Financing initiatives for reducing vulnerability and ...iesr.or.id/files/Adaptation Finance ICA 26...
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Financing initiatives for reducing vulnerability and increasing resilience to impact of climate change. GIZ PAKLIM IMACC
Transcript of Financing initiatives for reducing vulnerability and ...iesr.or.id/files/Adaptation Finance ICA 26...
Financing initiatives for reducing vulnerability and increasing resilience to impact of climate change.
GIZ PAKLIM
IMACC
29.07.2013
Adaptation Finance for :
Central Government
Local Government
Private Sector
Households
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(UNEP, 2012)
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Uncertain nature of CCA financing estimation (UNEP, 2012) ◦ the differences in coverage and methodology;
◦ uncertainties related to future climate changes and how best to adapt to them;
◦ the lack of an agreed operational definition of adaptation.
Underestimation on CCA needs calculation (Parry et.al, 2011) ◦ Some sectors have not been included in an assessment of cost (for
example, ecosystems, energy, manufacturing, retailing, disaster risk reduction and tourism).
◦ The sectors that have been included have been only partially covered.
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MITIGATION ADAPTATION
Global interest region or even country-specific with limited direct interest of the global community
$93 billion $4.4 billion
of $97 billion in total climate 2009/2010 (Buchner et.al, 2011)
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Financing for adaptation is perceived as more challenging:
Loans for adaptation are internationally disputed.
Develop countries have low interest to support adaptation in Indonesia (member of G20, middle income country)
Adaptation Fund is difficult to access because of the stringent fiduciary standards applied for accreditation of National Implementing Entity. This reflects the government capacities that are still lacking.
Some of the problem in adaptation are: uncertainty,
and long term results, this makes adaptation difficult to monitor.
There is not yet any budget number specific for adaptation in APBN
Performance Base Budgeting need indicators of accountability, alternative indicator that can be use in monitoring adaptation are: ◦ Regional vulnerability index ◦ Extreme weather risk index ◦ Coverage of early warning system; etc.
Proxy indicator can also be used to monitor adaptation such as health, poverty or food security indicators
Mainstreaming CCA into national development planning ICCSR sectoral target ◦ high priority sectors for adaptation action include the water
resources sector, marine and fisheries sector, agriculture sector, ad health sector (Bappenas, 2010).
RAN API ◦ Economic Resilience - Food Security and Energy Security ◦ Livelihood Resilience - Health, Settlement, and Infrastructure ◦ Resilience of Environment Services - ecosystem and
biodiversity ◦ Resilience of Special Areas - urban areas, coastal areas, and
small islands, and the reduction of natural disaster risks ◦ Supporting System - capacity building, development of data
and information on the climate, research and development of science and technology, planning and budgeting, monitoring ad evaluation (Bappenas, 2012).
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Public Funding ◦ International Grants / Loans
Global Financing Channeling
Multilateral
Bilateral
◦ Domestic Sources
National budget
Regional Budget
Private Funding ◦ Both International and National Private sector
Households:
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COP 13 - Bali Action Plan establishment of Adaptation Fund
Under UNFCCC Kyoto Protocol
2% levy on CER units for CDM
Estimate fund: US$ 270 – 600 (IGES, 2012) GIZ PAKLIM
COP 16 – Cancun Agreement – establishment of Green Climate Fund ◦ Fast Start Financing - $30 billion for the period
2010–2012
◦ 2020 pledge - $100 billion per year by 2020
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(Brown & Peskett, 2011)
Program Donor
Country
Channel Amount
Database for management of
climate adaptation
information and data
Germany Bilateral EUR 2.1
M
Vulnerability assessment
adaptation to climate change
for WRM Southeast Asia
Germany Multi
lateral
EUR 0.1
M
Inventory of Methods for
Adaptation to CC (IMACC)
Germany Bilateral
Partners for Resilience
program
Nether
Lands
Multi
Lateral
EUR
20.76 M
(Brown & Peskett, 2011)
The main problem of climate finance readiness in Indonesia is not always the lack of funding sources but the lack of institutional capacity, coordination, policy and systems to channel and disburse climate finance effectively.
