Rebeca Grynspan: Remarks at "Rethinking Resiliency: Innovative Solutions for Climate Adaptation"
I warmly thank the organizers for inviting me to address this audience on the important topic of climate adaptation – it is a pleasure to be here.
When time becomes the limiting factor
In today’s world, adapting to climate change is unfortunately not optional.
It is estimated that between now and 2050, without significant reduction in global greenhouse gas emissions, global average temperatures could rise by 4°C, and possibly more by 2100.
This means that the world may have no more than 100 – 150 months to dramatically change its energy supply trajectory and limit the temperature rise to a ‘safe’ 2°C.
Yet even if the world immediately stopped emitting greenhouse gas emissions altogether, many of the predicted effects of climate change are still unavoidable, thereby making adaptation in many parts of the world an urgent necessity.
In particular, climate change threatens to further exacerbate extreme weather events. An average of five hundred weather-related disasters is now taking place each year, compared to 120 in the 1980s, and the number of floods has increased six-fold over the same period. According to the IPCC, climate-induced disasters may increase up to ten-fold by 2020.
Communities currently vulnerable to coastal storms, drought and flooding, will require additional support to build resilience to even harsher conditions. Projected climate change impacts and low adaptive capacity are expected to put countries in Africa, small islands and the mega-deltas of Asia especially at risk. Already, in many parts of the world, families have had crops damaged by droughts, and homes destroyed by floods and storms. Those more likely to bear the brunt of the effects of climate change are the poor and vulnerable in developing countries and small island developing states (SIDS). Sadly, they are the ones who least can afford it.
For example, one of the main impacts of climate change will be on food security. Given the number of inter-related effects that climate change will have on food systems performance, it is extremely difficult to project changes in agricultural productivity as a result of climate change. However, there is a certain convergence among Global Climate Models that low latitude regions (mostly developing countries) are to suffer disproportionally compared to high latitude regions (mostly industrial countries) because of difference in climate impacts depending on the geography.
In fact, climate change threatens to erode decades of efforts to reduce poverty / and to reverse progress on the Millennium Development Goals. There is therefore a growing consensus that action adapting to the impacts of climate change is just as urgent as the need to reduce GHG emissions.
Financing a rapid transition to a climate resilient society
Adaptation to climate change is not a future scenario for the developing world. It is already happening—just as it is in rich countries. But the contrasts with adaptation in the developed world are striking. Be it in London or New York, people are being protected against the risks associated with rising sea levels through public investment in infrastructure. In the poorest countries, adaptation is often largely a matter of self-help. Millions of people with barely enough resources to feed, clothe, or shelter their families / are being forced to direct money and labour to adaptation.
While the true cost of adaptation is difficult to predict, it is clear that the required volumes of financing are far above available public resources.
Even the current commitments from developed countries at $100 billion per year by 2020 to assist developing countries to address climate change will not suffice. To transition to climate-resilient economies will require a major shift in financial flows. This means that climate change financing for mitigation and adaptation activities will need to come from multiple sources including public and private, bilateral and multilateral, and alternative sources of finance.
In fact, the UNFCCC estimates that eighty per cent of the capital needed to address climate change issues will need to come from the private sector. Developing the capacity of low income countries to create inviting conditions for the private sector to address pressing environmental problems should hence be a priority for the new international public finance to be provided through the Cancun Agreements.
The past few years have seen the emergence of a number of innovative public private partnerships to reduce investment risks, optimize the use of both sources of finance, and pool human resources and strategic capabilities. This includes the establishment of public-private equity funds and the emission of green bonds to increase access to project equity and debt finance for low emission climate resilient investment.
To unlock the large-scale private sector response which is required, however, such partnerships will have to go beyond the traditional service delivery and infrastructure-focused public private partnerships; they will need to meet the unique requirements of each location, balance diverging interests of a wide range of stakeholders and enable governments to blend various sources of finance.
Innovative public private partnerships will be required for both climate resilient urban and rural development. Crop rotation and diversification enable farmers to grow products that can be harvested at different times, and have different climate stress response characteristics. Strengthening farmer organizations, promoting the development of new crop varieties, improving access to local markets and finance, and the quality of local infrastructure will all be important for harnessing the productive potential of smallholders.
