Pollution and warmer temperatures have killed reefs off the shore of Hellshire Beach, allowing waves to pound it and wash away the sand.
The project is supported by a preparatory grant provided by the Climate Investment Fund through the Pilot Program for Climate Resilience Program (PPCR).
For the past decade, annual temperature records have been broken with disturbing regularity. Climate change is expected to adversely impact economies around the world, especially those in developing countries, and risks pushing 100 million people into extreme poverty by 2030. Making climate-vulnerable sectors such as agriculture, health, and infrastructure more resilient is critical to reducing the negative economic and social impacts of climate change. But the costs to make this happen are expected to run billions of dollars a year, of which public funds will only be able to cover a small fraction.
The private sector - ranging from individual farmers to small and medium enterprises to large companies across a variety of sectors – will likely shoulder the vast majority of these costs. But with these costs also comes unique opportunities. Companies with the foresight to properly assess and address their climate risks can protect future revenue streams and potentially create a competitive advantage.
A new report 'Private Sector Investment in Climate Adaptation in Developing Countries', published by the Climate Investment Funds (CIF) examines how development finance institutions can play an important role in helping companies overcome the barriers to making their assets and operations more climate resilient and to help close the financing gap. The report looks at what Multilateral Development Banks (MDBs), in particular, are doing in the climate adaptation space, with a goal to help provide practitioners and private companies with a deeper understanding of how they can better support climate resilience projects in the future.
Here are four key takeaways from the report:
1. Addressing Knowledge Gaps in the Private Sector Matters
Tools such as feasibility studies, business risk assessments, technical assistance and market studies can help address private sector knowledge gaps. In other words, most companies are not fully aware of the risks that they may face due to a changing climate, as well as the technological and investment opportunities available to address those risks. This is particularly true for sectors such as agriculture, infrastructure, and water management. Often, making the link between climate impacts and business risk can help drive companies to consider measures to make their operations more climate resilient.
For instance, an IFC project in Mozambique conducted a feasibility study to demonstrate the technical and financial viability of irrigating agricultural blocks for field crops, vegetables, and tree crops to help smallholder farmers overcome barriers to investment in irrigation technologies. And an EBRD project in Bosnia and Herzegovina conducted a business risk assessment for a pulp and paper company to stress test local water availability under future climate scenarios. These tools can help businesses properly assess the climate risks that could affect their operations, helping decision makers apply the necessary resources to mitigate those risks.
2. Concessional Financing When Returns are Uncertain is Important
Concessional finance is an important financing tool where returns are long and/ or uncertain. Concessional finance – funds provided at below market rates and/or with longer repayment periods - can be critical to reducing the real and perceived risks facing these investments. They can also help align incentives to push projects over the finish line that wouldn’t otherwise be feasible.
MDBs have reported on the effectiveness of using concessional financing to minimize first mover costs when piloting innovative projects. The Inter-American Development Bank, for example, offered a $5.75 million loan on concessional terms from the Pilot Program for Climate Resilience (PPCR) to the Jamaica National Building Society in order to on-lend funds to housing developers and construction firms for water efficient products. This concessional loan was necessary to move the project forward as it came at a time when dedicated lending for water efficient technologies was non-existent in the market.
3. Intermediated Financing Can be Effective for Engaging Small Businesses
Bringing in smaller, local financial institutions can be a necessary step to effectively engage micro, small, and medium enterprises (MSMEs) in climate adaptation. Intermediated Financing can be an effective way to engage MSMEs in climate adaptation activities. MSMEs often face challenges with regards to lack of capacity to address climate risks to their business. And they face an additional hurdle as these companies are often too small to be directly engaged with development finance institutions (DFIs).
DFIs can overcome this barrier by providing local financial institutions with on-lending/credit line products or credit enhancement (e.g. first loss provisions or guarantees for default risk). These local banks can then engage with their MSME clients to help finance climate resilience products. For example, EBRD’s CLIMADAPT financing facility offers credit to local banks to provide financing to small businesses in Tajikistan for sustainable technologies. The local banks are able to leverage their client relationships and expertise in order to effectively identify and support climate resilience investments for SMEs.
4. Scaling Investments through Collaboration Can Help Mitigate Project Risk
Intensive collaboration with other stakeholders can help mitigate project risk and scale investments. Even though many DFIs have gained some experience in the market, the challenge for private sector adaptation investments can prove difficult for one organization to implement on their own.
