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Adaptation

A bond for climate solutions

Laura Tlaiye's picture

Why would a group of large investors care about climate change when their primary concern is ensuring adequate returns for their investment portfolio to meet their future financial obligations? This group includes pension funds, insurance companies or foundations. Pension funds alone are estimated to hold over US$25 trillion globally

 

As Alan Miller indicated in his recent blog, a report published by Mercer (a well-known investment advisor) estimates that uncertainty around climate policy could contribute as much as 10% to overall portfolio risk for investors to manage over the next 20 years. So, investors are beginning to pay attention. Choosing to support investments that help address climate change or increase climate-resilience also helps reduce the exposure of portfolios to this risk. 

 

Green bonds issued by the World Bank is one such instrument. Funding raised through green bonds is earmarked for eligible low-carbon and adaptation projects financed by IBRD in its member countries. For example, the money could be used for funding an eco-farming project in China, or improving the solid waste management in Amman, Jordan. On the mitigation side, eligible projects could include solar and wind farms. On the adaptation side, it could be protection against flooding or droughts.

 

Earlier, this month, a 'Green Bond Summit' gathered about 110 representatives of the investment community. The event was hosted by State Street Global Advisers -- an asset manager with over $2 trillion under management in different asset classes. The goal was to discuss how green bonds could attract greater participation from large investors to scale-up financing of climate solutions through the capital markets. The World Bank, a pioneer of the green bond, and other issuers such as ADB, EIB, and IFC deliberated with the participants on prospects for common green bond standards, the financial characteristics investors expect, and the policy issues that underlie the demand for climate investments.  

 

Look under the canopy: There are people, not fences

Gerhard Dieterle's picture

This week I was at the UN Forum on Forests  meeting in New York where the International Year of the Forests was formally launched.

The Year of the Forests starts with a cautiously optimistic message: FAO’s report on the State of the World’s Forests  released at the forum says that the forest loss across the world has slowed down over the last decade.  Now the pattern of deforestation varies and is country-specific rather than being negative across the board. China, Vietnam and Costa Rica among others are countries where the forest cover is actually going up. 
 

More importantly, I see an opening in how the problems of deforestation and forest degradation are being addressed internationally. Like the logo of the International Year of Forests, people are seen at the heart of this effort now. This has not always been the norm. Take the case of REDD  (Reduced Emissions from Deforestation and Forest Degradation) which was debated in Bali at the first Forest Day in 2007. At that time, reducing emissions meant simply putting up fences to conserve the last pristine forests in the Amazon, the Congo basin and in Indonesia.
 

Now our understanding of how to address deforestation has evolved.  Forests today are more strongly linked in people’s minds to questions of food security, improved livelihoods and the general resilience of the people. This is where REDD + comes in, with approaches that go beyond restrictive approaches and focus now more and more on approaches to enhance forest stocks and restore degraded landscapes. It is good news for people and forests that the role of forests in climate change mitigation is being understood in a much broader context.

 

10-year-old Felix Finkbeiner speaks at the United Nations Forum on Forests. Watch the full speech here. 

Are buildings an important piece of the climate puzzle?

Alan Miller's picture

 

 

They inhabit two different worlds—buildings and climate change—both outside and within the World Bank. It should not be that way as the building sector could be central to both mitigation and adaptation efforts.  

 

Buildings are important for climate mitigation because they account for about 30% of global energy consumption and greenhouse gas emissions. According to the International Energy agency (IEA), energy use in this sector is expected to increase globally about 30 % over the next two decades if recent trends continue; however, the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report concludes buildings offer by far the largest potential source for low cost reductions in CO2 emissions. The World Bank has many projects and analyses addressing this opportunity including a recent ESMAP (Energy Sector Management Assistance Program) report on the benefits and obstacles to effective building codes. These could address over 60 % of building energy use but remain weak and often unenforced in most Bank client countries.

¿En qué consistiría el éxito de Cancún?

