1. Addressing Water Impacts of Climate Change EC-EIB Water and Sanitation Seminar Brussels – 7 July 2010 Jochen Harnisch, Coordinator Climate Change Policy KfW Development Bank

2. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

3. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

4. Model Results Seasonal Changes of River Run-off in Europe (2071-2100/1961-90; SRES A2) Source: EEA, 2008

5. Change of Water Runoff for 2090 relative to 1990 (IPCC SRES A1B) Source: IPCC AR4 WG I, 2007 Dotted areas: good model agreement

6. Uncertainties of Climate Change Projections Different model families involved in model inter/comparisons for Intergovernmental Panel on Climate Change (IPCC) and similar fora Uncertainties of model projections vary regionally Certainty of model projections: temperature > precipitation > run-off > climate variability > frequency and severity of extreme events

7. Main Effects of Climate Change on Water Rainfall, runoff, stream flow, groundwater recharge, water availability from changes in annual averages; Variability and extremes, floods and droughts, more intense and more frequent storms; Temperature – resulting in aridity, increasing evaporation and irrigation water demand, glacier and snow melt, loss of storage, change in water quality; Sea level changes – resulting in impacts on estuaries, deltas, and seawater intrusion into groundwater aquifers; and Plant water use efficiency from changes in atmospheric carbon dioxide (CO 2 ) concentration. Source: CCCD, 2009

8. Evolution of Number of Great Natural Catastrophes Source: MunichRe, 2010

9. Evolution of Global Losses From Natural Catastrophes (USD bln p.yr) Source: MunichRe, 2010

10. Equador: Increase of Flooding Desasters (<50 casualties / <500 houses) Source: UNISDR, 2009

11. Section Summary Damages due to climate change are already taking place, costs are largely incurred by households, private and public sector in developing countries Impact signal from climate change as recorded by insurance signals is robust but influenced by economic growth, growing population and improved communications The poorest are most vulnerable (poor houses, dependence on agriculture, no financial resources for response measures) but their losses bear little significance to insurance and economic statistics

12. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

13. Adaptation Focus: Vulnerability vs. Impacts Source: Klein & Persson, 2008

14. Local Options in Water Resources Management Development of rainfed agricultural systems that are easy to operate and maintain locally; Improved management of soil moisture in rainfed areas; Increased investment in water harvesting, small storage,and supplementary irrigation schemes; Small community-based irrigation schemes; Development of water supply to meet the needs of multiple and diverse water users; Improved water access for livestock in arid and semiarid areas; and Other actions such as demand management, conjunctive surface and groundwater management, payments for environmental services, and so on. Source: Hedger and Cacouris, 2008

15. National Options in Water Resources Management Integrate climate variability and climate change in water policy frameworks; Encourage an integrated approach in water management planning that cuts across land, agriculture, and mining sectors, taking into account water productivities as a basis for reallocations; Diversify economies and incomes; Support the decentralization of water resources management (or focus on catchments and river basins); Ensure that climate risk information is available and used to inform water planning strategies; and Empower communities to engage with local and national governments to help meet their water needs. Source: Hedger and Cacouris, 2008

16. McKinsey on Adaptation to Climate Change (August 2009) – Case Study Maharastra (India) http://www.mckinsey.com/App_Media/Images/Page_Images/Offices/Socia lSector/PDF/ECA_Shaping_Climate%20Resilent_Development.pdf Source: ECA/ McKinsey, 2009

17. Estimated Annual Adaptation Needs – Public Sector (USD bln p.yr) 17 Sector UNFCCC, 2007 for 2030 World Bank, 2009 2010-50 Infrastructure2-4114-30 Coastal zones430 Fresh water provision and flood protection 914-19 Agriculture, forestry and fisheries 77-8 Health52 Extreme eventsn.a.7 Total27-6678-90

18. Annual DC Adaptation Needs (USD bln 2010-50): All Infrastructure Except Coastal Protection 18 Source: World Bank – 2009

19. Developing Country Adaptation Needs ( 2010-50): Costal Protection (USD bln p.yr) 19 Source: World Bank – 2009

20. 20 Annual Financing Needs of Developing Countries Adaptation [billion EUR p.a.] Mitigation [billion EUR p.a.] Thereof Forests [billion EUR p.a.] Annual global R & D [billion EUR p.a.] 5 – 8755 – 8015 – 255 – 30 low share of private sector high private sector: 38 (EU) low share of private sector medium to high share of private sector 2005 constant Euros, average for 2013-2020, expressed as grant equivalents Source: EU COM, McKinsey, World Bank, UNFCCC

21. Section Summary UNFCCC (2007), World Bank (2009), Parry et al. (2009), ECA (2009) and other studies are milestones to understand adaptation needs Key uncertainties: development deficit, definition of long-term baseline, scope, climate impacts, adaptation definition & implementation UNFCCC(2007) and World Bank (2009) suggest that adaptation is mainly a public sector task – which is linked to their perspective Not all sub-sectors quantified in detail: e.g. ecosystem-stabilisation, private households, commercial buildings & industrial infrastructure While overall numbers are high they are probably underestimates: based on schematic approaches and incomplete coverage Beyond immeadiate capacity building, adaptation and development agendas cannot be disaggregated

22. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

23. Visual Impressions From Copenhagen

24. Key Elements: The Copenhagen Accord Agreed informally between 25 governments on the last day of Copenhagen Final plenary only takes note of Copenhagen Accord 2°C target agreed for 21st century Submission of supported and unsupported NAMAs until 31 January 2010 Support of adaptation activities by means of predictable and sustainable funding, technology and capacity development New and additional financing of 30 billion USD over period 2010 to 2012 (Fast- Start Funding) Annually 100 billion USD of climate financing from public and private sources via bilateral and multilateral channels Creation of High-Level Advisory Group on climate financing Framework for a Copenhagen Green Climate Fund Review of the Accord by 2015 (after publication of IPCC AR5)

25. 25 Public Climate Financing to Developing Countries: New Commitments of Grants and Loans in 2008 Globally >18 billion USD of new commitments: grants and loans KFW with 2.4 $ billion of climate financing, thereof 600 million adaptation Source: SEI, GEF & German Parliament

26. 26 Today: Parallel Implementing Channels Industrialised Country Budgets & International Sources of Finance Developing Countries: Budgets, Programmes, Projects, Companies, Civil Society Bilateral Financing Institutions Channel 1 Channel 2 Channel 3 World Bank CIFs CTF SCF Multilateral Deve- lopment Banks UNFCCC Climate Funds Multilateral Deve- lopment Banks & UN Agencies

27. Good Reasons for the Multi-Channel System Good Reasons: Full use of existing implementation capacity for +25% p.yr. growth Competition and choice innovation and efficiency Various interfaces for involvement of different private sector actors Attracts money from different types of sources Robustness – cannot be blocked by a single country or country group In line with Article 11 of the UNFCCC Challenges: Transparency and coordination: High level forum, UN registry or OECD-DAC 27

28. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

29. EU Financing Institutions WG on Adpatation to Climate Change: History and Objectives EU Financing Institutions Working Group on Adpatation to Climate Change Incepted in February 2010 in Luxembourg Current members: AFD, CEB, EBRD, EIB, KFW Adaptation related new commitments in 2008: >700 million Euros Priority actions Develop a common set of definitions on adaptation; Agree a concept note on the technical and financial principles for adaptation financing; Compile a resource base of tools and other initiatives (complete or under preparation) for mainstreaming climate risk management; Develop a joint toolkit for climate change risk management to be used by partners Select best-practice projects for testing the above principles and practices

30. 30 KFW Water Management in Jordan Problem Approach Effects Severely limited water resources Population growth and climate change increase water stress Water loss of 30% due to pipe leaks Investments in rehabilitation measures in the water supply network Repairing and replacement of old house connections KfW provides financing & technical advice Reduction of water losses Improvement of water security Increase of supply of drinking water Adaptation to climate related water stress

31. 31 KFW Cyclone Protection in India Problem Approach Effects Flood waves and heavy rainfalls are often companions of cyclones that frequently occur in the state of Orissa Cooperation with the German Red Cross Construction of protective buildings that can also be used for communal meetings Preventive actions: establishment of a local emergency management, emergency training and an early warning system Creation of fund to cover maintenance costs Improved protection against cyclones Support of communal institutions Adaptation to climate related extreme events

32. 32 KFW Adaptation Program in North-East India Problem Approach Effects Significant climate changes already notable: less rain, higher temperature, more floods High vulnerability and low adaptive capacity Program-based approach, selection of sub- projects according to pre-identified criteria (e.g. expected benefits, feasibility, no-regret) Funding adaptation measures across different sectors: protection of housing areas against floods, up-dating irrigation systems, adjustment of forest/agricultural/fisheries management etc. Convergence with national schemes Inter-linkage of adaptation and development planning – increased awareness Full-scale analysis of vulnerability and adaptive capacity by national researchers Funding of pilot adaptation measures

33. Adaptation Portfolio of KFW in 2008 Total 0.4 billion EUR

34. Presentation Outline 1. Water mediated impacts of climate change 2. Adaptation response options 3. International climate policy and adaptation 4. Selected activities by EU development institutions and KFW 5. Outlook

35. Outlook Climate change and adaptation are taking place already – majority of costs incurred by private sector Substantial new and additional funding for adaptation needed to avoid risks to growth and ODA diversion in developing countries European development institutions are global players in adaptation financing and cooperate closely to implement adaptation in partner countries Adaptation and development are integrated challenges

36. 36 Further Information Dr. Jochen Harnisch Coordinator Climate Change Policy Vice President Environment & Climate KfW Development Bank Palmengartenstr. 5-9 D-60325 Frankfurt phone: +49 69 7431-9695 e-Mail: jochen.harnisch@kfw.de