Nathan Wyeth

Copenhagen Climate Summit: Shaping Adaptation Finance

I want to pick up where Rishabh left off in his post yesterday on adaptation to climate change, specifically in relation to the climate negotiations happening now in Copenhagen (blow by blow of the negotiations). Assuming that the tens and then hundreds of billions of dollars in “climate financing” under discussion for the least developed countries materializes, of which half might be earmarked for adaptation, a robust discussion is needed on how best to use those dollars.

A significant proportion would be intended to reduce vulnerability to climate shifts among the poor and particularly the rural poor, utilizing some of the same mechanisms and technologies frequently discussed here, like water-efficient drip irrigation. So this is an opportunity to mainstream into public financing the approaches that this blog’s co-sponsor, Acumen Fund, and others like it, invest in.

Seeing the actions of African and island nation negotiators at this summit brought home to me in a visceral way the reality that although “global warming” entered public consciousness as a problem for polar bears, climate change will manifest itself as a developing world crisis – like the debt crisis of the 1980’s except much more deep-rooted, longer term, and much less reversible.

The impacts of climate change – the shifts that are underway and are inevitable given carbon emissions thus far – will go far beyond rising sea levels flooding Bangladesh and disappearing Pacific Islands. The poor will be impacted widely by temperature shifts that disrupt agriculture productivity and natural resource availability, rainfall shifts that create drought and floods for both rural and urban communities, more severe weather events that become natural disasters, and geographic shifts in disease vectors.

Warming is expected to happen faster in Africa than global averages and it is difficult to contemplate the instability that will be created if the reduction of the Himalayan snowpack and glaciers ultimately shrinks rivers in the immense arc of watersheds that fans across Asia – from the Indus in Pakistan across the Indian subcontinent to the Yellow River in China. In many ways climate change will be reflected in the developing world as water stress that reaches crisis proportions.

Accordingly, adaptation has entered the lexicon of the negotiations, but is contemplated now through an aid and public spending lens. It is likely that billions of dollars, hopefully additive to existing public aid flows, will be earmarked for adaptation. There is in-depth if speculative discussion of where this money will come from, such as fees on international shipping and air travel, but much less has gone into how this money should be spent. Little if anything is clear about who will administer this money, how it will be purposed and distributed, to whom it will be distributed, what the specific goals might be, and how success will be evaluated.

The United Nations’ agencies are not well situated to manage this and besides it being politically problematic, many might not be inclined to trust the U.N. to do the job well. The World Bank has overseen the Global Environment Fund created in the early 90’s but developing nations in particular are somewhere between skeptical of and staunchly opposed to a similar approach now. But no matter how this money flows, the overall approach and expectations for adaptation funding and finance will guide it no matter what form it takes.

Some adaptation to climate change must involve public infrastructure spending, addressing flood protection, major water infrastructure, country-level food security, and so forth. This is where an aid approach makes sense. But at the ground level the question of climate adaptation for the poor, particularly the rural poor, is not exotic and disconnected from existing development through enterprise.

Adapation is really a question of increasingly resiliency in the face of climate change, and resiliency can largely mean economic stability and prosperity. It is a matter of preparing for income shocks as a result of shocks to agricultural productivity and natural resource availability. And so the tools used by microfinance institutions and businesses with technology for the poor start to come into play in a big way – to grow income, provide credit and insurance, create access to information (of markets, weather forecasts, etc.) and increase productivity with efficient inputs of natural resources. These approaches not only help the base of the pyramid adapt to climate change but reduce their vulnerability in the first place.

The danger is that if funding is used on a siloed, project-by-project basis, adaptation finance might prepare communities for specific climate impacts – like the spread of malarial mosquitoes – but leave them otherwise as vulnerable as before to income and natural resource shocks.

On one hand, approaches to development acrosss the board must respond to the reality that the fundamental backdrop of a region’s climate will no longer be the same or even predictable. For example, the seeds and techniques that would make up a new ’green revolution’ in agriculture in Africa must be able to withstand changes in growing seasons and scarcer water or they will be created for a landscape that will no longer exist.

And on the other hand, it is an unfortunate opportunity to have, but influencing the shape of adaptation funding coming out of the Copenhagen summit could hugely impact the growth of approaches like microinsurance products, agricultural technology for the poor, water efficiency and quality products. It is a debate that the businesses and investors behind these approaches should be joining in order for the funding to be used effectively to bolster the position of the poor. Before the money gets appropriated, now is time to shape how it will be spent.

climate finance