Adaptation: status and prospects

1. Anand Patwardhan
Indian Institute ofTechnology-Bombay
Email: anand@iitb.ac.in
Adaptation: status and prospects

2. Why adaptation?
Asymmetry in distribution of impacts
Disproportionately larger impacts may be experienced in developing
countries
Mitigation is not enough
Regardless of mitigation, we are faced with a finite, and significant degree of
anthropogenic climate change
This is true even if we think a 2 C target is possible, and even more
important if we don’t reach it (quite likely)
Managing climate risk is important for sustainable development
We are not well adapted to current climate risks
A greater focus on adaptation (filling the “adaptation deficit”) may actually
help in advancing the development agenda
August 28, 20092 Anand Patwardhan, IIT-Bombay

3. Evolution as reflected in the IPCC
assessments
Gradual evolution in emphasis from biophysical changes to
impacts to vulnerability and now to adaptation from the first
to the fourth IPCC assessment reports
Gradual evolution in focus from making the case (‘why’) to
guiding the response (‘what’ and ‘how’)
Gradual evolution of thinking from a largely mechanistic and
sequential view of impacts, vulnerability & adaptation to a
more complex, process-oriented understanding of the
response process
Baselines and socio-economic development scenarios
Path dependency and the possibility of mal-adaptation
August 28, 2009Anand Patwardhan, IIT-Bombay3

4. Some relevant findings from the AR4
 Adaptation is necessary in the short and longer term to address impacts
resulting from the warming that would occur even for the lowest stabilization
scenarios assessed (WG2 SPM, p.19).
 More specific information is now available across a wide range of systems and
sectors concerning the nature of future impacts, including for some fields not
covered in previous assessments. Key impacts would be in water, food,
ecosystems, coasts and health sectors (WG2 SPM, p.11).
 Though adaptation measures are seldom undertaken in response to climate
change alone (WG2, Ch. 17, p.719), in several sectors, climate response
options can be implemented to realize synergies and avoid conflicts with other
dimensions of sustainable development (AR4 Synthesis Report, p.18).
 A wide array of adaptation options is available, but more extensive adaptation
than is currently occurring is required to reduce vulnerability to future climate
change (WG2 SPM, p.19).
August 28, 2009Anand Patwardhan, IIT-Bombay4

5. Some relevant findings from the AR4 –
contd….
 More specific information is now available across the regions of the world concerning
the nature of future impacts, including for some places not covered in previous
assessments. In addition to LDCs and SIDS (which are already acknowledged as
vulnerable regions under the Convention) other regions have been identified (WG2
SPM, p.13), for example (examples extracted from WG2, Ch. 19, Sec. 19.3.3, p. 791-
792):
 Africa is likely to be the continent most vulnerable to climate change especially with respect to
food security and agricultural productivity, particularly regarding subsistence agriculture,
increased water stress, potential for increased exposure to disease and other health risks,
increased risks to human health Approximately 1 billion people in South, South-East, and East
Asia would face increased risks from reduced water supplies decreased agricultural productivity
and increased risks of floods droughts and cholera.
 Tens of millions to over a hundred million people in Latin America would face increased risk of
water stress.
 Low-lying, densely populated coastal areas are very likely to face risks from sea-level rise and
more intense extreme events.
 Human settlements in polar regions are already being adversely affected by reduction in ice
cover and coastal erosion.
August 28, 2009Anand Patwardhan, IIT-Bombay5

