1. Accessing Resources from the Adaptation Fund

2. Purpose of presentation
Background
Current state of progress with the Adaptation Fund
AF is fully operationalized
Direct access – a reality
Level of finance available
As of March 16, 2011: US$ 168.5M
By end-2012: medium estimate US$ 334M (low: 286M; high: 389M)
Note: Level of finance available does not include funding decisions made and costs so far.
a) Based on Trustee communication in PPRC.4, minus funding decisions made in AFB.13
b) Based on AFB/EFC.4/10/Rev.2 Table 5 Potential Resources (16), minus funding decisions made in AFB.13

3. Background of the AF Set up under the Kyoto Protocol of the UNFCCC
Goal: to finance concrete adaptation projects
Financed from a 2% share of the CER proceeds on the Clean Development Mechanism (CDM) project activities and other sources of funding
Operating entity: Adaptation Fund Board
Operational procedures development
Fully operational in 2010: funding decisions
January 2011: launch of first project
Additional details:
Kyoto Protocol, art. 12.8: “Share of the proceeds from certified project activities is used to cover administrative expenses as well as to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation”;
COP 7 (Marrakesh, 2001): decided that an AF be established and financed from a 2% share of the proceeds on the Clean Development Mechanism (CDM) project activities and other sources of funding;
CMP 3 (Bali, 2007): Established the AF and set up its legal framework: Adaptation Fund Board (AFB) as operating entity served by a secretariat and a trustee;
CMP 4 (Poznan, 2008): Legal capacity to the AFB.
CMP 5 (Copenhagen, 2009): Germany to legally host the AFB.
AFB.9 (March 2010): First accreditation of Implementing Entities (including NIE).
AFB.10 (June 2010): First project concept endorsements (including from NIE).
AFB.11 (September 2010): First fully-developed project documents approved (including from NIE).
November 2011: First project MoU signed (with NIE)

4. The Adaptation Fund (AF)
An innovative financial mechanism:
Governing body: equitable and balanced representation of Kyoto Protocol Parties
Direct access to AF resources for eligible countries
New funding source: international levy of 2% of CERs produced by CDM projects

5. Institutional arrangements
Secretariat: GEF on an interim basis
Trustee: World Bank on an interim basis
KP Parties decided that the interim institutional arrangements be reviewed in 2011
CMP
Secretariat (GEF interim basis)
AFB
Trustee (World Bank interim basis)

6. Governing Body: the AF Board
The Board is composed of 16 members and their alternate members representing Parties
Legal capacity conferred by Germany in February 2011: enables entering into agreements with implementing entities
Subsidiary bodies:
Project and Programme Review Committee (PPRC)
Ethics and Finance Committee (EFC)
Accreditation Panel (AP)
The Board is composed of 16 members and their alternate members representing Parties, formally elected at a session of the CMP as follows:
Two representatives from each of the five UN regional groups;
One representative of the small island developing states;
One representative of the least developed country Parties;
Two other representatives from Annex I Parties; and
Two other representatives from non-Annex I parties.
Two years term, once renewable

7. Project and Programme Review Committee
Duties:
Consider and review projects and programmes submitted to the Board by eligible Parties in accordance with the Operational Policies and Guidelines;
Address issues arising from projects and programmes submitted to the Board, including outstanding policy issues;
Review the project and programme reports submitted by National Implementing Entities (NIEs) and Multilateral Implementing Entities (MIEs) in accordance with paragraph 46 of the Operational Policies and Guidelines, with the support of the Secretariat; Report and make recommendations to the Board on project and programme approval, cancellation, termination, suspension and on any other matter under its consideration; and
Consider any other matter the Board deems appropriate.

8. Ethics and Finance Committee
Duties:
Oversee the implementation of the Code of Conduct and address differences in its interpretation as well as consequences of breach of the Code of Conduct;
Review and provide advice on the budget for the operating expenses of the Board, secretariat and trustee;
Advise the Board on overall resource mobilization policy and approach, including recommendations from the trustee with respect to monetization of CERs and receipt of contributions from other sources;
Review the financial statements of the Fund;

9. Ethics and Finance Committee (2)
Duties (continued):
Review the performance of the Fund and NIEs and MIEs making use of both internal and external evaluations and reports from NIEs, MIEs and other sources as appropriate;
Address issues concerning monitoring and evaluation of projects and programmes;
Oversee the activities of the Secretariat involving recruitment and procurement of services and other activities related to the area of responsibility of the Committee ;
Oversee the activities of the trustee in areas relevant to the responsibility of the Committee;
Consider any other matter the Board deems appropriate.

