Adaptation Fund: Strong Foundation to Scale Up Climate Finance for the Most Vulnerable Communities
Photo by IISD/ENB | Kiara Worth
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At its 28th meeting in early October 2016, the AF Board (AFB) decided to develop a medium-term strategy for the Fund, which will build on the distinctive characteristics and strategic advantages of the Fund.

Second, the AFB continued consideration of the AF’s potential linkages with the Green Climate Fund (GCF) and decided to participate in a dialogue convened by the GCF Board in December, 2016.

Third, the AFB decided to fast-track re-accreditation of implementing entities accredited by the GCF, which constitutes a concrete demonstration of complementarity between the two funds.

Finally, the AF heads to COP 22 in Marrakesh with the clear objective of advancing the process to serve the Paris Agreement.

As the Adaptation Fund (AF) leaves behind its foundational years and starts embarking on its tenth anniversary, the years ahead should clearly consolidate its role in the global climate finance architecture.

At its 28th meeting in early October 2016, the AF Board (AFB) took some concrete steps along this path: first, the AFB decided to develop a medium-term strategy for the Fund, which will build on the distinctive characteristics and strategic advantages of the Fund. Second, the AFB continued consideration of the AF’s potential linkages with the Green Climate Fund (GCF) and decided to participate in a dialogue convened by the GCF Board in December, 2016. Third, the AFB decided to fast-track re-accreditation of implementing entities accredited by the GCF, which constitutes a concrete demonstration of complementarity between the two funds. Finally, the AF heads to COP 22 in Marrakesh with the clear objective of advancing the process to serve the Paris Agreement.

At its October meeting the AFB also enhanced the growing AF portfolio and project pipeline by approving two projects: to build adaptive capacities of communities, livelihoods and ecological security in India; and enhance climate and disaster resilience of the most vulnerable rural and emerging urban settlements in the Lao People’s Democratic Republic; while also endorsing ten project concepts and pre-concepts in Africa, the Pacific and Latin America.

The AF occupies a clear space in the climate finance landscape: the provision of funding for small-scale replicable and scalable concrete adaptation projects to the most vulnerable communities in developing countries. This is done in a transparent, country-driven, human-rights based, and gender responsive manner, especially through the Fund’s pioneering direct access modality.

Serving the Paris Agreement makes total sense for the AF, since it is already contributing to the operationalization of the Paris Agreement’s components on adaptation, finance and capacity building through its operations. The policies and procedures needed to allocate climate adaptation finance are in place and fully applicable, including AF’s: environmental and social policy that promotes gender equality, vulnerable groups, human rights and conservation principles; risk management framework and ad hoc complaint handling mechanism; and gender policy and action plan. The AF occupies a clear space in the climate finance landscape: the provision of funding for small-scale replicable and scalable concrete adaptation projects to the most vulnerable communities in developing countries. This is done in a transparent, country-driven, human-rights based, and gender responsive manner, especially through the Fund’s pioneering direct access modality. Direct access enhances country ownership in line with the Paris Declaration on Aid Effectiveness. Direct access represents about 34% of the AF portfolio, which is unique in climate finance nowadays. This includes the very first enhanced direct access project, a small grant facility in South Africa.

The AF has currently 42 implementing entities accredited, including 24 national implementing entities (NIEs), with 42% in least developed countries (LDCs) and small island developing States (SIDS). A streamlined accreditation process for small entities responds to the specific circumstances of small countries, with the Micronesia Conservation Trust and the Ministry of Finance and Economic Management of Cook Islands being the first NIEs of this kind.

Demand for accreditation and funding keeps growing steadily. Through the accreditation process many NIEs have enhanced their systems and built capacity to manage climate adaptation finance along the way. This ability to directly engage with countries is also supported by the AF’s climate finance readiness programme, which effectively underpins direct access.

Seeing the vibrant community of NIEs thriving has been most rewarding. I have had the opportunity to directly witness the amazing support to the most vulnerable communities provided by the Center for Ecological Monitoring (CSE) in fighting coastal erosion in Senegal and by the Agency for Agricultural Development (ADA) in building resilience to drought in oasis zones of Morocco. In my own country, Argentina, the Unit for Rural Change (UCAR) is completing a project that enhances adaptive capacity and builds resilience of highly vulnerable small-scale agricultural producers in the Northeastern part of the country. Moreover, these three NIEs and others have benefited from fast-track accreditation by the GCF thanks to their previous accreditation with the AF.

In addition, the GCF Board has recently approved funding for projects submitted by CSE (US$7.6 million to increase ecosystem and community resilience by restoring productive bases of salinized lands) and ADA (US$39.3 million for development of Argan Orchards), hence demonstrating the key role these institutions are playing as catalysts of climate finance in their respective countries, thanks to early recognition, readiness support and trust from the AF.

The AF has been associated with innovative approaches to finance since its creation, in particular with a levy on the carbon price for the Kyoto Protocol carbon market mechanisms as a revenue source. Thus, the AF has in place the systems and the required expertise to continue monetizing carbon assets. The mechanisms under Article 6 of the Paris Agreement may offer an opportunity for the AF in the future. The AF has weathered the downfall of carbon prices since 2011 with creativity and the consistent support of some contributors. This is a collective achievement of the Board, civil society and secretariat. In the near term, however, the lack of predictable and sustainable flows of resources would threaten the work of the AF.

The Paris Agreement placed adaptation as a key component of the global response to climate change, alongside mitigation and finance. It also expressed the aim to achieve a balance of scaled-up mitigation and adaptation financial resources, and recognized the need for public and grant-based resources for adaptation. The AF is therefore an important instrument for advancing the Paris Agreement. The strategic work initiated by the AFB, the focus on complementarity and coherence among funds, and the upcoming tenth anniversary of the AF are milestones to build momentum in this direction.

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