Why the AfDB supports the Pilot Program for Climate Resilience
The Pilot Program for Climate Resilience (PPCR), the Climate Investment Funds’ (CIF) resilience program for low-income countries, is a bellwether for today’s emerging renovation of the global climate finance architecture. Its role as a preeminent global public sector program funding adaptation to climate change must be reviewed in light of the advent of the Green Climate Fund (GCF), which is aiming to direct 50% of its funds to adaptation. CIF donors are asking why the multilateral development banks (MDBs) can’t simply fund resilience from their own concessional funds, and are questioning whether PPCR projects are really additional or whether they should be part of MDB core development programs.
I believe there are four critical reasons why the PPCR must continue as a major source of adaptation support central to the African Development Bank’s climate finance work and running in parallel with the other functioning and anticipated resilience mechanisms including the Global Environment Facility (GEF) adaptation window and the GCF.
1) Links to National Policies: The PPCR is unique in its link to countries’ national policy. To get PPCR funding, the first step a country must take is to create a national resilience plan, called the Strategic Plan for Climate Resilience (SPCR), which is based heavily on stakeholder participation and ownership. This is the world’s only policy-based approach to embedding resilience fully into development. Once the SPCR is in place, countries can build a set of projects or programs, supported by the MDBs with help from climate finance mechanisms including potentially the GCF, which intelligently and effectively create resilient development at scale.
2) Additionality: Should the MDBs be doing this with their own concessional funds? In theory, possibly, but in practice, most MDBs do not have the required expertise and focus to manage the financing of climate resilience programs at sufficient scale at this time. At the AfDB, for example, we have in the past focused on large infrastructure and this is where the staff and the Board have expertise and experience. We are now shifting our focus to energy and climate, but it will take time to build experience and expertise throughout the Bank before we could implement resilience at the required scale. Furthermore, our Country Strategy Plans (CSPs) run on a five-year cycle and it will take time to work through the existing CSPs and change direction for new CSPs. Consequently, there is a risk that we could lose momentum in resilience financing at a time when we actually need to be ramping up and/or that resilience efforts are tacked onto existing plans rather being integrated with national policies. The CIF, through its national Focal Points, specialist involvement from MDBs and its PPCR-specific governing Sub-Committee, provides essential adaptation-focused experience and expertise for the planning and approval of adaptation funding.
Are these activities additional in the first place? The most relevant definition of “additional” in today’s climate changing world is whether or not these activities happen sooner than they would have done otherwise within the MDB-supported development programs. From a time perspective, absolutely, the PPCR brings activities forward in time by specifically engaging MDBs to help develop the SPCRs. Yes, MDBs might get to these projects, but in five or 10 years’ time – meanwhile natural capital has been lost and development goals set back.
3) The GCF is still unproven: The GCF’s capacity to develop PPCR-style plans and projects is still unclear. One concern is that the GCF Board, working with projects submitted by a very wide range of accredited entities at global, national, and sub-national levels, will have great difficulty in consistently applying their policies. Our experience with the Clean Development Mechanism (CDM) provides us with a cautionary tale (see Box 1. “Clean Development Mechanism’s context”).
Box 1. Clean Development Mechanism's contextLooking back at the Clean Development Mechanism (CDM), recommendations were submitted by tightly controlled Designated Operational Entities (the product of an accreditation process run by the CDM Executive Board), whose role it was to make recommendations based on guidance, methodologies, templates and their own interpretation of the minutes from CDM Executive Board (EB) meetings. Even though the focus of CDM projects was relatively tight – reducing greenhouse gas (GHG) emissions – the CDM EB had quite a turbulent time consistently applying their decision-making criteria. They relied heavily on the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat working at a project-by-project level, and one of the failings of the mechanism is that it has not, to date, implemented an appeals process. With a lot of funding at stake, a much more varied array of accredited entities submitting proposals for a much wider range of activities, the GCF may well find it difficult to apply their policies consistently and to approve projects quickly enough to cope with demand.
To add to this challenge, the GCF has indicated its intention to commit 50% of its finance to adaptation and the Paris Agreement indicates that US $100 billion per year is the minimum level of finance from 2020 to 2025. However, adaptation is not well defined, and the Paris Agreement’s Article 7 leaves it up to countries to define adaptation using a country-driven, gender-responsive, participatory and fully transparent approach. This sounds politically correct, but will it result in a fair distribution of adaptation funding? The GCF Board will have plenty of work to do. And even if it can effectively and efficiently disburse funds, relying substantially on one mechanism is not a good (risk) management strategy.
PPCR sidesteps these challenges by requiring the investment plans to be prepared by governments together with MDBs and projects to be implemented using MDBs safeguard procedures.
PPCR, interestingly, has the flexibility to develop projects to submit to the GCF. In fact, it’s possible that a PPCR National Focal Point could apply to the GCF for accreditation and submit its SPCR projects and programs to the GCF, secure in the knowledge that these have been designed with input from MDBs and stakeholders. Perhaps there is scope for some useful collaboration here?
4) Our definition and knowledge of resilience: In a world where our knowledge about adaptation and resilience is young and still needs further development, PPCR serves a vital role in helping develop a clear understanding about the range of solutions which can help to address the increasingly complex issue of climate resilience. PPCR already has a substantial bank of operational work under its belt, and can offer a wealth of learning on which we can all build so that countries can make informed and intelligent decisions about their climate-resilient development work.
So where now for the PPCR?
The recently agreed Nationally Determined Contributions (NDC) process made the global climate agreement inter-generational; our fight against climate change is no longer a series of discrete targets, but is now a five-year cycle of lower and lower emissions. PPCR should do the same, and instead of using the process to build one discrete SPCR, it should enable MDBs to revisit countries to simply update the existing SPCRs in view of current and revised Intended Nationally Determined Contributions (INDCs) to spin off new projects and programs that can seek funding from wider sources or un-committed CIF funding; and, every five years, it should institutionalize a SPCRs consistent with the host country’s new NDCs.
Pilot Program for Climate Resilience should push the definition of resilience to include the concept of Policy Resilience. Today, we focus on climate resilience to help economies cope with expected changes in climate; as we move into the post-2020 climate agreement, we need to help economies and populations prepare for changes in policies which Governments will need to implement if they are to achieve their NDCs – namely Climate Resilience and Policy Resilience. For example, how will agricultural systems in developing countries adapt to the inevitable need to limit methane emissions? PPCR could help us look ahead and start addressing these questions, such as how do we reduce methane emissions from livestock?
PPCR 2.0 should definitely be bigger and better.