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Innovative approaches to financing climate adaptation
During this year’s Innovation4Climate meeting in Germany, focused on “Adaptation metrics for innovative results-based adaptation and resilience finance,” the African Development Bank hosted a workshop on Tuesday, May 21, in cooperation with Perspectives Climate Group, The Higher Ground Foundation.
Guest speaker Balimwezo Ronald Nsubuga, Mayor of Nakawa, Kampala, Uganda, reviewed the climate-related challenges facing his city from flooding, the destruction of wetland habitats, access to cooking energy, food security, and education. All of these issues are exacerbated by Uganda’s population: over 70% of Ugandans are under 25 years of age. His description set the scene for presentations on different approaches to quantifying adaptation to raise finance for adaptation actions.
Matthias Krey of Perspectives explained the “saved-health/saved-wealth” approach that provides a quantitative evaluation of the outcomes of different adaptation actions. Using this approach, an economic evaluation of different opportunities can be made, but it relies on the definition of weighting factors and entails a relatively complex process.
Karl Schultz of the Higher Ground Foundation presented the foundation’s work on developing the vulnerability reduction credit (VRC™) standard framework, governance and quality assurance standards underpinning adaptation metrics. The VRC creates credits which, following independent verification and certification, can be transferred, traded and used as evidence of corporate social responsibility actions.
Gareth Phillips, Climate Division Manager at the African Development Bank, who also moderated the event, presented an Adaptation Benefit Mechanism that sidesteps the issue of units to focus on “certifying” the amount of public finance used to mobilize private-sector finance into bona fide adaptation projects so that developed country governments can achieve their US $100-billion pledge by 2020.
Participants concluded that further support was necessary to pilot these innovative approaches to improve the understanding of adaptation metrics and provide mechanisms that donors can use to finance adaptation and encourage private sector investment.