Source: Small Island Developing States
1 August 2019: Millions of dollars are being poured into adaptation and resilience projects with the growing recognition that investing in climate-proofing infrastructure and climate-smart agriculture (CSA), for example, makes good economic sense, reduces risk, and enhances livelihoods and well-being. This Update focuses on recent developments in climate change adaptation finance, including: projects approved at the Green Climate Fund (GCF) Board’s 23rd meeting; World Bank support for resilience of maritime operations and infrastructure in small island developing States (SIDS); a “three-pillar strategy” to manage disaster risk proposed by the International Monetary Fund (IMF); and a contingent disaster financing (CDF) mechanism developed by the Asian Development Bank (ADB).
GCF Board Approves USD 267 Million in Projects
At its 23rd meeting, held in Songdo, Republic of Korea, from 6-8 July, the GCF Board approved ten new projects in developing countries worth USD 267 million, and agreed on procedures for adopting decisions in the absence of consensus. With co-financing, the projects will channel over USD 1,450 million for low-emission, climate-resilient development, bringing the GCF portfolio to over USD 5.23 billion, with 111 projects in 99 developing countries.
Approved projects and programmes include:
- USD 25.3 million for supporting climate resilience and transformational change in the agriculture sector in Bhutan, with the UN Development Programme (UNDP);
- USD 35 million for transforming the Indus Basin with climate-resilient agriculture and water management in Pakistan, with the Food and Agriculture Organization of the UN (FAO);
- USD 22.4 million for safeguarding rural communities and their physical and economic assets from climate-induced disasters in Timor-Leste, with UNDP; and
- USD 20 million for a programme on affirmative finance action for women in Africa, which will finance climate-resilient agricultural practices in Ghana, with the African Development Bank (AfDB).
The Board also approved USD 8.9 million for integrated climate risk management for food security and livelihoods in Zimbabwe, under the Simplified Approval Process (SAP).
The 24th GCF Board meeting will take place in Songdo from 12-14 November 2019. [GCF News Story on Approval of Projects] [GCF News Story on FAO/GCF Project in Pakistan]
ADB Introduces Contingent Disaster Financing for Natural Disasters
ADB has developed a mechanism on CDF, which will support policy reforms to strengthen disaster preparedness and provide quick-disbursing funding following natural disasters in developing countries. Once CDF is approved, it will remain active until a disaster occurs, following which the country can quickly access the approved financing to help relieve fiscal constraints for relief and recovery efforts and avoid disruptive reallocations from priority budget programmes.
The CDF disbursements will sometimes be accompanied by follow-up assistance through ADB’s other emergency or regular lending instruments to support recovery and reconstruction. [ADB News Story]
World Bank Projects Seek to Improve Climate Resilience of Maritime Operations, Promote Blue Economy in SIDS
The World Bank’s Board of Executive Directors has approved two projects to improve the safety, efficiency and climate resilience of maritime operations in the Federated States of Micronesia (FSM) and the Marshall Islands, with grants worth USD 38.5 million and USD 33.1 million, respectively.
The Federated States of Micronesia Maritime Investment Project will construct and rehabilitate maritime infrastructure, including upgrades or repairs to drainage, terminal structures, berthing and apron facilities at four ports in order to strengthen safety and security of maritime transport and improve connection reliability between the ports and outer islands.
The Marshall Islands Maritime Investment Project will upgrade or repair quays and other structures, and improve safety and port operations and outer island docks to strengthen maritime transport across the country and improve the reliability of connections between the capital Majuro and outer islands.
While both countries depend on marine resources for trade, many of their ports lack the proper infrastructure, making travel in bad weather or at night particularly dangerous, which increases the vulnerability of outer island communities who depend on maritime transport to access education, markets and health services. The projects will strengthen communities’ access to food, water, fuel and emergency response services, and provide technical assistance for future port planning and management. Both projects are funded through the International Development Association (IDA), the World Bank’s fund for the world’s most vulnerable countries. [World Bank News Story]
In Cape Verde, the World Bank Board has approved an IDA credit of USD 40 million to help reduce fiscal risk associated with the national airline, Cabo Verde Airline, and promote a strategic partnership in the maritime sector for improved quality of inter-island maritime transportation services. Part of the Development Policy Financing series, the project will help strengthen the financial capacity of the public energy utility, the financial performance of the social housing programme to reduce debt service risks, and legislation for budget and debt management. The first pillar of the series focuses on reducing fiscal risks from state-owned enterprises while promoting private sector-led provision of infrastructure services. The second pillar aims to strengthen accountability and effectiveness in fiscal management.
Also in Cape Verde, an IDA credit of USD 5 million and an International Bank for Reconstruction and Development (IBRD) loan of USD 5 million were approved for the Cabo Verde Disaster Risk Management Development programme to strengthen the institutional and legal framework to ensure risk-informed sectoral and territorial planning and increase the financial capacity to manage impacts associated with disaster and climate-related shocks. [World Bank Press Release]
The World Bank’s Board of Executive Directors approved a USD 30 million Development Policy Credit to help Saint Vincent and the Grenadines strengthen its climate and fiscal resilience for promoting a blue economy. More specifically, the project will promote effective public financial management and build buffers to better deal with natural disasters and other economic shocks. It will also support the transition to a blue economy by building on the country’s natural assets and reinforcing climate resilience. For example, it will help phase out coastal sand mining and implement policies that aim to strengthen the spatial planning and management of ocean and coastal resources, including fisheries. This Development Policy Credit, the first in a series of two, is complemented by technical and capacity support. [World Bank Press Release]
Publication Highlight: IMF Paper Discusses Ways to Build Resilience in Vulnerable Developing Countries
The IMF has published a paper on ‘Building Resilience in Developing Countries Vulnerable to Large Natural Disasters,’ which discusses the ways in which countries can reduce human and economic costs associated with natural disasters.
The paper looks at a “three-pillar strategy” to manage disaster risk through building structural, financial and post-disaster resilience, including social resilience. Structural resilience requires infrastructure and other investments to limit the impact of disasters; financial resilience involves using fiscal buffers and pre-arranged financial instruments to protect fiscal sustainability and manage recovery costs; and post-disaster resilience, including social resilience, requires contingency planning and related investments to ensure a speedy response to a disaster. A comprehensive and coherent national disaster resilience strategy, according to the IMF paper, requires action on all three pillars.
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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past climate finance updates can be found under the tags: Finance Update: Climate Change and Finance Update: Sustainable Energy.