Knowledge, Capacity development and Finance, Three Pillars for Successful Adaptation

Keynote Address by Ursula Schaefer-Preuss, ADB Vice President, at the Asia Pacific Climate Change Adaptation Forum 2010, Bangkok, Thailand

Introduction

Good morning distinguished guests, ladies and gentlemen. It is my great pleasure to be here at the Asia-Pacific Adaptation Forum. This Forum is a tremendous opportunity to share knowledge and experiences, particularly in the face of one of the world's greatest challenges—that is, how to adapt to climate change.

Of all the regions in the world, Asia and the Pacific is the most vulnerable to climate change. Since 1960 more people in Asia and the Pacific have been affected by floods, droughts and storms than in any other region. More than 80% of all people affected by these natural disasters were from Asian or Pacific countries.

Science predicts that climate change will increase the intensity and frequency of these natural disasters. This could have catastrophic impacts on social welfare and stability. For example, ADB estimates losses of more than 6% of GDP by 2100 for the major Southeast Asian economies due to climate change impacts.

These figures remind us all that climate change may undermine the attainment of the Millennium Development Goals, and threaten to reverse decades of progress that developing countries have made in reducing poverty. The equity dimensions are even more worrying. Simply put, climate change will make the poor get poorer, hitting hardest those who are the least prepared to cope.

It is clear that we have to reduce greenhouse gas emissions to mitigate climate change. But science warns us that even with substantial reductions of GHG emissions, substantial impacts are already unavoidable. So we have no recourse but to also adapt to the changing climate. I believe that successful adaptation will rest on three pillars: knowledge, capacity development and finance. The importance of these three pillars is highlighted in the themes of this forum.

Knowledge Gap and Public Goods

Let me first touch upon knowledge. Historically, we have designed our infrastructure and prepared for disasters based on the past behavior of the climate. This is no longer possible; we will be required to craft effective responses to climate risks without the benefit of accurate foresight.

Dealing with uncertainty is in fact a great challenge. Thus, we have placed a high priority on identifying the changes likely to affect our region. Global climate models can tell us what to expect in very general terms: for example, that we will experience more frequent and more intense storms.

This type of information is certainly useful, but only up to a point. Many key adaptation tasks, such as strengthening the resilience of infrastructure to climate change impacts, require more specific knowledge at the local level. The lack of scientifically credible projections of future climate trends at the scale that we require represents a major gap in our knowledge, and limits our capacity to design effective adaptation responses.

Nevertheless, the scientific community has been able to develop approaches that can provide such projections based on down-scaling of global models using regional climate modeling tools. ADB has applied these approaches to Ho Chi Minh City in the Asia mega-cities project, a joint initiative with the World Bank and JICA. However, such models require substantial investments in both human resources with specialized knowledge and sophisticated computer modeling tools. This places them beyond the reach of many developing countries. And, even where the needed expertise is available, we have often seen that the required analysis is conducted on an ad hoc and project-by-project basis — which is an expensive and time-consuming way of reinventing the wheel.

However, we can take a different approach, by seeing climate projections as a perfect example of a regional public good. When such knowledge products are properly developed, they can find a wide range of applications. And once the modeling has been done, each new application does not incur new costs. Downscaled climate change projections, regional weather forecasting, early warning systems for disasters—these examples can all be provided at low additional cost as regional public goods if we are willing to coordinate our efforts rather than acting alone. With our partners, ADB will play an important role in facilitating the creation of such regional public goods that support effective adaptation to climate change. These can be combined with vulnerability assessments to help improve decision making at the local level.

Capacity Development

We have seen how crucial it is to urgently fill knowledge gaps. It is critical that such information is packaged in a user-friendly format, and is made available to all users from government to community level, in a language that can be understood. To be effective, such an approach will require enhanced capacities. This brings us to my second pillar for successful adaptation: capacity development.

Capacity development for adaptation is a cross-cutting area of support. It is central to effective implementation of adaptation measures and to appropriate policy development. Both of these require high-level cross-sectoral coordination with adequate levels of ownership by all involved departments and line agencies. Better integration of disaster risk reduction and adaptation programs will be another area of focus. It is also increasingly essential to develop capacity for mainstreaming adaptation into development planning.

Another priority is to develop and apply country-specific and locally-appropriate methods and tools. Tools are needed for assessing vulnerabilities as well as the costs and benefits of adaptation options. Such analyses will also help to improve the economic rationale of decision-making under conditions of climate uncertainty. ADB will continue to play a key role in developing and supporting the introduction of such tools into country and sector strategies, as well as project planning, design and implementation. In this area, there is a need to work closely with the private sector, to ensure that climate risks are appropriately reflected in investment decision-making.