6. Anand Patwardhan, IIT-Bombay6
Adaptation in the UNFCCC and KP
 According to Article 4.1 of the UNFCCC, Parties are committed to:
 Formulate, implement, publish and regularly update national and, where appropriate, regional programmes
containing measures… to facilitate adequate adaptation to climate change (Art. 4.1. (b)); and
 Cooperate in preparing for adaptation to the impacts of climate change; develop and elaborate appropriate and
integrated plans for coastal zone management, water resources and agriculture, and for the protection and
rehabilitation of areas, particularly in Africa, affected by drought and desertification, as well as floods (Art. 4.1
(e)).
 Article 4.4 states that:
 The developed country Parties and other developed Parties included in Annex II shall also assist the developing
country Parties that are particularly vulnerable to the adverse effects of climate change in meeting the costs of
adaptation to those adverse effects.
 Articles 4.8 and 4.9 of the Convention make specific reference to developing country Parties, in
particular least developed and most vulnerable countries. These articles explicitly mention funding and
transfer of technology “to meet the specific needs and concerns of developing country Parties arising
from the adverse effects of climate change” (UNFCCC 1992).
 The Adaptation Fund created as a part of the Marrakech Accords was finally operationalized at CMP3
in Bali. The process involved decisions regarding the basic elements of the fund (28/CMP.1),
principles underlying operation and management (5/CMP.2) and giving specific form to these
arrangements (1/CMP.3) under which the Adaptation Fund Board is serviced by a Secretariat and a
Trustee.
 The Special Climate Change Fund and LDC Fund also created as part of the Marrakech accords.
August 28, 2009

7. Adaptation is addressed under
different agenda items
SBI
Financial mechanism of the Convention (guidance to the GEF regarding
SCCF and LDCF)
1/CP.10 (Buenos Aires programme of work) and Art 4.8
SBI (CMP)
Adaptation Fund
SBSTA
Nairobi Work Programme
AWGLCA
One of the pillars of the BAP
AWGKP
Extending share of proceeds
August 28, 2009Anand Patwardhan, IIT-Bombay7

8. August 28, 2009Anand Patwardhan, IIT-Bombay8
Multilateral response on adaptation
Based on the two pillars of
National and local adaptation responses
Technology Financing
Generation Delivery
• Criteria for
project selection
and cost-sharing
•Methodologies
‘How’ to
support
‘What’ to
support
• Adequacy and
predictability of
source of funds
• Scale of funds
• Research: utilize S&T cooperation
• Development: approaches for joint
technology development
• Deployment: and appropriate
financing models
Should support and enable
•Institutional
structure
• Financial
instruments
Mechanisms for development
& transfer
What
technology
• Technology in
the broadest
sense
• Traditional
knowledge
capture

9. Effective financing and resource delivery is
key
July 31, 2009Anand Patwardhan, IIT-Bombay9
 Resource generation
 Adequacy and predictability of resources
 Scale of resources required: chronic vs. acute change
 Resource delivery
 What to support?
 Making the space of potential projects tractable: criteria and parameters for
additional cost, baselines and project outcomes / benefits
 Need standardized, simplified methodologies
 How to deliver?
 Institutional structure for delivery, including governance of mechanism
 Appropriate financial instruments for delivery
 Recognize that in the case of adaptation (unlike mitigation), for most sectors,
the actions being supported will be those of public entities
 Difficulty with directly applying ideas from mitigation (baselines, additionality,
incremental cost, global / local benefits)

10. August 28, 2009Anand Patwardhan, IIT-Bombay10
Elements
Demand
What are the needs and their characteristics and resource
requirements?
Supply
How do we generate the resources for meeting these needs?
Delivery
How do we deliver the resources effectively? What are the
appropriate institutional arrangements and modalities?

11. August 28, 2009Anand Patwardhan, IIT-Bombay11
Supply
Characteristics
Adequacy
Predictability
Automaticity
New & additional
Meeting demand characteristics
Options
Contributions
Levy on transactions
Others….

