This guidance is based on the GEF paper 'Programming to implement the Guidance for the Special Climate Change Fund adopted by the Conference of the Parties to the United Nations Framework Convention on Climate Change at its Ninth Session (GEF/C.24/12). Additional recommendations have been incorporated based on UNDP's experience with project formulation. This guidance does not replace the GEF paper. Please refer to the official document (GEF/C.24/12), as needed.

Objective: To implement long-term adaptation measures that increase the resilience of national development sectors to the impacts of climate change. Projects must focus on long-term planned response strategies, policies, and measures, rather than short-term (reactive) activities.

Scope: The GEF will focus on projects in vulnerable regions and sectors. Vulnerable regions and sectors will be based on information contained in:

• National Communications to the United Nations Framework Convention on Climate Change;

• National Adaptation Programmes of Action (NAPAs);

• Technology Needs Assessments; and

• Other major national or regional studies that highlight the impacts of climate change.

The SCCF offers an opportunity to link climate change adaptation with socio-economic sectors, including:

• Water resources management;

• Land management;

• Agriculture;

• Health;

• Infrastructure development.

Linkages with fragile ecosystems, integrated coastal zone management and disaster preparedness are also encouraged.

Projects must focus on 'additional costs' imposed by climate change on the development baseline. It is not necessary to generate global environmental benefits. Local benefits can be generated by SCCF projects, as long as the case for 'additionality' can be made.

Activities: Project activities to be supported include:

• Integration of climate change risk reduction strategies, policies, and practices into sectors;

• Implementation of adaptation measures;

• Institutional and constituency capacity building, and awareness raising.

Activities should fall within the scope of the sectors above. For example, eligible activities could include: improved monitoring of diseases, early warning systems and responses, disaster planning, preparedness for droughts and flood in areas prone to extreme climate events. Projects must include elements of at least two of the above three activities (i.e., integration, implementation and/or capacity building).

Please note that activities which are considered as part of the development baseline are not eligible for funding. For example, improvement of public health and education systems, infrastructure for rural development, and water sanitation are not eligible. Funding will be provided only to address impacts of climate change on a vulnerable socio-economic sector that are above and beyond the baseline.

Outcomes: At the end of the programming cycle, the GEF will have learned how best to reduce climatic vulnerability across a variety of development sectors. To achieve this outcome, the portfolio will be reviewed to identify best practices in critical regions and focal areas. The UNDP/GEF’s Adaptation Learning Mechanism will contribute to this review.

Outputs: A successful project is one where:

• Additional costs have reduced vulnerability to long-term climate change;

• Resilience of development sectors has been enhanced, over and above the ‘without-adaptation’ baseline;

• Strategies, polices and measures have been implemented to ‘climate proof’ sectors;

• Adaptive capacity of communities to climate change has been created and/or enhanced.

Innovation: The SCCF should generate lessons that are applicable in a wider context and can be used to develop good practices for incorporating adaptation to climate change into development planning and project implementation. Innovation in the following areas is desirable:

• Financing adaptation, risk transfer and risk-sharing mechanisms;

• Identifying coping strategies which are applicable over longer-decadal time scales of climate change;

• Identifying innovative 'hard' and 'soft' technologies;

• Designing adaptation processes that promote behavioural changes, social learning, replication and scaling up;

• Leveraging existing programmes in countries.

Portfolio mix: Thematic and geographical diversity in the portfolio is highly desirable. Geographical emphasis will be given to the most vulnerable countries in Africa, Asia, and the Small Island Developing States (SIDS). However, projects may be submitted by all countries that are Parties to the United Nations Framework Convention on Climate Change; and World Bank and UNDP recipient countries. Project size can be small, medium or large.

Blended projects: SCCF cannot be co-mingled in ‘blended’ projects with funding from any focal area under the GEF Trust Fund.

Additionality: As outlined above, projects should follow incremental/additional reasoning. The baseline scenario is taken to be development without the project funded under SCCF, and the alternative scenario is that which is required to ensure that the sectors is resilient to future climate shocks. The difference between the two scenarios is the additional cost that is eligible for SCCF funding. Baseline scenarios can be based on the project methodology, for example:

• Hazards-based;

• Vulnerability-based;

• Adaptive capacity based;

• Policy-based.

For each of the methodologies, the baseline for constructing additionality would vary. For example, for a project implementing disaster response measures, the baseline could be current exposure of a population to climate hazards. A project addressing adaptive capacity would identify a baseline using the UNDP's Capacity Development Framework or the Adaptation Policy Framework. If a project is designed as a policy change process, then the baseline would be the current set of policies. Most importantly, additional reasoning must be robust.

Monitoring and evaluation: Projects under the SCCF will have to demonstrate (a) additionality in the selected sector(s), and (b) that resilience of national development sectors has been enhanced. For this purpose, indicators will be required to track both project outcomes and programme objectives. The indicators should be selected according to the baseline methodology (above).

Cost sharing: Financing for adaptation can follow two approaches. The most simple is the sliding scale approach. The second is calculation of additional costs. The former is the recommended route, especially for small or medium-sized projects. For larger demonstration projects, more rigorous quantification of additional costs will be required. However, regardless of the cost-sharing approach selected, we recommend that additional reasoning is presented in the project, showing clearly the baseline and alternative scenarios. This approach will help to identify baseline financing from other sources.

The recommended co-financing ratios for SCCF projects are as follows:

Institutional arrangements: Because climate change impacts are so pervasive, many actors, sectors, and institutions will be involved in adaptation. In many cases, new institutional arrangements will have to be created to ensure that appropriate institutions are implementing different components of the project.
For example, for a water project, it may be necessary to involve:

• Primary agency: Municipalities that manage water supply and demand;

• Secondary agency: Funding institutions to provide revolving loans or microcredits;

• Tertiary agency: Department of Environment, with the mandate on climate change.

We recommend that careful attention be paid to developing execution modalities for co-implementation of SCCF projects, as appropriate.