gg)

Characteristics of the Land-use change sector in Namibia  Agriculture is dominated by livestock production & dry- land crop production & contributed 5.6% of the GDP (2000), of which almost 90% was from the production of cattle and small stock  Majority of Namibians depend on subsistence agriculture, farming pearl millet, sorghum, livestock & fruit. Commercial crop production includes maize, pearl millet, sunflowers & wheat. Grapes, vegetables & dates are grown under irrigation where water from rivers, dams or artesian water sources is available  Forest & wood resources are used under permit control

 Define scope for the assessment  Define the institutional framework  Specify the time horizon for the analysis: recommended, base year 2005 recommended  Build on existing model for the sector where possible 1. Establish key parameters of the assessment

Define boundaries for the assessment 1. Establish key parameters of assessment Decision needed - What will be included in the sector?  Agriculture? – What exactly?  Livestock / crop production?  Only production or also processing of products?  Irrigation?  … Scoping the land-use change sector

Define boundaries for the assessment 1. Establish key parameters of assessment Decision needed - What will be included in the sector?  Forestry? – What exactly?  Managed / unmanaged forest?  Plantations?  Soils?  … Scoping the land-use change sector

Define boundaries for the assessment 1. Establish key parameters of assessment Decision needed - What will be included in the sector?  Tourism? – What exactly?  Scoping by infrastructure: Hotels etc.  Scoping by type of tourism: Safari tourism, cultural tourism etc.  … Scoping the land-use change sector

 Data collection, rely on national accounts data  The System of National Accounts (SNA) constitutes the primary source of information about the economy  Systems of integrated environmental and economic accounts (SEEA) were developed to address statistical gaps  Other sources: National agricultural & forestry plans, National Communications etc. 2. Compile historical I&FF data and other input data for scenarios

Data collection, rely on national accounts data Data sources complementing national sources  Agriculture: index.stm  Forestry:

2. Compile historical I&FF data and other input data for scenarios Examples of I&FF in the land-use change sector Type of flow Type of physical asset Investment flows Agricultural & forestal development Agricultural & forestal land resources & water resources Agricultural & forestal inputs Food crop & cash crop production, collection of foresty goods Livestock & game Agricultural & forestal alternative development Financial flows Agricultural extension & reform Policy & planning Education/training Agricultural & forestry research & services Plant/post-harvest protection & pest control Agricultural financial services Agricultural co-operatives Livestock/veterinary services, forest management, soil management

 Define the physical basis for the Baseline Scenario  A baseline scenario: description of what is likely to occur in the absence of ADDITIONAL policies to address climate change; expected socioeconomic trends (e.g., population growth & eating habits), technological change (if relevant), and expected business-as-usual investments in the sector 3. Define Baseline Scenario

3. Define baseline scenario Baseline scenario reflects  Current sectoral and national plans  Expected socioeconomic trends  Expected investments in the subsectors Information should be disaggregated by  Year (starting 10 years before the assessment’s Base Year)  Source (by corporations and government)  Type (national funds, foreign direct investment, official development assistance) Define baseline scenario

3. Define baseline scenario Important to be considered when developing scenarios on the LULUCF sector in Namibia  Large amount of uncertainty associated with the LULUCF sector due to the following reasons:  The LUCF IPCC category, compared to the other IPCC categories, has the highest level of uncertainty associated with the default methodology and values provided  Very limited country-specific data on the following are available. Define baseline scenario

3. Define baseline scenario Define baseline scenario Type of flowType of physical asset Official development assistance ($)Investment ($) BilateralMultilateralPrivateGovernment Investment flows Livestock production Crop products Fuel wood/charcoal development Management for promoting environmental services (e.g. enhancements of sinks) Enterprise development Infrastructure (including GIS systems, road infrastructure) Financial flows Policy & Institutional management Forest protection Research activities Ecosystem services Education and training

 Compile annual estimates, disaggregated by investment entity, source, investment flow type, and financial flow type  Calculate the total investment cost in real, unannualized terms over the planning period.  Estimate annual investment costs associated with the new plan  Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds) 4. Derive I&FF for baseline scenario