To more broadly engage the private sector, policy makers need to establish a policy environment that enables its participation in adaptation activities. In particular, they should ensure that private and public investors apply climate risk standards, that planning and design codes are developed and up to date, and that material selection, construction methods, supervision, and operation and maintenance are all up to standards. New and innovative financing and risk sharing approaches and associated institutional arrangements are also needed to promote the integration of adaptation and disaster risk reduction, including through insurance and other disaster risk finance instruments.

Adaptation can only partly be addressed through action at national and sector level. A complementary challenge, and long-term goal, is to empower local communities and build their capacities to assess their own climate vulnerabilities and strengthen adaptation strategies. Communities will need access to climate information, and those at higher levels should ensure that adaptation responses address local stakeholders' concerns. Adaptation strategies should therefore build upon existing livelihoods, and take into account the existing knowledge and coping strategies of the poor. Formalization of participatory approaches for adaptation will be an important part of this

Finance

Adapting to inevitable climate change impacts will cost developing countries a lot of money. They will need to dedicate resources to building climate resilience in vulnerable sectors and critical infrastructure. The most recent estimates suggest that adaptation costs in our region could be in the order of $40 billion annually. Clearly, substantial additional financing will be needed. So I raise Finance as the third pillar.

 

In Copenhagen, developed countries made a collective commitment to provide $30 billion from 2010 to 2012, and set a goal of mobilizing up to $100 billion per year by 2020, balancing the allocation between adaptation and mitigation. Such financing provisions will be important elements of the post-2012 climate regime. The multilateral development banks are expected to play a key role in channeling these funds to developing countries. ADB is well prepared and positioned to support this process and has been working to build understanding about climate change response options in the region for nearly two decades.

Unfortunately, there is little expectation that a post-2012 global climate agreement can be concluded before 2012 in Johannesburg, and probably later. The climate talks recently concluded in Tianjin to prepare for COP-16 in Cancun, Mexico were therefore mostly about identifying interim steps to form the foundation for a comprehensive and legally binding agreement. One option for progress on adaptation would be to make the Copenhagen Accord's financing pledge more specific.

Financing for climate change adaptation needs to be adequate, predictable and sustainable; and it needs to be provided in a measurable, reportable and verifiable manner. While these are principles that I suppose we all agree with, translating them into efficient, effective and accountable financial mechanisms is both a challenge and an opportunity.

Existing financial mechanisms have given us important lessons. Countries face a bewildering set of financing modalities, and have to contend with high transactions costs and lack of predictability in accessing incremental finance. In addition, new and innovative financing and risk sharing approaches are needed along with associated institutional arrangements. Insurance and other disaster risk finance instruments are among the options that should be considered. Financing channels must continue to evolve to reduce transaction costs, while focusing on responsiveness, results and accountability.

 

As an implementing agency of the Global Environment Facility, the World Bank- administered Climate Investment Funds and the UNFCCC Adaptation Fund, ADB is already helping developing member countries to access global resources to achieve environmentally sustainable growth. In close coordination with other partners, ADB can help its developing member countries navigate the range of opportunities. We can act as a "one stop shop" for financing and identify appropriate financing strategies, while building the capacities of our developing member countries to directly access climate financing over time.

Conclusion

Ladies and gentlemen, I have pointed out that climate change adaptation requires three important pillars, knowledge, capacity development and finance. We have observed sizable gaps for all three key components in both the developing countries and our development partners in the region. Sharing our knowledge is imperative. This is a crucial time, with the concept of adaptation gaining more ground in the development arena. Regional knowledge networks like Asia Pacific Adaptation Networks (or APAN) have key roles in filling the gaps. The lack of progress on a new global climate agreement simply serves to underscore the importance of APAN for facilitating adaptation and access to financing.

ADB will commit to support APAN and help enrich its knowledge base. ADB expects APAN will help policy makers and stakeholders gain better access to adaptation knowledge, which they can apply in the development of adaptation policies, programs and projects. We believe that ADB's developing member countries will clearly benefit from the knowledge products to be disseminated through APAN.

I do look forward to the discussions of the Adaptation Forum as a means of identifying opportunities for engagement with you. I am optimistic that we can find more innovative solutions to address the gaps in adaptation knowledge, capacity development and finance in the region. In the face of a changing climate, let's all work closely together to really establish a sustainable and resilient pattern of development—one that will enable the region's poor and vulnerable to safely satisfy their basic needs and enjoy a better quality of life. ADB eagerly anticipates our continued collaboration.

Thank you.