Originally Published 2019-10-18 10:42:59 Published on Oct 18, 2019
For poorer countries, funds for ‘adaptation’ make more sense than ‘mitigation’. A retreat from climate hotspots is to be explored
Focus of climate finance needs to change

The Climate Action Summit held at New York in September (amidst one of the largest environmental protests ever and a heart-wrenching speech from Greta Thunberg) seems to be inflicted by the age-old assumption that adaptation (impacts) to climate change has its limits, and mitigation (causes) deserves more emphasis. There is scant acknowledgement that large parts of the underdeveloped and the developing world might not have the wherewithal for mitigation. Under such circumstances, adaptation seems to be the only answer.

Historically, mitigation projects have always been preferred for funding over adaptation projects. But, the Green Climate Fund (GCF) remained a rare exception, offering funding for both mitigation and adaptation, while being guided by the UNFCCC principles and provisions. The GCF provides support in the form of grants (45 per cent of allocated fund till date), loans (42 per cent), equities (9 per cent), guarantees (2 per cent), and results-based payments. At present, the share of funds allocated by GCF to adaptation projects is 24 per cent and mitigation 42 per cent, while the balance 34 per cent is classified as “cross-cutting”, but with a larger mitigation component. The low level of funding to adaptation can be attributed to two factors: First, adaptation is a new endeavour without much “expertise” available; and second, it primarily provides local benefits.

Adaptation funding

Adaptation experts from the LDCs and SIDs feel that the GCF has failed to channel funding to the most vulnerable communities in the most vulnerable countries, because of its mandate to act as a “bank”, seeking returns on its investments. In absence of revenue streams, adaptation projects have mostly remained micro and small, and thus incremental rather than transformative. The GCF’s emphasis on fiduciary and fund management capacities of both recipient country governments and implementing entities have made access to large-scale funding difficult.

The GCF also insists on genuine adaptation projects, not development proposals dressed up as adaptation, due to which adaptation projects from Bangladesh and Ethiopia have been rejected lately.

A solution for this may be found in the Generic Adaptation Decision Framework (GADF) that we have proposed in an article co-authored with Jayanta Bandyopadhyay and Sugata Hazra in the Journal of Indian Ocean Region. The GADF has been proposed to help rationalise between choices of in-situ adaptation (adaptation in the vulnerable region) and managed retreat (movement to safer regions). Our GADF suggests that managed retreat should be thought of if three conditions are satisfied: the socio-economic well-being under the business-as-usual (or status quo) is diminishing; the cost of in-situ adaptation is higher than the business-as-usual scenario; and net current value of ex-situ adaptation (or strategic and managed retreat) is highest of all the adaptation scenarios.

If managed retreat is found to be the best option, then development of the host location could be designed to generate a revenue stream for private investors as well as the GCF. Even the source location could generate revenue through forest regeneration and tourism concession.

Sundarbans delta

This has an application in the Sundarbans delta, which has been encountering a relative-mean-sea-level rise of the Bay of Bengal at the rate of 8 mm/year over the last decade, and is subject to regular instances of land-loss and disappearance of islands. The proportion of high intensity events (cyclones) appears to be increasing, possibly as a result of rising sea surface temperatures.

In the face of this ferocity of climate change, a long-term strategy for adaptation and mitigation for the delta is proposed by the WWF India Vision 2050, in the form of a managed retreat of population by 2050, and regeneration of mangrove forests in the vacated vulnerable zone. The economic evaluation of planned retreat vis-a-vis a scenario of inaction or “business-as-usual” — considering the various possible benefits (including those of ecosystem services) and costs — reveals that the scenario of a “managed retreat” by 2050 will yield a net economic benefit of 12.8 times of that of the status quo. The clear indications of the community’s diminishing well-being, futility of the in-situ adaptation modes, and the net current value of ex-situ economy being highest among all the scenarios creates a case for a GCF grant as also a business case for “managed retreat” in the delta.

Generally speaking, a refined GADF and its application could be part of a GCF grant programme, while implementation could be a mix of loan, equity, guarantee, and results-based payments. Since the GCF is required to channelise up to $100 billion from 2020 annually to the developing countries for both mitigation and adaptation projects, recourse to a refined GADF could serve all the constituencies well.

This commentary originally appeared in Business Line.

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Anamitra Anurag Danda

Anamitra Anurag Danda

Anamitra Anurag Danda is Senior Visiting Fellow with ORF’s Energy and Climate Change Programme. His research interests include: sustainability and stewardship, collective action and institution ...

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Nilanjan Ghosh

Nilanjan Ghosh

Dr. Nilanjan Ghosh is a Director at the Observer Research Foundation (ORF), India. In that capacity, he heads two centres at the Foundation, namely, the ...

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