Long term and patient collaboration with clients and partner DFIs can often be necessary to move private sector adaptation investments forward. For instance, IFC and IDB have worked with Ecom Agroindustrial Corporation (ECOM), one of the world’s biggest coffee traders, on a combined six investments worth close to $200 million. These existing relationships helped build the trust necessary to undertake the first in a series of climate resilience projects benefitting small holder farmers in Latin America. This project combines concessional finance, guarantees, and company contributions along with private sector commitments to buy the crops, helping ensure that the project makes financial and business sense for all stakeholders.
This report will be discussed further at an upcoming BBL event, happening Thursday, January 26th from 12:30 – 2:00 pm at the World Bank headquarters in Washington, DC. For additional information, including how to register for the event, via this link.
Download the Report here.
The African Development Bank (AfDB), with support from the Climate Investment Funds (CIF), has awarded a contract to Swedish consulting firm CPMA International to help develop a global Adaptation Benefit Mechanism (ABM).
Sometimes, small isn’t necessarily beautiful. A new policy paper by the International Monetary Fund highlights the big consequences small states can suffer from natural disasters.
The paper shows that on average, the economic costs of natural disasters for small states can be more than four times that for larger countries. Small states can also suffer damage amounting to between 15 and 30% of GDP – these levels of devastation are almost never experienced by larger states.
As the report explains: “Climate change is projected to affect small states disproportionately, partly by exacerbating natural disasters and partly through more gradual effects such as rising sea level. Small states will thus face much larger economic costs from climate change than larger peers. The impact on important economic sectors (agriculture, tourism, fishing) and pressures on ecosystems could exacerbate poverty and emigration.”
Small Island Developing States (SIDS) are particularly vulnerable. That’s why the $1.2 billion Pilot Program for Climate Resilience, a funding window of the $8.3 billion Climate Investment Funds, is assisting national governments in integrating climate resilience into development planning and providing additional funding to put these plans into action and pilot innovative measures to tackle pressing climate-related risks.
The PPCR is helping SIDS increase their understanding of climate change and its impacts, improve their capacity to adapt and develop high priority investments on adaptation.
For example, in Jamaica, a $6.5 million project aims to improve climate data and information management. The ambition is to make this more accurate, timely, wider in coverage and easier to access and use by coastal communities, particularly farmers and fishermen. PPCR funding contributes to Early Warning Systems, improved equipment and observations – all of which lead to better forecasting. The project will contribute to Jamaica’s effort to integrate climate change into decision-making processes and adapt to its effects.
Combining finance for adaptation with strategic planning for development reduces risks and PPCR’s Financing Water Adaptation in the New Urban Housing Sector project, with funding approved by the PPCR’s governing body, will aim to do just that. By introducing adaptation measures into new private sector housing development and increasing awareness of the practical and competitive advantages of building climate-resilient housing, it will help Jamaican communities and businesses.
In Samoa, 70 percent of the population lives within a kilometer of the coast. Approximately four-fifths of the country’s 400 km coastline is at risk from erosion, flooding or landslides. A PPCR grant of $14.6 million administered by the World Bank supports a program assisting 45,000 Samoans in coastal communities in adapting to climate change and variability; protects coastal infrastructure; and increases awareness about climate change impacts and adaptation activities among communities, civil society and government.
The project provides training and support in targeted communities to update and implement local coastal infrastructure plans, and for activities that increase the resilience of coastlines, near-shore areas and coral reefs. It offers community grants for village-level projects that target coastal resilience like planting activities, mangrove rehabilitation, improved water storage or the relocation of small infrastructure.
St Lucia is also under threat from climate change, as Farzana Yusuf-Leon of St Lucia’s Water Resource Management Agency explains: “The climate change impacts of increased incidences of floods, reduced availability of water – these are not simply expected impacts, they are actually current. Because of the recognition that these impacts are devastating to Saint Lucia. We recognized the need for improvements in our climate services and climate data.
“Through PPCR, a national geonode was established and developed and is currently being used. It’s called SLING – St Lucia Integrated National Geonode. It’s a web-based application – a repository of geospatial information. A number of agencies collect geospatial data but there’s very little collaboration. SLING gathers all this data, keeps it in a central repository for easier accessibility so this information can now be used towards more informed planning and decision making.”
And at the regional level, all programs in the Caribbean and the Pacific are increasing learning-by-doing and sharing the lessons with one another.
By investing in SIDS’ resilience, the PPCR is helping these countries and others not just survive but thrive.