10. Ethics and Finance Committee: main decisions
Adoption of an approach to Results Based Management (RBM) and a Strategic Results Framework.
This will be complemented by:
M&E framework and terminal evaluation guideline
Guide on project baselines and results frameworks
Development of publicly accessible project database

11. Ethics and Finance Committee: main decisions (2)
Approval of Code of Conduct for the Adaptation Fund Board
Implementing entities management fee: cap set at 8.5%
On-going work on budgeting and work planning

12. The Accreditation Panel
Established by the Board to ensure that organizations receiving Adaptation Fund money meet the fiduciary standards:
recommendation to the Board on accreditation, conditional accreditation, suspension or cancellation of accreditation, re-accreditation.
Two Board members (Chair, Vice-Chair), three external technical experts.
The Board oversees the work of the Panel.
The Panel started working in January 2010

13. Where are we now: Finance
As of March 18, 2011:
Funds held in trust US$ million
Funding availability of US$ million
Annex-I parties provide additional finance:
Spain €45M, Monaco €10k, Germany €10M, Sweden SK100M
Pledges: Australia AU$ 15M, Brussels Capital Region €1M
Funds allocated by March 18, 2011: US$ 43.2M
Estimated funds available by end-2012:
Medium estimate US$ 334M (low: 286M; high: 389M)
Figures from AFB/EFC.4/10/Rev.2., reflecting Trustee communication in PPRC.4 on March 16, of additional CER revenue of US$ 1 million, minus funding decisions made in AFB.13
Estimated funds by end-2012 is based on AFB/EFC.4/10/Rev.2 Table 5 Potential Resources (16), minus funding decisions made in AFB.13.

14. Accessing AF funding: IE structure
Direct Access Modality
Eligible Parties can submit their projects directly to the AFB through an accredited National Implementing Entity (NIE).
A group of Parties may also nominate regional and sub- regional entities as implementing entities in lieu of NIE.
MIE Access Modality
Parties can submit their proposals through an accredited Multilateral Implementing Entity (MIE).

15. Accessing AF funding (2)
NIE and MIE shall:
Meet the fiduciary standards established by the AFB:
Financial management and integrity
Institutional capacity
Transparency, self-investigative powers and anti-corruption measures
Bear full responsibility for the overall management of the projects and programmes; and
Carry out financial, monitoring and reporting responsibilities.

16. Accessing AF funding (3)

17. Fiduciary Standards (1)
Financial Integrity and Management
Accurate and regular recording of transactions and balances, audited periodically by an independent firm or organization
Managing and disbursing funds efficiently and with safeguards to recipients on a timely basis
Produce forward-looking plans and budgets
Legal status to contract with the AF and third parties

18. Fiduciary Standards (2)
Institutional Capacity
Procurement procedures which provide for transparent practices, including on competition
Capacity to undertake monitoring and evaluation
Ability to identify, develop and appraise project
Competence to manage or oversee the execution of the project/programme including ability to manage sub-recipients and support delivery and implementation
Transparency and Self-Investigative Powers
Competence to deal with financial mismanagement and others forms of malpractice

19. The Accreditation Process
Step 0: The government endorses a Designated Authority and the Implementing Entity. DA must endorse all IE proposals.
Step 1: Submit application:
Description of how the organization meets the specific required capabilities
Attachment of supporting documentation
Step 2: Accreditation Panel Reviews Application.
Step 3: Panel can request additional information/clarification from organization.
Might suggest to Board that an on-site visit and /or observation of an organization is required
Might suggest that technical support needs to be provided to an applicant to improve its capacity in order to attain accreditation
Step 4: Panel makes recommendation to AF Board.
Step 5: AF Board makes final decision on accreditation of entity

20. Where are we now: Implementing Entities
3 National Implementing Entities accredited:
Centre de Suivi Ecologique (Senegal)
Planning Institute of Jamaica (Jamaica)
Agencia Nacional de Investigación e Innovación (Uruguay)
7 Multilateral Implementing Entities accredited:
The World Bank, UNDP, UNEP, ADB, IFAD, WFP, WMO
Swift accreditation process: can be done in 3 months