Not a less important issue is the not readiness at subnational level. The decentralization has implication on the climate finance source and delivery.
National Budget (APBN) - taxes, non-taxes and other domestic revenue
Regional Budget (APBD) ◦ the intergovernmental transfer which include:
Revenue Sharing Fund (Dana Bagi Hasil, DBH),
General Allocation Funds (Dana Alokasi Umum, DAU),
Special Allocation Funds (Dana Alokasi Khusus, DAK)
◦ local revenue (Pendapatan Asli Daerah, PAD)
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There is no available study on domestic expenditure on climate change adaptation in Indonesia. This is because no agreed definition on what would constitute an exact adaptation action, which would then allow tracking it within the existing national budget.
Adaptation activities canot be separated from regular development activities in the sectors.
(MoF, 2011)
Long term investment
Public Private Partnership (PPP)
Insurance / micro insurance
Micro finance
The role of public sector funding is to scale up and leverage private investments and to ensure that no area is left out. The key role of governments is in building conducive environment for private investments.
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private sector funding composite the largest source for financing mitigation and adaptation activities, USD 55 billion out of USD 97 billion. (CPI 2011)
But most of it went to mitigation, where incentives is available.
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Presidential Regulation No. 67/2005; Presidential Regulations No. 13/2010 and No. 56/2011
Private to construct, operate and maintain infrastructure project such as drinking water services, electricity, mass transport system
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(OECD, 2012)
Cover the cost of damage caused by disaster such as floods
Jakarta floods: US$ 300 Billion (estimated)
MAIPARK – disaster reinsurance Build Jakarta flood model, will be used for insurance
cover in 2014
Also preparing for micro insurance targeting micro segment costumer (farmers, fishermen, small shop-house owners)
The micro insurance product can be used in case of a massive flood occur and destroy farming field. GIZ PAKLIM
Households will be one of the largest investor on adaptation, they need to adapt their shelter, water and sanitation, livelihood, or even migrating.
Poor people is the most vulnerable, so poverty alleviation programs in high risk area is a priority.
Education and awareness on climate change will help households make a better adaptation choice
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Successful mechanism in delivering public fund to local vulnerable communities
Adopt community driven development
Priorities: infrastructure, education and health for poor and remote areas
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Apply simple procedure, focus on the SMEs, and low income community in the sector of agriculture, fishery, small home industries, etc
Microfinance: bank and non bank
BRI 4600 branches the largest and one of the most profitable rural micro banking networks in the developing world
Cooperatives non-bank microfinance scheme institutions in Indonesia delivering financing to climate change victims in rural areas which more than 36,000 branches.
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(Ministry of Cooperatives and SME, 2012)
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Related to Public Financing 1 Specify priority actions for mid term development plan 2014-
2019
Define what is “Adaptation Finance”
Calculate the cost and identify funding gap
Develop policy on climate change adaptation criteria and priorities
Enhance coordination in policy setting among the related sectors
Strengthen national capacity to be able to access for global financing (NIE accreditation)
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Related to Public Financing 2 Utilize the existing funding mechanism in national and
regional level government applied for APBN, APBD. The utilization of existing mechanism avoids the complexity, uncertainty, unfamiliarity of the new mechanism
Enhance institutional capacity of national and local government particularly in climate change adaptation financing.
Applied the succeed lesson learn of national program such as PNPM, to be able to build and strengthen community development in the local vulnerable communities.
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Related to Private Sector 1
Develop policy and attractive mechanism (incentives) and enhance private involvement in investment and innovation for CCA.
Strengthen capacity of related institution which responsible for PPP development.
Support feasibility study for a PPP in CCA.
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Related to Private Sector 2
Development of policy which can enhance climate insurance market in Indonesia.
Development of policy which can enhance the microfinance bank an non bank (such as cooperatives) which can reach local communities
Enhance private sector and community awareness toward the climate change adaptation issues.
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