Climate adaptation faces funding crisis warn UN officials

Collapse of revenue from carbon markets has left Adaptation Fund critically short of money

Source: Philippe Berry. IFPRI

Source: Philippe Berry. IFPRI

By Sophie Yeo

Flows of money towards climate adaptation projects are becoming increasingly unpredictable, making it difficult for vulnerable countries to prepare for the hardships caused by global warming.

Future fundraising tactics would have to be “extremely aggressive” in order to raise enough money to continue their work, according to board members of the UN-run Adaptation Fund, the primary finance provider for adaptation projects around the world.

“We are essentially going with our hands out to everyone,” Philip Weech, the board member from the Bahamas representing the Latin American and Caribbean regions, told RTCC.

“We take funds from anyone, any inch, but the reality of it is the scale of resources we need is hundreds of millions of dollars.”

The Adaptation Fund currently provides money to 34 projects around the world, including over US$ 4million to develop agro-pastoral shade gardens in Djibouti, and over US$ 5million on improving flood management practices in Georgia.

Efforts to tackle climate change have been mainly concentrated on how to prevent it from getting worse by cutting greenhouse gases. But experts now acknowledge that many of the impacts are unavoidable.

The next installment of the UN’s blockbuster climate science report from the IPCC, due out on March 31, is expected to say dangerous impacts are now inevitable, and that climate change will likely reduce median (crop) yields by 0 to 2% per decade for the rest of this century.

Carbon market collapse

Central to the adaptation finance drought is the steep downturn in the carbon markets, which were expected to provide a predictable flow of support to vulnerable countries.

When the Adaptation Fund was established in 2001, it was envisaged that money generated through the sale of carbon credits (CERs) would provide a steady source of revenue, which would support national projects to help countries prepare for the impacts of climate change.

But the price of these CERs, generated by the UN’s Clean Development Mechanism and which companies can buy to offset their emissions, has since crashed, largely as a result of the oversupply of carbon credits within the EU’s emissions trading scheme, leaving the Adaptation Fund foundering.

Now, say board members, they are largely dependent on donations from developed countries to keep their projects running.

At the UN’s annual meeting in Warsaw last year, contributions from rich countries amounted to just over US$100 million – the objective of the Adaptation Fund for that period. But a similar sum will need to be raised this year if the Fund is to be able to continue getting projects off the ground.

At a board meeting being held in Bonn this week, members are considering ten new projects that developing countries have put forward.

Angela Churie-Kallhauge, who represents Sweden on the board, told RTCC that there is still a “very keen interest” from developing country governments in the Fund, despite their financial difficulties.


While the Adaptation Fund meets with donor countries every year, such a changeable source of income is “not the ideal solution”, said Weech, who said that in the long term, it was essential to create a predictable stream of finance.

“The fundraising strategy becomes essential by virtue of the fact that the price of CO2 has collapsed. That’s the reality that we continue to face. None of the projections we see in the short term has indicated that the price of CO2 will ever get up to the price we saw three years ago.”

Meanwhile, mounting evidence points to a future where climate-related devastation could become the norm. Adaptation will be key in staving off some of the worst impacts, including flooding as a result of sea level rise and starvation and droughts due to heat waves and changing weather patterns.

Finding the money to fund these actions is a key issue within the UN process to tackle climate change. In 2009, developed countries pledged to deliver US$ 100 billion every year from 2020 to fund both adaptation and mitigation activities.

This will be largely channelled through the Green Climate Fund (GCF), though this is not yet operational, and contains no money.

“It’s not just about the Fund,” says Weech. “It is the overall commitment to finding solutions to adaptation financing. That’s where the challenge is.

“We can talk at great length about the challenge we have with the Fund, but the challenge that faces all of us is finding the resources to deal with adaptation, which is a growing concern in light of the fact that we’re seeing changes we’ve never seen before, completely unprecedented.”

Green Climate Fund

One option being considered by Parties is using the Adaptation Fund as a channel for the money that will eventually be collected by the GCF, as the body already has experience in working in developing countries to put adaptation systems in place.

This is a move that the board members said they would support, as it would maximise “efficiency”, although the decision ultimately lies with the individual parties.

“We don’t want this baby we have created by ourselves disappearing because we have created some concrete things,” said Mamadou Honadia from Burkina Faso, who chairs the board.

“We are the only international body dealing with financing concrete adaptation projects for local communities. We hope that by the end of 2020 the Adaptation Fund will still be alive and continue to provide.”

In light of the importance of the projects and ongoing discussions with potential future donors, Churie-Kallhauge said that there is a sense of optimism “despite the odds”.

“We’re trying to be positive. There are a lot of challenges along the way, but I think we have a good story to tell. We have good experiences with the countries and we’re starting to see good results.”

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