I would like to emphasise two important measures, which UNDP has identified as critical for unlocking the potential of large scale private sector involvement in climate resilient development:
First, a robust policy environment must be in place to provide incentives for both public and private investments.
Is not by deciding on a project by project basis which will get us to the scale that is needed - so a new framework and new rules of the game need to be developed. A central challenge is to address various information, behavioural, regulatory, technical, and financial barriers in order to redirect capital flows from traditional high-carbon investments to low-emission, climate-resilient investments.
This can be done through conducive climate investment policies, the objective of which is to promote climate resilient investments, either through reducing risks (stable policy context, guarantee instruments, etc.) or increasing rewards (premium prices, tax credits, etc.).
This is key, because, while potentially earning a good return on investment, most low emission climate resilient investment require substantial upfront costs and have long pay-back period (7-10 years). Upfront costs for household or municipal energy efficiency projects, amount to prepaying one’s electricity bill for the next 5-10 years. Installing a rooftop array of solar panels large enough to produce the energy required by a building is, in the absence of subsidies, the equivalent of prepaying its electricity bill for the next 10-20 years.
Because of these upfront costs, long term policy stability is a pre-requisite to attract long-term investment. A feed-in tariff law, by providing a price guarantee for 20 years, for example, provides that type of long term stability. In the absence of such long-term pricing or regulatory stability, investors tend to stick to short term investments with pay back periods of 2-3 years.
UNDP is working with a number of programme countries to help them create exactly this: a conducive environment for investing in climate resilient development.
• In the Maldives, UNDP is involved in a project aimed at strengthening the adaptive capacity of the tourism sector – which comprises more than 30 per cent of GDP and 60 per cent of foreign exchange receipts - to reduce the risks of climate-induced economic losses. This will be done through policy recommendations aimed at incentivizing private sector investment for climate change adaptation in this industry which is so important for the country; and
• In Egypt, the Government, with UNDP’s assistance, is revising coastal development legislation and regulations to encourage private sector involvement in coastal management.
The second critical area which needs to be focused on is active collaboration with all stakeholders.
Here I am referring to, for example, public policy decision makers, technical experts, development practitioners, NGOs, businesses, and investors. Even if there is a common recognition among all those actors of the need to support resilience-building, each one is often working in a silo addressing the issues at hand.
Stakeholder coordination will help to identify, access, and combine different funding opportunities to support low-emission and climate resilient development. This in turn will reduce transaction costs, and make the political and institutional environment more secure, while also sharing the investment risks.
In many of our programme countries, UNDP has been actively engaged in bringing a range of stakeholders together to address climate change adaptation:
• In Belize, for example, we worked to strengthen the consultation process among different stakeholders in the area of natural resource and environmental policies. We are also assisting the Government to take private sector interests into account in the design of the overall policy framework. This will help to encourage private sector involvement, and limit policies that would otherwise discourage private investment.
• In addition, in Guinea-Bissau UNDP is helping to develop a national multi-sectoral committee to advise on climate change adaptation practices. This committee will bring together government, development partners, NGOs, community-based organisations, the private sector, academia, and the media.
The commitments made in Copenhagen to raise one hundred billion USD per year by 2020 can create a tipping point from which to catalyse much larger scale private investment for climate change adaptation in developing countries
This means using international public climate finance to build robust policy environments and bring together diverse stakeholder groups. By so doing, developing countries can actively encourage public private partnerships which will help transition to a pro-poor low-emission climate-resilient society.
UNDP is actively working with developing countries in these efforts. We will continue to do so, integrating climate change solutions into wider development efforts, thereby promoting the advancement of the MDGs by 2015 and beyond.
I am certain that this important event organized by The Climate Group will contribute to the on-going efforts to share experience on resilience and innovative solutions for climate adaptation. Time has become a critical limiting factor for climate change management, cooperation between governments and the private sector hold the key to dramatically scale up action. Like the old saying reminds us: “If it is not now then when?”