12. 12
Rationale for enhanced financial flows
Sector Areas / Adaptation measures
considered
Global
(billion USD)
Developing
countries (%)
Agriculture, forestry
and fisheries
Production and processing
Research and development
Extension activities
14 50 %
Water supply Water supply infrastructure 11 80 %
Human Health Treating increased cases of
diarrhoeal disease, malnutrition
and malaria
5 100 %
Coastal zone Beach nourishment and dykes 11 40 %
Infrastructure New infrastructure 8−130 25 %
 UNFCCC, 2007: Additional investment and financial flows in 2030 for adaptation
amount to tens of billions of USD, estimates depend on underlying scenarios
 Adaptation costs depend on level of mitigation activities
August 28, 2009Anand Patwardhan, IIT-Bombay

13. 13
Rationale for enhanced financial flows – cont.
UNDP HDR 2007/2008: adaptation investment needs will
be USD 86 billion by 2015
Evolution from adaptation costs studies at the global level
towards studies that will likely develop more information on
adaptation needs at regional and national levels
 UNDP project to estimate adaptation costs for agriculture, water resources, human
health, forestry, and tourism in 10 countries
 Regional Economics of Climate Change Studies, e.g. by ECLAC and ADB
However there are big questions about the adaptation cost
numbers, including
 Assumptions (e.g.,10-20% of investments for climate-proofing)
 Limited sectors and adaptation
 ‘Nebulous nature’ of adaptation or what are we exactly estimating costs
of?
August 28, 2009Anand Patwardhan, IIT-Bombay

14. 14
Generation of financial resources - options
Funding
source
Current
Proposed
Public funding Private funding
Voluntary Contributions Defined
Contributions
Contributions though levies
on market
instruments/commodities
Multilateral Bilateral International National
• Convention
Funds under
the GEF
(SPA, SCCF
and LDCF)
• PPCR
ODA,
including
• GCCA
• Japanese
Cool Earth
Partnership
• Spanish
MDG Fund
Fixed % of
GNP or based
on criteria
such as GDP,
GHG and
population
• CDM levy
for AF
• EU ETS • Investments
• Financial risk
management
instruments,
including
insurance
Market finance,
including
•venture capital,
•commercial loans
•revolving credits
• Share
from
global
carbon
tax
• Expansion of
CDM levy to 3-
5%
• SOP from JI and
ET
• Auctioning
allowances
• Levies on
international air
travel and
bunker fuels
August 28, 2009Anand Patwardhan, IIT-Bombay

15. 15
Current available and pledged funding in USD million
Source Estimated level
of funding
Period Nominal
annual level
of funding
Funding under the Convention
SPA
LDCF
SCCF
50
172
91
As of Oct 21, 2008
As of Oct 21, 2008
n.a.
n.a.
Adaptation Fund 400-1 500 2008-12 80-300
Multilateral
PPCR 640 2009-12 160
Bilateral
Japanese Cool Earth Partnership 1 000 2008-12 200
German International Climate Initiative 385 2008-12 77
GCCA of the European Commission 84 2008-10 28
Spanish MDG Fund 143 2008-11 36
 Call for resources to be:
 Adequate and sustainable to address identified needs
 Predictable to enable proper planning or sequencing of adaptation actions
 New and additional to not divert funds from ODA
August 28, 2009Anand Patwardhan, IIT-Bombay

16. 16
Potential of proposed options in USD billion
Proposed by Source Nominal annual level of
funding
G77 and
China
0.25 to 0.5 % of GDP from Annex I Parties 100.5–201
Switzerland 2 USD/t CO2 18.4
Norway 2% levy on auctioning AAUs 15–25
Mexico contributions based on GDP, GHG and
population and markets
0.2
EU 2% levy on SOP from CDM 0.25–2.5
Pakistan 3-5% levy on SOP from CDM 0.375–6.25
LDCs 2% levy on SOP from JI and ET 0.03–2.25
LDCs Levy on international air travel (IATAL) 4–10
LDCs Levy on bunker fuels (IMERS) 4–15
 Private sector will likely play a critical role in funding adaptation investments and will at some stage
undertake adaptation out of self-interest
 Need to identify levers to further encourage the private sector to optimise and shift its investments
towards more climate-resilient activities, for example
 Public-Private-Partnerships for infrastructure projects or financial risk management, including
insurance, where public takes over risks and ensures a certain economic rate of return
August 28, 2009Anand Patwardhan, IIT-Bombay