21. Why aren’t there more NIEs?
Some identified issues:
The direct access modality and the role of the fiduciary standards not fully understood?
Identification of the most appropriate / most potential NIE within a country not simple?
Putting together documentation to support the accreditation application not easy?
Difficulties due to language barriers?
Lack of self-confidence?
Recapped from the full list of issues in AFB/B.11/4 which was:
Lack of clarity of the standards and the supporting documentation requested;
Lack of clarity on the process;
Difficulties due to language barriers;
Conceptual novelty of the NIE function and previous absence of such a role within the government;
Difficulties to identify the best suited institution to function as NIE in the country;
Fiduciary standards met jointly by more than one institution in the country but not by one single institution.

22. More NIEs are needed
The Accreditation Fund Board has called for the assistance of multilateral and bilateral donors to support the accreditation process in countries
The Board encourages Parties to seek guidance from the Board / secretariat on establishing NIEs
UNFCCC secretariat to organize up to 3-4 regional workshops, making use of the AF accreditation toolkit, to familiarize Parties with the process and requirements of NIE accreditation

24. AF project cycle (2): Simplified review and approval process
Cap per country is set at USD 10 M. No separate project cap.
For projects larger than USD 1M, a choice of a one step (full proposal) or two step process (concept approval and project document)
For small-scale projects (below USD 1M) one-step process
NIE proponents can get Project Formulation Grant for developing endorsed concepts to full proposals
Proposals to be endorsed by a Designated Authority. As of today, over 50 countries have nominated one
Proposals need to be submitted at least 9 weeks before a Board meeting
The Designated Authority (DA) for the AF can be the same person as the Designated National Authority for CDM projects but does not have to be. In either case, the country must appoint the DA with a letter signed at the ministerial level.

25. Some principles for funding
Funding provided on full adaptation costs basis of projects and programmes to address the adverse effects of climate change
AF will finance projects whose principal and explicit aim is to adapt and increase climate resilience
Projects have to be concrete: discussion on definition on-going, emphasis on impacts
Accommodation of different country circumstances: no prescribed sectors or approaches

26. Proposal Review: emphasis on…
Consistency with national sustainable development strategies
Economic, social and environmental benefits
Meeting national technical standards
Cost-effectiveness
Arrangements for management, financial and risk management, M&E, impact assessment
Avoiding duplication with other funding sources for adaptation

27. Some reasons for project non-approval
Inadequate adaptation reasoning (business as usual, or otherwise unclear)
Avoidance of duplication with past/existing projects not shown
Lack of information in one or more areas, typically on technical feasibility
Project set up in an inefficient way
Project not shown to be country-driven

28. Where are we now: Operations
AFB meetings since Sep 2010: 7 funding approvals
Coastal protection and livelihoods in Senegal (CSE, direct access, 2-step process): USD 8,619,000
Reducing vulnerability and food security in Ecuador (WFP, 2-step process): USD 7,449,468
Water management structures and agricultural practices in Eritrea (UNDP, 1-step process): USD 6,520,850
Water management in Honduras (UNDP, 1-step process): USD 5,630,300
Reducing risks and vulnerability from floods and droughts in Nicaragua (UNDP, 2-step process): USD 5,500, 950
Reducing risks and vulnerabilities from glacier lake outburst floods in Northern Pakistan (UNDP, 2-step process): USD 3,906,000
Strengthening food production and management systems in the Solomon Islands (UNDP, 2-step process): USD 5,533,500
8 endorsed concepts (Cook Is., El Salvador, Georgia, Guatemala, Madagascar, Maldives, Mongolia, Uruguay)
Situation as of March 18, 2011.

29. Senegal – Adaptation to coastal erosion in vulnerable areas
Budget: USD 8,619,000
Implemented by the first NIE, CSE
Contributes to the protection of the physical structures as well as livelihoods in three coastal areas in Senegal.
Submitted in a 2-step process
Launch: January 2011

30. Honduras – Addressing Climate Change Risks on Water Resources
Budget: USD 5,630,300
Implemented by an MIE, UNDP
Increase resilience to CC water- related risks in the most vulnerable population in Honduras through pilot activities and mainstreaming CC considerations into the water sector.
Submitted in a 1-step process

31. 25 project proposals Variety of sectors: Water management
Coastal management
Food security
Rural development
Urban development
Agriculture
Disaster Risk Reduction

32. Thank you!