Ranked 187th out of 187 countries on the Human Development Index, Niger is the world’s poorest country. It is almost four times the size of the UK or slightly more than twice the size of California. The high variability in the country’s rainfall patterns make the population, 80% of whose livelihoods depend on agriculture and livestock-based activities, extremely vulnerable to climate-related hazards. Droughts and floods and soil erosion and degradation drive persistent economic and food insecurity and endemic poverty.
To tackle these challenges, Niger’s strategy for climate resilient growth and poverty reduction targets investments at the intersection of climate-related risks, food security, and sustainable land and water management. And the Pilot Program for Climate Resilience (PPCR) – a $1.2 billion funding window of the Climate Investment Funds – is playing its part.
Niger has been part of the PPCR family since its inception in 2008. Niger has received total funding of $110 million to support its climate resilience efforts. PPCR’s work in the country is strongly aligned with the government’s aims of integrating climate resilience into national and local government planning and budgeting mechanisms. By implementing climate resilient land and water management programs, Niger can reduce the rural population’s vulnerability to climate change and improve the quality and accessibility of weather and climate information.
In November 2016, at the UN Climate Conference (COP22) in Morocco, the government of Niger convened a panel discussion to highlight the results and lessons of the country’s PPCR work. Officials from the Ministry of Environment and the Inter-State Committee for Drought Control in the Sahel, explained the step-by-step process to implement an effective partnership and climate-resilient strategic investment program.
A highlight in the presentation was the Community Action Program for Climate Resilience (CAPCR), which is targeting food security. The program helps communities by providing water pumps to boost vegetable production. There’s also cash for food schemes for the most vulnerable people, mostly widows and young children. It’s also drawing on locally-based indigenous techniques to counter the area of drylands with ‘demi-lunes,’ a half-moon shaped area on the ground that helps to restore ecosystems through systematically trapping moisture. The community-based efforts underpinning the CAPCR underpin the government’s flagship program ‘Nigeriens Nourish Nigeriens’ – an ambitious effort to secure much needed food security in the country.
Working with the African Development Bank, the PPCR is supporting the Water Resources Mobilization and Development Project. This helps improve the resilience of rural communities dependent on rain-fed farming through sustainable water resources, soil management and the adoption of resilient techniques and technologies. The project has so far improved the lives of more than 700,000 people, half of them women. To date, up to 1,000 farmers have been trained in climate resilient agricultural technologies and practices. Up to 250 have accessed credit.
The CIF and AfDB-funded climate resilience program is supporting rural communities to improve the quality and accessibility of climate and weather information. It will directly benefit 150,000 producers across Niger’s 235 districts; and 1,500 producers will receive agro-meteorological support. This will enable smallholder farmers to make informed decisions, better manage risk and adapt to climate change.
There is an old Nigerien proverb which says “before starting to sing, the young bird will listen to the song of the old.” As one of the earliest members of the PPCR, Niger had valuable lessons to share with a standing-room-only audience at COP22.
Highlighting its results, the government made a call for continued support for its adaptation efforts. “Many investments will be in made in Niger’s climate resilience in the coming years – all in all about $9 billion,” said Yahaya Nazoumo, focal point for PPCR in Niger. “Most of the funding will come from domestic resources. But more financing is necessary and we are calling upon our international partners to continue to support us in our fight against climate change.”
OAXACA - 12th June 2016 - This week Mexico is hosting the Climate Investment Funds’ governing body meetings as well as a knowledge exchange forum of the CIF’s forestry program. The meetings in Oaxaca bring together an audience of over 150 experts from about 50 countries, including representatives of developing and donor countries, international organizations and civil society.
The official opening took place today, June 12, and included a welcome address by Mafalda Duarte, Manager of the Climate Investment Funds. “Mexico is a very fitting stage for these very exciting knowledge sessions. We have many countries in this meeting that offer valuable experiences about the sustainable use of forestry resources”, Duarte said, thereby referring to the $775 million Forest Investment Program (FIP) which is a funding window of the CIF and provides direct investments to benefit forests, development and climate.
The Mexican Government is presenting its community experiences in sustainable forest management to the 23 countries that make up the Forest Investment Program (FIP). Mexico was chosen in 2011 as a pilot country and has received 60 million dollars for four forestry projects.