17. August 28, 2009Anand Patwardhan, IIT-Bombay17
Demand: what to support?
 The adaptation = development conceptualization has led to an unfortunate
paradox:
 Because adaptation = development, “normal” development actions ought to take care of
the problem, as long as agents (and decisions) are “fully informed”
 If adaptation = development, donor countries fear that “normal” development cam get
put under adaptation projects, thus “opening the floodgates” in terms of demand on
resources
 To move forward we will need to recognize that adaptation to climate change:
Poses a distinct, additional burden
The costs of responding to this additional burden would need to be met through
(grant financing) under the financial mechanism of the Convention
That while mainstreaming or integration is an approach for putting adaptation
into practice, and not a means for removing the needs for funding
Given that the estimation of these additional costs in practice may be rather
difficult we may need (a) better characterization of adaptation demand, (b) a
process for determination and (c) negotiated levels of co-financing
Our response will need to address chronic and acute hazards (reinsurance)

18. 18
Characterization of adaptation
 Adaptation may be examined and characterized along two
dimensions:
 Nature of additionality, and
 Nature of the intervention
 Nature of additionality and primary drivers
1. Integrating climate risk into socio-economic activities to ‘climate-
proof’ a current or future socio-economic activity to harness
development benefits, e.g. airport in coastal zone
2. Expanding adaptive capacity to deal with future and not only
current risks to harness development and adaptation benefits, e.g.
crop insurance
3. Directly addressing observed impacts from climate change to
harness adaptation benefits, e.g. changing Malaria zones
August 28, 2009Anand Patwardhan, IIT-Bombay

19. 19
Characterization of adaptation – cont.
 Nature of the intervention in line with the Bali Action Plan
 Context of intervention at national and sectoral level
 Policies
 Programmes and plans
 Projects
 Type of intervention
 Capacity-building
 Research and assessments
 Disaster risk reduction and risk management, including insurance
 Technology
 Specific adaptation action (e.g., infrastructure, cultivating drought-resistant crops)
 Economic diversification
August 28, 2009Anand Patwardhan, IIT-Bombay

20. August 28, 2009Anand Patwardhan, IIT-Bombay20
Examples of adaptation interventions (from NAPA’s)
Intervention
Additionality
Type of intervention Context of intervention
Research and
assessments
Disaster risk
reduction
Programmes Projects
Integrating climate
risk into socio-
economic
activities
Research on
micro hydro-power
production
(Burundi)
Introduce drought
tolerant crop
varieties
(Comoros)
Incorporate
adaptations from
NAPAs in Ministry
Operational Plans
(Kiribati)
Increase water
supplies to combat
increasing drought
(Comoros)
Expanding
adaptive capacity
to deal with future
and not only
current risks
Research on
drought, flood and
saline tolerant
crop varieties
(Bangladesh)
Strengthen early
warning systems
(Zambia)
Integrated
protection and
management of
coastal zones
(Cape Verde)
Plant vegetation to
reduce risks from
storms
(Cambodia)
Directly
addressing
impacts from
climate change
Improve
understanding of
groundwater
resources in light
of persistent
drought
(Mauritania)
River flood
warning system
(Bhutan)
Mainstreaming
adaptation into
sectoral
programmes
(Bangladesh)
Lowering of water
levels in the
Thorthormi Lake
to reduce risk of a
future GLOF
(Bhutan)

21. August 28, 2009Anand Patwardhan, IIT-Bombay21
Delivery arrangements
Institutional arrangements
Governance
How much to fund?
Matching demand and supply
Methodologies for additional cost determination
How to disburse?
Access to resources

22. 22
Current institutional arrangements
August 28, 2009Anand Patwardhan, IIT-Bombay