Andrew Steer's picture

Esta tarde llegué a Cancún. El sol brilla. El mar es azul. El hotel Moon Palace –sede de las negociaciones– es un hermoso centro vacacional con playa propia de un kilómetro de extensión y arena blanca. Se insta a evitar el uso de chaqueta y corbata y muchos delegados visten las tradicionales guayaberas mexicanas. 

 

Los anfitriones han hecho un excelente trabajo de diplomacia y logística en la preparación de este evento. ¿Por qué parece, entonces, que los turistas lo están disfrutando más que los representantes de los países participantes?


Porque nadie sabe cuáles serán los resultados. Cada uno de los presentes cree que otra persona debería proponer algo más y algunos lo están expresando con mucho sentimiento. Se ha ido el entusiasmo por un posible acuerdo forjado en Copenhague el año pasado. No hay en el horizonte un jonrón, una clavada, ni un hoyo en uno a la vista. La analogía ahora pertenece al fútbol americano: se trata de hacer avanzar el balón con paciencia por el campo de juego con la esperanza de marcar un tanto el año próximo, el siguiente o dentro de cinco años. Sobre todo, no hay que dejar caer la pelota para no perder terreno rápidamente.   

 

What would success look like in Cancun?

Andrew Steer's picture

I just flew in to Cancun this afternoon.  The sun’s shining. The sea is blue. The Moon Palace – the site of the negotiations – is a beautiful resort with its own one-kilometer white sandy beach. Jackets and ties are discouraged, and many delegates are wearing the traditional Mexican guayaberas. 

 

The Mexican hosts have done an outstanding job –in diplomacy and logistics – in preparing for this event. So why do the tourists look like they’re having a better time than the delegates?

 

UNFCCC Executive Secretary Christiana Figueres speaking at the opening ceremony. Photo by IISDBecause nobody knows how this will turn out. Everybody feels that somebody else should be putting more on the table, and some are expressing this with great emotion. The excitement of a possible deal last year in Copenhagen is gone. There is no home run, slam dunk or hole in one in the offing. The analogy is now from American Football: It’s about moving the ball patiently down the field with the hope of an eventual touchdown next year, the one after, or five years from now. Above all, don’t drop the ball, or we could lose ground fast.   

 

But this cautious view short-changes what Cancun should achieve. The package of decisions that is being negotiated is highly consequential, and could significantly improve the prospects of a pro-poor climate-friendly future.

 

So, what would success look like at the end of this 12 day marathon? By the end of this meeting we could have the following:

 

1.       Forests: The first globally agreed REDD+ partnership providing sufficient funding for investments, performance-based payments, and readiness for future carbon market inclusion – thus ensuring that forests are more valued alive than dead.  

 

2.       Adaptation:  A framework for ensuring the fair and adequate allocation of resources for climate resilient growth, with special attention to the most vulnerable countries, and a process for ensuring lesson learning and technical assistance on this urgent agenda.

Bangladesh, a beneficiary of adaptation funding

Arastoo Khan's picture

This week marked another milestone in Bangladesh’s fight against climate change. Bangladesh with its long coastline and high poverty rates is among those countries most at risk from climate change. This week we got some good news on the climate front: Bangladesh was one of the three countries for which the Pilot Program on Climate Resilience (PPCR) was approved. The country will receive a total of US$50 million in grant and US$60 million in near zero-interest credits to pilot climate resilience strategies.

 

The PPCR was created to help highly vulnerable countries to pilot and demonstrate ways to integrate climate risk and resilience into core development planning. It is under the broader umbrella US$6.4 billion Climate Investment Funds (CIF), created in 2008 to finance climate resilience strategies. Today, it is one of just a handful of funds available for adaptation. The CIF’s   partners—donor countries, funding recipients, and five multilateral development banks—were meeting in Washington this week.

 

Until now there has been a spotty history of funding for climate change adaptation. We’ve hardly seen anything of the pledges made in Copenhagen (US$100 billion annually in the long term and US$30 billion as a fast-start fund). Money for adaptation is not even a fraction of what is needed. In this context, PPCR funds provide something real and timely for countries like Bangladesh for which adaptation is key to meeting the Millennium Development Goals.  

Disasters: what is the cost ?

Julia Bucknall's picture

Buried under the most snow since records have been kept, as we are right now in Washington, the mind turns naturally to the effects of  extreme weather events. Clearly the impacts for those of us with solid housing and uninterrupted WiFi access are minimal compared with the impacts of extreme weather for most people in the world.  But even here we can see a combination of effects -- the costs of closing offices or of running through the whole winter's supply of firewood in  one week, at the same time as the economic uptick for those who repair household boilers, restore downed power lines or dig people's cars out  of the snow or shovel their sidewalks for a fee. Since climate change is expected to increase the frequency and severity of extreme weather  events, figuring out the net cost of natural disasters is an important topic.  And figuring out sensible ways to reduce those costs is also  going to be increasingly important.

At the World Bank last week, we had an interesting seminar from Stéphane Hallegate from the French International Centre for Research on Environment and Development and the National Meteorology School that shed light on some of these issues. Stéphane has modelled the impacts of a number of natural disasters looking at both the direct costs of  the disaster (how much does it cost to rebuild structures that were destroyed?) and the indirect costs (what is the cost of a business  being closed for several months net of any local economic benefits that may occur as reconstruction starts). 

Africa and climate change: enhancing resilience, seizing opportunities

Raffaello Cervigni's picture

A new page on the World Bank’s web site emphasizes that addressing climate change is first and foremost a development priority for Africa. Even if emissions of CO2 and other greenhouse gases stopped today, there is wide agreement among scientists that global temperature will increase by 2 degrees Celsius by mid-century. If no action is taken to adapt to climate change, it threatens to dissipate the gains made by many African countries in terms of economic growth and poverty reduction over the past ten years.

  Photo © World Bank 
A major reason is that climate change is expected to increase the frequency and severityof droughts and floods. This will have serious consequences for vulnerable sectors such as agriculture, which now contributes some 30percent of GDP and employs 70 percent of the population in Africa. Climate change is also likely to spread malaria (already the biggest killer in the region) to areas currently less affected by it, particularly those at higher elevations. 

Development Marketplace: 100 Ideas to Save the Planet

Kseniya Lvovsky's picture

In Peru, innovative forest fire management prevents the risk of more fires with rising temperatures. In Kenya, communities share experiences with multi-pronged approaches to managing climate risk, combining indigenous knowledge with modern technologies. In India, women and youth use reality-show methods to tell of climate options. In the Philippines, a mangrove restoration initiative helps improve livelihoods during storms now, and protects against longer-term climate change impacts. 

These are just some of the examples of the “100 ideas to save the planet” that I encountered as a juror for this year’s Development Marketplace, which focused on innovative solutions for climate change. Development Marketplace is an annual competitive grant program that identifies and funds innovative, early-stage development projects that have high potential for replication and development impact.

Of these one hundred great ideas, 26 winners were announced today in three categories—Resilience of Indigenous Peoples Communities to Climate Risks; Climate Risk Management with Multiple Benefits; and Climate Adaptation and Disaster Risk Management. Each winner receives a grant of up to $200,000 to implement their project over two years.

You can read more about the winners in these categories (and also about how this global competition works and who funds it) on the Development Marketplace website and follow the conversation on the Development Marketplace blog. For many of the winners, it was a long journey to Washington DC to compete for the grants. 

Africa’s Development in a Changing Climate

Marianne Fay's picture

 
    Photo © World Bank
In step with our Nairobi launch of the World Development Report 2010: Development and Climate Change, we issued a news release focusing on Sub-Saharan Africa , as well as a policy booklet containing the main messages of the report for Africa and elements from the World Bank’s climate change strategy in this region.

The booklet draws attention to the urgent need to tackle the varied impacts of climate change on Africa’s agriculture, forests, food security, energy, water, infrastructure, health, and education. The continent’s natural fragility means that changes in rainfall patterns, increased droughts and floods, and sea level rise are already causing damage and affecting people’s lives.

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