Global issues on adaptation funding at the urban level

Published: 9th April 2012 11:32Last Updated: 9th April 2012 10:32


Adaptation funding is insufficient and needs a new angle
If consensus can be reached about anything these days, it is that funding for adaptation is not sufficient, even if the costs of adaptation cannot be accurately  or unanimously estimated - especially as stand alone from other types of funding. Ongoing efforts, mainly climaxing during the UNFCCC’s annual Conference of Parties (COP), have so far not left people feeling ready to deal with the effects of more severe and frequent climate impacts - at least not so for people in countries, regions and cities most vulnerable and at risk.

At the international level, adaptation funding normally comes from UNFCCC or from official development assistance (ODA) sources. Even though ‘climate funding’ has so far been mostly dedicated to mitigation efforts, funding earmarked for adaptation has been slowly gaining ground as more decision-makers at different levels acknowledge the need to adapt. Indeed, at the last UNFCCC COP17 in Durban in November-December 2011, the creation of a Green Climate Fund (GCF) - expected to become the prime funding source for adaptation and mitigation in low income countries - was considered to be “the key outcome of the conference” by the COP’s president. However, time for further negotiations around the specifics and formal commitment by developed nations is still needed to make the GCF something more than a ‘placeholder’ for its future expected role. In fact, the details of how and by whom it will be funded are yet to be negotiated.

Cities will need to make big efforts to adapt
Considering cities’ geographical location, population density, demographic pressures, the strong linkage between their physical systems (causing impacts in one system likely to affect the proper operation of other systems; such as overloaded stormwater drainage systems affecting traffic in road networks, for example [1]) and climatic stresses, it is fair to say that cities will bear the brunt of adaptation costs - “half the world's population lives within 60 km of the sea, and three-quarters of all large cities are located on the coast” (ref) making them potentially vulnerable to climate change impacts such as sea level rise, coastal erosion and storm surges, among others.

Yet, the present predominantly top-down, supply-driven approach to adaptation funding, designed for short-term returns on investment, can hinder the efforts of local governments to implement adaptation actions in a rapidly changing environment. For instance, international funding may not sufficiently ‘trickle down’ to the levels where it is most needed and can be most effectively put to work on reducing vulnerability, or may not do so in a timely manner. In the words of Marcelo Ebrard, Mayor of Mexico City, “the architecture that is available now is not working, why, because it is not designed to help the cities; it is designed to work with the national governments,” whereas adaptation needs to be addressed in a local context, utilising local knowledge.

In addition, adaptation measures demand financial instruments that work on a longer-term horizon than they do at present (e.g. funding for measures aimed at ecosystem remediation will often require decades to deliver the expected result).

What does funding adaptation mean in practice?
An added angle to the issue of funding for adaptation is: what does funding for adaptation actually mean? That is, what qualifies, in the context of developing countries, as adaptation funding as compared with ODA? Or, if existing funding lines are revised to make investments climate proof as a norm - is this considered adaptation funding?

The semantics may not necessarily be terribly important, but the issue does suggest that urban decision makers should not exclusively focus their efforts on lobbying for increased adaptation funding. Rather, they should also seek to introduce adaptation criteria into city planning and urban development investments (adaptation mainstreaming), creating synergies with other flows of money into the urban space, both public and private. Indeed, more private investment is needed that addresses risks comprehensively (including those of a changing climate) and enhances the city’s resilience; instead of merely relying on international public-sector adaptation funds.

In other words, it is necessary to make appropriate valuations of future investments by determining the asset’s acceptable level of risk at the end of its useful life. In this sense, valuations can allow holistic and efficient decision-making, when adaptation criteria are inserted for the sake of a sound investment, and not in order to qualify for adaptation funding.

Where should adaptation funding go?
When considering two types of adaptation funding - adaptation-labelled funding coming from UNFCCC or as ODA (DRR, developmental and humanitarian perspectives), and infrastructural climate-proofing funding to enhance the resilience of a given urban asset (efficiency perspective) - it is important to evaluate how and where it is allocated.

As mentioned above, one of the present drawbacks of adaptation-labelled funding is its top-down nature. (Read about using vulnerability indices to allocate adaptation funding). Due to political and institutional limitations, such an approach is more likely to ignore the needs of the most vulnerable groups than a bottom-up approach would (i.e. making funds directly accessible to local level institutions, which, in turn, are invested in response to needs expressed in a participatory way). By taking advantage of existing local knowledge, in addition, a bottom-up approach can support the allocation of funds in a demand-driven, fairer and, also, in a more efficient way. This may, however, require capacity building efforts at the city/urban level to develop the skills to gain access to the funding system and evaluate spending in new ways (taking a longer-term persepctive). Clearly, local governments will play an important role in materialising this funding inversion (from top-down to bottom-up).

Local governments can also play a crucial role in eliciting climate-proofing funds from private organisations (to upgrade or climate-proof their own assets), among other ways by raising awareness of the importance of adapting to future impacts, by helping stakeholders understand the business-case of adopting adaptation criteria in the development or refurbishment of urban assets, and more formally through new regulations. Likewise, sound and integrated urban planning and operation of the city and its systems (energy, water, waste, transport, etc.) can enhance the effectiveness of adaptation investments and reduce the city’s climate and non-climate related vulnerabilities. Indeed, the World Bank suggests that efficiently managed cities that have open communication channels with its citizens tend to attract the majority of urban adaptation funds.

[1] See other examples in pages 29-30 of the ETC/ACC Technical Paper 2012/12

The following documents were consulted in the elaboration of this knowledge base article: