Adaptation from the local level: enhancing and measuring its financing

On Wednesday 22 September 2021, the 23rd virtual exchange session of the Community of Practice on Climate Policy Monitoring and Evaluation (CoPME) took place.

Under the title "Adaptation from the local level: enhancing and measuring its financing", the session aimed to learn about the regional reality on local action for adaptation, especially in terms of financing experiences, monitoring and evaluation, as well as to hear about the direct experience of the countries. For this, an overview of the situation in the region was given by Santiago Lorenzo, head of the Economics of Climate Change Unit of the Economic Commission for Latin America and the Caribbean (ECLAC) and then the experiences of Ecuador and Mexico were heard with presentations by Inés Arias, Director of Adaptation to Climate Change of the Ministry of Environment, Water and Ecological Transition of Ecuador and Aram Rodríguez de los Santos, Deputy Director of Planning Instruments for Adaptation of the National Institute of Ecology and Climate Change (INECC) of Mexico. As in other opportunities, there was an open space for conversation with all attendees.

Key Definitions

Locally-led adaptation: Characterised as such because local people and communities have personal and collective ownership over their adaptation priorities and how these are carried out.

Locally-led adaptation finance: Climate financing that reaches the local level in a way that intentionally promotes and enables local actors to have input and decision-making power over how funding is programmed to support adaptation to the impacts of climate change. 
Translated from the WRI Working Paper - Tracking and reporting finance for locally led adaptation to climate change (2021)

Adaptation from the local level: current situation actual, opportunities and challenges

The metric for adaptation under the framework of the processes associated with the United Nations Framework Convention on Climate Change (UNFCCC) have been evolving. Currently, the development of common adaptation metrics, in addition to their contribution to the “global stocktake” process and their contribution to promoting increased ambition and related commitments, is also associated with facilitating access to climate financing. Of the total climate financing available, to date only 20% is allocated to adaptation. As long as there is no clear metric understood by all stakeholders, it is increasingly difficult to justify and increase the share of adaptation financing. Finally, from an economic point of view, the aim is to maximise the adaptive benefit of each dollar invested.

Some elements that are relevant for this metric that evaluates the effectiveness of adaptation projects should consider three concepts: vulnerability, cost-benefit and cost-effectiveness. There are some relevant approaches at the global level such as the Global Climate Risk Index (CRI) or the World Risk Index (WRI); and there are also some examples in the region with proposals from Colombia and Chile; and multilateral banks have also developed their own approaches.

Adaptation funding should aim to generate social resilience (e.g. warning networks), ecosystem resilience (e.g. watershed management), or defensive infrastructure (e.g. protection against extreme phenomena). Based on these objectives, investments can be of two types: investments with return (e.g. agroforestry) or without return (e.g. community strengthening). This in turn defines the type of source which can be public (e.g. grants or preferential rates) or private (with return or with impact) as well as whether they are national or international sources. Not all sources of finance respond to all needs and an understanding of the dynamics of each is required to link adaptation objectives with relevant sources.

Table. Flow of climate financing in Latin America and the Caribbean (in millions of dollars per year, spanish version)

 

A review of the flow of climate financing in Latin America and the Caribbean over the last seven years shows that aid is not growing. Two sources are highlighted:

  • Climate-related bonds or green bonds are on the rise, however, these are mainly earmarked for mitigation. There is potential for adaptation issues, although this requires demonstrated returns on the investment.
  • In the field of multilateral banking, Latin America and the Caribbean receive 15% of global funds earmarked for adaptation. These are mainly allocated to institutional capacity building and technical assistance and to cross-sectoral issues, water and sanitation, energy, transport, construction, and financial services.

As a final thought, the TaskForce for Climate Financial Disclosure for physical risks responds to banks' need to know the exposure of sectors and value chains that will be affected by risks (e.g. agriculture or tourism services). This review can make projects and loans more expensive. However, by having an adaptation plan or vulnerability analysis in place, these conditions can be relaxed. 

Ecuador

Ecuador has several framework instruments for adaptation actions. The Climate Change Strategy establishes sectoral priorities (food security and agriculture, health, water resources, natural heritage, human settlements) and provides guidelines for adaptation. For its part, the National Adaptation Plan is based on projections and risk studies and is expected to have the roadmap for its implementation by next year. Finally, the NDC sets clear targets for all sectors and serves as the basis for reporting to the UNFCCC.

The National Climate Finance Strategy (EFIC) establishes the parameters and guidelines for effectively channelling resources, both from the general state budget and from international and private sources. With a vision to 2030 and a 10-year frame of reference, the EFIC defines a catalogue of climate change activities and provides recommendations for the construction of a portfolio of strategic climate change projects. For the development of the portfolio of projects, which include adaptation, work is carried out at the local level, with planning at the territorial level in processes carried out by the communities themselves according to their own realities.

Locally Led Adaptation aims to strengthen communities and people at the frontline, not only by promoting their participation in processes or projects, but also by building capacities for local actors to identify project ideas and participate in conceptualisation, planning, implementation and monitoring and evaluation, incorporating the efforts into the agenda and individual and collective action. There are several experiences and initiatives underway. Some stand out, such as the ADAPTACLIMA project in Esmeraldas, which works on nature-based measures and solutions for landslide control, or the Paisajes project in the central highlands, which establishes ecological corridors and seeks to strengthen family farming.

Along the way, it has been possible to identify the following barriers to monitoring and evaluation of local adaptation funding:

  • There is a lack of information on local level climate projections and methodologies to be able to establish climate risk.
  • Processes: Lack of procedures and regulations to identify and integrate mobilised financial flows. 
  • Capacity: There is limited capacity for managing specific information on adaptation financing.
  • Resources: International cooperation resources are available to carry out measurements and applications in the territories. However, there are limited resources for digitalising information on financing at the local level.

Complementarily, opportunities are also identified:

  • The National Climate Change Registry results in a space for research, development and conceptualisation that allows for showcasing progress and projects.
  • International experience on monitoring adaptation financing is more widely available and accessible.
  • Technical assistance from international cooperation enables strengthening of systems and processes.
  • The availability of better information triggers a virtuous cycle that makes it possible to mobilise more funding.

Mexico

In Mexico, the process of improving public policies on adaptation follows an iterative and participatory cycle that includes:

  • Assessment of current and future vulnerability: This includes the identification of the problem, the definition of the territorial unit and the analysis of the socio-environmental characteristics of the system.
  • Design of adaptation measures: Includes the design of indicators for monitoring and evaluation.
  • Implementation of the measures.
  • Monitoring and evaluation: This includes the evaluation of costs and benefits of adaptation as well as the systematisation of lessons learned and best practices. 

As part of this process, INECC's approach to adaptation M&E has three steps:

  1. Desk work, consultation with experts and generation of guidelines for adaptation planning, including the typology of adaptation measures and criteria for their design. It should be noted that one of the criteria is that which can be measured.
  2. Development of tools for monitoring and evaluation of local adaptation and consultation with the territory: These are tools that seek to be able to incorporate the different perspectives and visions of the adaptation process at the local level and include (1) systematised information collection sheet for the adaptation measure (2) questionnaire for beneficiaries (3) questionnaire for implementers (4) indicators for M&E (5) lessons learned workshop. Specifically, the systematised collection sheet is relevant because it collects and makes public information relevant to the measure that is rarely available. It includes a section on governance, implementation, and financing as well as a section on results, monitoring and evaluation, and lessons learned.
  3. Pilot application in the territory and feedback: Two local adaptation projects were selected to apply the proposed tools. These were (1) implementation of an ecosystem conservation and restoration scheme in Tuxpan, and (2) an integrated early warning system for vulnerable communities. Lessons learned from these include:
    1. Implementation of adaptation measures and their M&E system fosters social learning through the exchange of experiences, best practices and lessons learned during the process.
    2. The processes are enriched and strengthened by incorporating local vision and experience.
    3. Dissemination of results, feedback and co-responsibility are fundamental to the improvement of climate action.

Regarding the monitoring system of climate financing for adaptation, INECC has a proposed guidebook for a monitoring, reporting and verification system to lay the groundwork and serve as a starting point for strengthening transparency among the actors involved in adaptation financing. The guide aims to:

  • Qualitatively and quantitatively evaluate adaptation to generate evidence of project and policy outcomes and impact. 
  • Improve credibility in the management of financial resources, their impact on the territory and the attention to local adaptation needs.  
  • Assist governments at different levels to design effective strategies as part of their programmes and policies.

Shared resources in the session

EUROCLIMA letra blanca peqEUROCLIMA+ is the European Union's flagship programme on environmental sustainability and climate change with Latin America. It aims to reduce the impact of climate change and its effects in Latin America by promoting climate change mitigation and adaptation through resilience and investment. 
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