“With the Forest Investment Program’s resources, matched by other funding sources of, for example, the World Bank, Mexican forestry communities have benefited from training and technical studies for forest land-use and land management”, said Jorge Rescala Pérez, Director-General of Mexico’s National Forestry Commission of Mexico (CONAFOR), during the opening session.
During this week’s meetings, the governing body of the CIF will decide on the future strategy of the funds. Other key issues concerning CIF’s Clean Technology Fund, its climate resilience fund (PPCR) and renewable energy program in low-income countries (SREP) will be discussed later this week. For the CTF, innovative ways to mobilize capital of institutional investors will be discussed. This would open up new investments into frontier areas, such as energy storage, distributed generation, sustainable transport, and residential and industrial energy efficiency, where an additional push could accelerate market development. Investment plans of Mozambique and Bangladesh, including funding envelopes, will be featured in designated committee meetings on forestry management and renewable energy, respectively.
They may be over 6,600 kilometers apart but for the Climate Investment Funds (CIF), the journey from Paris to Dushanbe is a natural one. Because a CIF project in Tajikistan’s capital reflects, in its own unique way, the agreement made by world leaders in the French capital last December.
At COP21, we saw a strong consensus around and commitment to the importance of a wide range of stakeholders coming together to tackle climate change. Especially the private sector whose role in climate resilience is crucial to help combat climate impacts. Tajikistan’s CLIMADAPT is a pioneering project and a powerful and practical example of what this consensus and commitment look like.
In Paris, the private sector were not just present; they were persuasive advocates for a shift towards low-carbon, climate resilient economies. Investment decisions are becoming more climate-smart and being reviewed against their resilience to a changing climate. Tajikistan may indeed be a long way from Paris but it’s amongst the most vulnerable countries to climate change in the world so the decisions that were made in the French capital, and their implementation, have real-life implications for Tajik communities and businesses.
With funding from the CIF’s Pilot Program for Climate Resilience (PPCR) and the European Bank for Reconstruction and Development (EBRD), Tajikistan is pioneering CLIMADAPT, a climate resilience financing facility - one of the first of its kind in the world. It combines $5 million in concessional funding from the CIF’s PPCR and $5 million in loan and grant funding from the EBRD to scale up financing for climate resilience through local financial institutions.
Effective climate resilience technologies already exist in Tajikistan but market barriers, such as the high cost and low availability of medium-term finance along with a scarcity of suppliers and installers, can limit their uptake. That’s where CLIMADAPT comes in - it offers loans to private businesses, farmers and households via local Financial Institutions (FIs.) These FIs already have a good market presence and are interested in climate resilience technologies which many have high demand. And it’s a win-win – climate-resilient technologies have long-term benefits for the community and they benefit investors too.
CLIMADAPT works in three area – water use improvement, energy use improvement and sustainable land management. Funding is available for agriculture, business and manufacturing small and medium-sized enterprises (SMEs) and residential needs.
For farmers, this could mean drip and sprinkler irrigation, improved water pumps and developing new orchards for growing apples. For SMEs, this could mean improved processing technologies or energy-efficient production. And for households, this could mean improved insulation or shifting to renewables.
So far, loans totaling the Tajik somoni equivalent of $8 million have been provided to one Tajik bank and two microfinance institutions to on-lend to small and medium-sized enterprises, small farmers, and households in rural areas.
At the project’s launch, Jamshed Hasanov from the PPCR Secretariat, Tajikistan said: “The PPCR is initiating transformational change. We’ve already seen that the multi-stakeholder approach to program implementation is an important asset. With its community-driven development focus, community members, women’s groups and local farmers are taking the lead in decision making on investment choices. NGOs and other civil society organizations are regularly consulted on issues related to implementation.”
Hasanov and his team along with EBRD and the CIF Secretariat will be following the results of this innovative facility - and learning how it can be replicated in other countries to deliver climate-smart development.
The integration of climate change into formal academic courses is a new development for Nepal as well as for other countries. Under the curriculum development activity, with support from the Mainstreaming Climate Change Risk Management in Development (MCCRMD) project, new climate change content was developed for seven academic programs of three national universities including Pokhara University (PU). The goal of these revisions to curricula is to reinforce knowledge and skills of students so that they are prepared to take action on climate change in their later professions.
Average temperatures are rising, precipitation patterns are shifting and glaciers are retreating. This has an enormous impact on the economy – which is dominated by the agricultural sector. Agriculture accounts for one quarter of the country’s GDP and two thirds of the working population. Tajikistan’s businesses and, most importantly, the country’s population are also affected by climate change.