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Climate finance, disaster risk and environmental resilience

The Addis Agenda reaffirms decisions and agreements on climate finance made in the context of the United Nations Framework Convention on Climate Change (UNFCCC). It also calls for transparent methodologies in reporting climate finance. Related commitments on disaster risk and environmental resilience are also covered in a dedicated section on ecosystems.

Growth in GDP and emissions remains closely linked. In 2017, for every 1.0 per cent increase in world gross product there was a 0.3 per cent increase in global CO2 emissions. The 2017 growth in GHG emissions was a notable change from the trend in 2014-2016, when GHG emissions growth had been negligible despite the global economy growing by 3.2 percent per year. The carbon intensity of the global economy has been declining, but the 2017 decline was smaller than in previous years. 

 

Climate finance

Developed countries committed in 2009 at the Fifteenth Conference of Parties (COP15) of the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen to jointly mobilize $100 billion a year by 2020 from multiple sources for climate action in developing countries. At the Paris Conference on Climate Change in 2015, developed countries agreed to maintain that target through 2025 and to consider raising it for ensuing years. In December 2018, at COP24 in Katowice, Parties agreed to initiate deliberations on the new target in November 2020.

While the target has not yet been reached, climate finance has been growing significantly. According to the latest estimates from the Standing Committee on Finance of the UNFCCC, total climate financial flows from developed to developing countries—including public flows and mobilized private flows—reached $71 billion in 2016, an increase of almost 20 per cent over 2015. Both public and private flows increased, from $49 billion to $56 billion and from $11 billion to $16 billion, respectively. On a statistically comparable basis with earlier data collection, total global climate finance flows increased 17 per cent from 2013–2014 to 2015–2016, with public flows increasing 26.5 per cent.

Transparent methodologies for reporting climate finance

COP 21 also addressed the need for transparent methodologies for reporting climate finance, as recognized in paragraph 60 of the Addis Agenda. It established an enhanced transparency framework for action and support, with a view to provide clarity on the support provided and received, and to provide a full overview of aggregate financial support. Under the auspices of UNFCCC, the Ad Hoc Working Group on the Paris Agreement is currently developing recommendations for modalities, procedures and guidelines for the transparency framework for action and support. It is aiming to conclude this work no later than 2018.

Green Climate Fund
 
The Green Climate Fund (GCF) was established in 2010 and serves as a primary operating entity of the financial mechanism of the UNFCCC and the Paris Agreement. In 2015, it received pledges for $10.3 billion, although only $7 billion has materialized. As of October 2018, GCF had approved $4.6 billion to 93 projects and programmes (figure 11). In October 2018, GCF launched its first formal replenishment process, to be finalized in 2019.
 
All developing-country parties to the UNFCCC are eligible to receive resources from the GCF. However, many developing countries have noted that the accreditation process is difficult to navigate and requested GCF to facilitate direct access. In response, GCF has included a readiness programme and preparatory support programme, engaging with 122 countries (as of February 2019). Of the $140 million approved for readiness support, just under 50 per cent was for the formulation of National Adaptation Plans (NAPs) or other adaptation planning processes. GCF support for adaptation planning processes is also being used to design financing strategies for countries to implement adaptation priorities, including with private investment, public resources, and a pipeline of projects and programmes for consideration by GCF and other climate funds.
Addressing disaster risk and building resilience

The Addis Agenda recognizes the risk to progress in sustainable development from natural hazards and other shocks. Economic losses from disasters such as earthquakes, tsunamis, cyclones and flooding are estimated to average US$250 to US$300 billion annually. Member States committed to develop and implement holistic disaster risk management at all levels in line with the Sendai Framework for Disaster Risk Reduction, and to consider climate and disaster resilience in development financing.  

International initiatives to lessen disaster impact 

Early interventions can help save lives, mitigate suffering and significantly lower the cost of responding to the humanitarian consequences of shocks. With forecasting and communication of early warnings improving over the years, work has advanced on translating early warning into early action. The Central Emergency Response Fund (CERF) of the United Nations is developing a formal approach to finance anticipatory humanitarian action to help support early action at scale. This could include slow-onset emergencies such as droughts, as well as imminent sudden-onset disasters like cyclones and floods, and potentially also infectious disease outbreaks, with a focus on reducing or preventing humanitarian consequences. By providing a degree of assurance of access to early action funding, CERF could also incentivize domestic actors to invest in preparedness activities, such as collective risk analysis, contingency planning and other anticipatory actions. The Contingency Fund for Emergencies (CFE) of the World Health Organization (WHO) was set up in 2015 in response to the Ebola outbreak in West Africa. It allows WHO to respond rapidly to disease outbreaks and health emergencies, often in 24 hours or less, saving lives and reducing long-term costs. Donors contributed $38 million in 2018, more than three times the level of 2017, which has allowed WHO to respond rapidly to 20 disease outbreaks, 6 disasters deriving from natural hazards and 2 complex emergencies in 2018 alone. The Green Climate Fund (GCF), responding to calls from African countries, has invested in climate information services and early warning systems to help vulnerable communities, particularly farmers, choose the right crops and avoid a lost growing season and the risk of famine. For instance, in the Zambia, a joint GCF climate information services project with the United Nations Development Programme will help farmers who rely on rain-fed agriculture better plan as rainy seasons become more erratic. Monitoring stations will be combined with “last mile” communications to ensure crucial information reaches those most impacted by climate-induced seasonal variations.

In light of the growing frequency, intensity and economic impact of disasters, disaster risk reduction should be an integral part of sustainable development planning, as called for by the Paris Agreement and Sendai Framework for Disaster Risk Reduction. This requires an increase in resilience, as the capacity of a society to cope and adapt, together with a reduction of its vulnerability to hazards.64 While the level of disaster risk exposure can be reduced by regional and urban planning—through minimizing the location of people and tangible assets in hazard-prone areas, for example—the resilience of a society depends on physical, social and economic factors that are also foci of sustainable development strategies. Funding for climate and disaster resilience thus needs to be considered as part of the integrated national financing frameworks discussed in the 2019 Financing for Sustainable Development Report.

Through ex ante resilience building, Governments and their international partners can expect to save on large recovery costs, in addition to reducing human suffering and economic and social disruptions and environmental degradation. These savings can be substantial for small states with high vulnerability to natural hazards. Preliminary results from the International Monetary Fund (IMF) for six small island developing States find average savings—net of amounts spent on building resilience—of 10 per cent of initial GDP over a 20-year period, based on the historical frequency of disasters. These savings could increase to up to 14 per cent of recipient’s base-year GDP if the frequency of disasters increases.

The international community, including multilateral financing institutions, can support countries in this effort through financial support and technical assistance in identifying, planning, sequencing and implementing measures embedded in multi-year disaster risk reduction strategies and plans. The Global Risk Financing Facility, set-up by Germany, the United Kingdom of Great Britain and Northern Ireland and the World Bank, and the Global Facility for Disaster Reduction and Recovery are initiatives in this regard. The IMF can help with the macrofiscal elements of a disaster risk reduction plan, including helping countries to generate fiscal revenues and improve public financial management systems. The joint IMF/World Bank Climate Change Policy Assessment currently being conducted on a pilot basis helps to identify key policy gaps in adaptation and mitigation policies.

Tracking official cooperation geared towards disaster risk reduction is difficult, but efforts are being made to improve relevant statistics, focused on project and programme information captured in the DAC database

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Measuring cooperation for disaster risk reduction

While there are established reporting mechanisms and standards, however incomplete, for measuring public and private climate finance flows, it is harder to identify resources designated specifically for disaster risk reduction, including resilience building. In the past, it was only possible to estimate concessional flows for disaster risk reduction from Organization for Economic Development and Cooperation (OECD)/Development Assistance Committee (DAC) member countries by reviewing official development assistance (ODA) purpose codes and project descriptions on a case-by-case basis, which made it difficult to obtain reliable statistics and compare trends over time or between country groups.

One recent attempt to estimate these flows by the OECD and World Bank sought to identify ODA financing for climate and disaster risk reduction in small island developing States (SIDS) during 2011–2014. Concessional finance in support of climate and disaster risk reduction nearly doubled over the study period, representing 14 per cent of the total concessional finance for SIDS during this period. Resilience finance was dominated by investments in resilient infrastructure in just a few countries and tended to follow large disasters. Predictable, long-term financing was scarce,a making it difficult for SIDS to integrate flows into longer-term planning for disaster risk reduction, in the broader context of an integrated national financing framework.

In January 2018, the DAC approved a policy marker for aid projects that address disaster risk reduction, developed in collaboration with the United Nations Office for Disaster Risk Reduction (UNISDR). By accurately tracking the incidence of disaster risk management projects and programmes in development cooperation, the policy marker can encourage the mainstreaming of disaster risk reduction into development planning. It can also provide a reliable means of gauging disaster risk reduction mainstreaming within development cooperation and, over time, provide an incentive to increase risk-informed development investments. The marker thus supports the achievement of target (f) of the Sendai Framework. Reporting on the disaster risk reduction marker will start in 2019, for spending in 2018.

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