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Adaptation Benefit Mechanism (ABM)

What is the ABM?

The ABM is an innovative mechanism for mobilizing new and additional public and private sector finance for enhanced climate change adaptation action. It has the potential to speed up transformation to low-carbon, resilient and sustainable development of the host countries by giving value to resilience.

ABM will contribute directly to the establishment of a new business model for adaptation and the achievement of:

  • The Sustainable Development Goals;
  • The Adaptation and Climate Finance goals of the Paris Agreement;
  • The UNFCCC long-term finance goal;
  • Adaptation and resilience goals and needs of developing countries expressed in, amongst others, Nationally Determined Contributions, National Adaptation Plans, Technology Action Plans and Long-term strategies for low-emissions, resilient and sustainable development.

DID YOU KNOW?

Out of the total flow of climate finance in 2017, adaptation efforts globally were awarded USD 22 billion, about four percent.

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ABM will de-risk and incentivize investments by facilitating payments for delivery of Adaptation Benefits. ABM will certify the social, economic and environmental benefits of adaptation activities. The value of adaptation action captured in these certificates, including the incremental costs of generating the benefits, will be promoted to potential investors or lenders. The expectation is that verified certificates of the benefits of specific adaptation activities issued by a reputable international organization and based on sound methodological and technical work, in consultations with stakeholders and with the approval of the host country government will guarantee the credibility of the adaptation activities and increase their attractiveness to potential investors or lenders.

In response to demand by African countries, ABM was developed theoretically by the African Development Bank in collaboration with governments from several African countries and various stakeholders.

In the intergovernmental climate change negotiations under the UNFCCC, ABM is part of the discussions on Article 6.8 on Non-market-based approaches. ABM is considered a non-market-based approach, because no international transfer of outcomes is envisaged and its aim is consistent with the aim of non-market-based approaches, referred to in Article 6, paragraph 8 of the Paris Agreement.

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 has outlined a range of possible pilot projects.

Starting in 2019 to 2023, ABM will be tested on the ground through pilots in collaboration with partners, such as the UN Capital Development Fund (UNCDF). The pilot phase will aim at 10-12 demonstration projects in Africa. ABM will be tested with small-scale projects, which are either replicable or scalable, or need funding for continued maintenance and operation.  The certificates for the Adaptation Benefits of the demonstration projects will be granted to the project developer for free, while the Adaptation Benefits of replication, up-scaling or continued maintenance and operation will be promoted to various potential investors or lenders to mobilize enhanced action and finance.

An ABM Board, Methodology Panel and Secretariat will be established by the AfDB in 2019 to guide, advise and facilitate the pilot phase. The use of Adaptation Benefits certificates would be tracked through a register. Based on the experiences and lessons learned from the pilot phase, ABM will be delivered to the international climate change community for wider use as a voluntary tool. ABM is deemed relevant for all countries in all regions. Funding from various sources, such as international funds and donor countries is welcome to demonstrate the mechanism during the pilot phase.

It is envisaged that after the pilot phase, sufficient infrastructure, methodological work and awareness will exist to enable project developers and host countries to determine the Adaptation Benefits in advance and sign off-take agreements with donors or climate change financiers, without having demonstration projects in place first, or on the basis of micro-pilots. The off-take agreements will guarantee payments on delivery of Adaptation Benefits following verified performance of the adaptation projects and certification of the Adaptation Benefits. Payments for Adaptation Benefits will enable financial institutions to consider ABM revenues as a new source of income and as extra security against loans and equity investments.

The scope for ABM projects is very broad covering all aspects of adaptation and resilience to climate change. The African Development Bank has developed some initial methodologies that can be tailored to a specific context. However, project developers are free to propose new methodologies. Early concepts include:

  • Solar powered irrigation pumps to help farmers overcome unreliable rainfall;
  • Drip irrigation technology to make better use of available irrigation water;
  • Sustainable practices to protect cacao plantations form diseases exacerbated by climate change;
  • Climate resilient agriculture to diversify income streams of vulnerable farmers;
  • Development of weather information systems to provide farmers with accurate weather forecasts;
  • Job creation for the most vulnerable groups affected by climate hazards, particularly women and youth;
  • Coastal protection through afforestation with mangrove trees;
  • A range of clean energy technologies, which free up women and children’s time enabling them to become more economically productive or attend school and hence become less vulnerable to the negative impacts of climate change.



Contact :

Gareth Phillips,
Manager, Climate and Environment Finance, PECG1

Lucy Naydenova,
Adaptation Benefits Mechanism Specialist, PECG1