Adaptation Benefit Mechanism (ABM)


What is the ABM?

The ABM is a new mechanism designed to mobilize private sector investment into adaptation. It offers developed country Governments, Corporate Social Responsibility actors, philanthropies and others a way of providing context and project-specific levels of grant finance to overcome the barriers to investment in technologies that provide adaptation benefits and mitigation co-benefits to households, communities and economies. In effect, the ABM certifies transfers of grant funds for bone fide adaptation projects and reports on the leverage of private sector co-finance blended with donor funds. The ultimate goals of the ABM are (1) to deliver adaptation technologies to developing countries to make them less vulnerable to climate change and (2) to help achieve the Copenhagen pledge of mobilizing 50% USD 100 bn for adaptation by 2020.

Development of the ABM

With funding from the Climate Investment Funds and support from the Governments of Uganda and Cote d’Ivoire, the African Development Bank has developed concept notes, an additionality concept, slide presentations, draft modalities and procedures and outline concepts for a range of pilot projects. A selection of documents are presented below.

Modalities and Procedures

With funding from the Climate Investment Funds, AfDB commissioned CPMA International to prepare draft modalities and procedures and document templates to help operationalize the ABM.

Proposed Pilots

A wide range of pilot projects have been outlined and the Bank is seeking funding from a variety of sources to demonstrate the mechanism. The UN Capital development Fund (UNCDF) is working with the Bank to elaborate a pilot program in one or more African countries. The scope for ABM projects is very broad and project developers are free to propose new methodologies to the ABM Methodologies Panel but early concepts include:

  • Solar powered irrigation pumps to help farmers overcome un-reliable rainfall
  • Drip irrigation technology to make better use of available irrigation water
  • Climate resilient agriculture to diversify income streams on farms
  • Development of weather information systems to provide farmers with accurate weather forecasts
  • Job creation particularly for women and youth
  • A range of clean energy technologies which free up women and children’s time enabling them to be more economically productive and attend school and hence become less vulnerable to climate change.


ABM and Article 6.8 of the Paris Agreement

Based on submissions made by the Governments of Uganda and Côte D’Ivoire, the ABM is listed as part of the work program under Article 6.8. The ABM is considered as a non-market mechanism because it does NOT create a tradable or transferrable unit. The outcome of the ABM is a certificate confirming how much donor funding was committed to a host country approved adaptation project via an Adaptation Benefit Offtake Agreement (ABOA). The ABOA will, in due course, become a bankable instrument which lenders and investors can take into consideration as a source of cash flow, and hence the ABOA is expected to help leverage private sector finance.

DID YOU KNOW?

Only about 14% of the resources mobilised for climate change is allocated to adaptation and only 4% of adaptation funding ends up to Africa

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This is a whole new field…check out our blogs as we try to shed light on some of the intricacies and challenges of ABM


Contact:

Gareth Phillips,

Manager, Climate and Environment Finance, PECG1

Ayanleh Daher-Aden,

Young Professional, PECG1