Estimate current I&FF for the sector Category of entity Source of funds Iinfra struc- ture Orga- nic mat. & ferti- lizers Equip -ment La- bor Re- sea- rch Exten- sion servi- ces Total Households Equity and debt Government support (subsidies) Corporations Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA)* Governments Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA)* Total

 Adaptation scenario: a description of what is likely to occur in the sector, over the assessment period, in the presence of additional policies to address climate change  Outcomes from local national strategies  The adaptation scenario should include previously identified adaptation options, such as those used in a national communication or in a national NAPA. 5. Define Adaptation scenario

5. Define adaptation scenario Adaptation options in the land-use change sector Type of MeasureComponent of LULUCF Sector Adaptation Measure Field-levelCrop ProductionChange crop species/varieties Moisture management/irrigation … Animal ProductionChange animal species/breeds Change in animal management … Forest management Management of natural areas Soil management Research, education, assistance, infrastructure, institutional Sector-wideResearch, extension and training Forecasting and disaster management … Example for adaptation options in the field of land-use change

5. Define adaptation scenario Adaptation options in the land-use change sector Adaptation options in the LULUCF sector in Namibia  Mainstreaming CCA in national policy  Land use planning and promotion of climate compatible land uses and associated production systems  Prevention of land degradation and rehabilitation  Identifying key infrastructure and development investments that require “climate change proofing”  Upscaling EWS and generally improving information on CC and CCA

5. Define adaptation scenario Adaptation options in the land-use change sector Examples of land and resource management options  Crop, forage and tree species/varieties  Livestock, game and fish species/breeds  Crop and tree management  Livestock, game, aquaculture and wild fish management  Moisture management, irrigation and soil & water conservation  Pest and disease management  Management of natural areas  Fire management

 Compile annual estimates, disaggregated by investment entity, source, investment flow type, and financial flow type  Estimate annual investment costs associated with the alternative management plan  Calculate the total investment cost in real, unannualized terms over the planning period  Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds) 6. Derive I&FF for Adaptation Scenario

Projecting investments 6. Derive I&FF for adaptation scenario Adding costs to adaptation scenario Cumulative investment ( ) Funding entity categorySource of funds(billion 2005 $)(%) Households Equity and debt Governments Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA) Corporations Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA) Total

 Subtract the baseline annual I&FF, by entity and source, from the annual adaptation I&FF, by entity and source  Subtraction of the Baseline Scenario from the Adaptation Scenario  Sum incremental amounts over all years, by entity and source 7. Estimate changes in annual I&FF needed to implement adaptation

[ Subtract the baseline annual I&FF from the adaptation annual I&FF 7. Estimate changes in annual I&FF needed to implement adaptation  For each chosen land-use change adaptation option, the analysis should identify the incremental investment (total dollars) by source (domestic funds, ODA, FDI etc.) up through 2030 to support the respective land-use change management option

[ Summarizing incremental investments 7. Estimate changes in annual I&FF needed to implement adaptation Investment (billion 2005 $) Cumulative ( ) Incremental Funding entity categorySource of funds Baseline scenario Adaptation Scenario Households Equity and debt Baseline value Adaptation value Baseline minus Adaptation value Governments Domestic funds (budgetary) Foreign borrowing (loans) ……… Foreign aid (ODA) ……… Corporations Domestic equity …..… Foreign investment ……… Domestic debt ……… Foreign borrowing ……… Government support ……… Foreign aid (ODA) ……… Total Sum (Baseline) Sum (Adaptation) Sum (Baseline minus Adaptation)

 Determine policy instruments and measures to encourage changes in I&FF  Identify the entities that are responsible for the significant incremental changes in I&FF  Determine the predominant sources of their funds, particularly important to distinguish between public and private sources of finance 8. Evaluate policy implications

Assess policy options and summarize the projected I&FF for the key sector 8. Evaluate policy implications  Public sector policies on land-use change are likely to be needed to induce the relevant entities to implement the proposed measures  Adaptation can occur quickly in some sectors, but is slower in sectors with long-lived infrastructure  These characteristics suggest a mix of adaptation policies

 For more information on synthesizing results, documentation & the completion of the report, please refer to the Reporting Guidelines 9. Synthesize results and complete report

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