23. 23
Proposed institutional arrangements
Call for adaptation funding being structured and governed
under an umbrella financial mechanism of the Convention
Policy choice:
Using and improving existing institutions, e.g. GEF
Establishing new ones, e.g. Adaptation Fund under the Convention
overseen by a board appointed by the COP with equitable and balanced
representation of all Parties
August 28, 2009Anand Patwardhan, IIT-Bombay

24. 24
Current access
For whom?
All developing country Parties to the Convention
SPA under the GEF Trust Fund (for global environmental and adaptation
benefits)
SCCF (for adaptation benefits)
Only LDCs that are Parties to the Convention
LDCF (for preparation and implementation of NAPAs)
Developing country Parties to the Kyoto Protocol that are particularly
vulnerable
Adaptation Fund (concrete adaptation projects and programmes )
How?
So far only indirect access through implementing agencies, direct access to
Adaptation Fund being operationalized
August 28, 2009Anand Patwardhan, IIT-Bombay

25. 25
Proposed access
For whom?
 All developing country Parties to the Convention with a possibility of prioritization
regarding vulnerability
 BAP: LDCs, SIDS and countries in Africa affected by drought, desertification and
floods
 Proposals:
 “Poorest and most vulnerable”
 Vulnerability index or indicators reflecting a country’s:
o Circumstances
o Respective capabilities
o Level of associated risk
o Physical impacts
How?
 Direct and easy access with streamlined and transparent procedures
August 28, 2009Anand Patwardhan, IIT-Bombay

26. 26
Disbursement considerations
Current disbursement
Under the SPA
2 increments: one for GEB and one for adaptation, developed for each
project
Under the SCCF and the LDCF
1 increment for adaptation, determined through a sliding co-financing
scale based on the size of the project
Proposed disbursement
Adaptation funding to be provided based on the nature of
additionality and the nature of intervention
May need negotiated levels of co-financing and possibly a
process by which this may be accomplished (example:
Methodologies Panel to the AF)
August 28, 2009Anand Patwardhan, IIT-Bombay

27. 27
Examples of disbursement for adaptation
Intervention
Additionality
Type of intervention Context of intervention
Research and
assessments
Disaster risk
reduction
Programmes Projects
Integrating climate
risk into socio-
economic
activities
Full cost Negotiated co-
financing
depending on
sector and project/
Full costs of
marginal
adjustments
Negotiated co-
financing
depending on
sector and project/
Full costs of
marginal
adjustments
Negotiated co-
financing
depending on
sector and project/
Full cost of
marginal
adjustments
Expanding
adaptive capacity
to deal with future
and not only
current risks
Negotiated co-
financing
Negotiated co-
financing
depending on
sector and project
Negotiated co-
financing
depending on
sector and project
Negotiated co-
financing
depending on
sector and project
Directly
addressing
impacts from
climate change
Full cost Full cost Full cost Full cost
August 28, 2009Anand Patwardhan, IIT-Bombay

28. 28
Disbursement – cont.
Way of disbursement
Project support, as currently practised
Appropriate for piloting adaptation actions in countries and sectors
Less suitable in delivering up-scaled financial resources
Programmatic support as envisaged by the Adaptation Fund and
several Parties
Allow for implementation at scale
Support for national adaptation plans
Budget support as piloted in development assistance
Allows for integration of national budgets, climate funds and other
development funds
August 28, 2009Anand Patwardhan, IIT-Bombay

29. Beyond financing
Expert support for adaptation
Adaptation Committee of Experts
Regional centers and global and regional networks
Research and capacity-building
Tools, methodologies and metrics for assessing implementation
and outcomes
August 28, 2009Anand Patwardhan, IIT-Bombay29

30. Anand Patwardhan, IIT-Bombay30
Contact information
Anand Patwardhan
Shailesh J Mehta School of Management
Indian Institute of Technology
Powai, Mumbai 400076, India
Phone: 91.22.25767788
Fax: 91.22.25722872
Email: anand@iitb.ac.in
August 28, 2009