Dealing with the effects of climate change is our new normal. Prolonged heat waves, coastal sea-level rise, changes in rainfall patterns, and increases in the intensity and frequency of extreme weather events are already affecting the lives and livelihoods of millions of people, especially the poor and vulnerable. These could affect human health, migration dynamic, and the potential fo conflicts in the future. Over the past 20 years, 5.2 billion people in Asia and the Pacific have been affected by disasters such as floods, storms, droughts, earthquakes, and extreme temperatures. Worst, one million individuals have died. Between 1989 and 2019, disasters have also caused almost $850 billion in total direct physical losses to the region. Recent estimates reveal that the region already experiences average daily losses of $200 million because of disasters, and climate change is aggravating this situation.
Seven out of ten countries with the highest estimated disaster risks in the world are in Asia and the Pacific: Bangladesh, Cambodia, Philippines, Solomon Islands, Timor-Leste, Tonga, and Vanuatu. Solomon Islands, Tonga, and Vanuatu are among the small island developing states (SIDS) that are even more particularly vulnerable to climate change and disaster related shocks.
ADB’s Strategy 2030 treats tackling climate change, building climate and disaster resilience, and enhancing environmental stability as an operational priority.
In 2019, of the total $7 billion approved total climate finance, $5.54 billion (78%) is expected to contribute to mitigating climate change and $1.54 billion (22%) to adaptation. ADB’s own resources provided $6.37 billion while external resources contributed $705 million. Of the $705 million from bilateral and multilateral partners, $142 million were in the form of grants (see ADB’s 2019 Climate Financing Dashboard).
ADB has consistently offered innovative cofinancing opportunities to partners, such as the Green Climate Fund, which supported nine projects with $473 million in grants and concessional financing from 2015 to 2019, $100 million of which was for the Shandong Green Development Fund in 2019. Other funds that prioritize climate change and disaster risk management dimensions include, among others, the Asia Pacific Climate Finance Fund, Canadian Climate Fund for the Private Sector in Asia, Clean Energy Financing Partnership Facility, Climate Investment Fund, Global Environment Facility, Green Climate Fund, Integrated Disaster Risk Management Fund, Japan Fund for the Joint Crediting Mechanism, Future Carbon Fund, and the Urban Climate Change Resilience Trust Fund.
Accelerating Low Greenhouse Gas Emissions Development
Greenhouse gas (GHG) emissions will increase as rapid urbanization progresses in many parts of Asia. This will heighten the need to promote clean energy and energy efficiency to reduce greenhouse gas emissions. In 2019, ADB and the United States Agency for International Development (USAID) launched a partnership to boost the capacity of clean energy systems by 6 gigawatts while increasing regional energy trade by 10% over the next five years.
Technologies that reduce emissions while making people more resilient to climate change will be critical in the coming years. In 2019, ADB, the Clean Energy Fund, and the Climate Change Fund joined hands to initiate a sustainable energy project in Uzbekistan, a country struggling with high power demand. The Sustainable Hydropower Project, which runs from 2019 to 2024, brings hope to other energy-intensive states looking for ways to diversify their energy mix to reduce emissions and ensure power supply is climate-proofed. It modernizes while diversifying Uzbekistan’s power generation using renewable energy. ADB also engages with global funds, including the Climate Investment Funds, to invest in solar parks such as the first of its kind in Cambodia, and to scale up demand-side energy efficieny in India.
ADB, together with its development partners, has been consistently providing innovative carbon finance to incentivize investments in low carbon technologies through its Future Carbon Fund. In 2019 ADB supported eight GHG mitigation projects through the purchase of carbon credits generated through their successful operations in PRC, Fiji, India, and Thailand. For example, FCF disbursed carbon finance to the Water Authority of Fiji operating anaerobic sludge treatment units to recover and flair methane, reducing approximately 22,000 tCO2 annually.
ADB also collaborates with its development partners for the diffusion of advanced low carbon technologies by reducing initial investment costs by mobilizing carbon finance through the Japan Fund for the Joint Crediting Mechanism (JFJCM). In 2019, JFJCM provided a total of $3.5 million for the introduction of smart green design for a hospital and family health centers in Mongolia.
Ensuring a Comprehensive Approach to Building Climate and Disaster Resilience
ADB’s climate finance also looked at investments that reduce the disaster risks that countries and their population face, such as the National Disaster Risk Management Fund (NDRMF) in Pakistan, where Australia, Norway, and Switzerland served as cofinanciers. The project provides financial and technical support to the NDRMF, which will function as a corporatized financial intermediary designed to reduce the country and its people’s vulnerability to natural hazards. It will finance up to 70% the cost of projects that prioritize the country’s disaster resilience.
This can be complemented by projects such as Kiribati: South Tarawa Water Supply Project, which demonstrates how investments can help ensure climate-resiliency of water supply. The project is building a desalination plant powered by a 2,500-kilowatt solar photovoltaic system to supply water in the island’s highly-urbanized capital city. This type of initiatives should be prioritized in low-income ad vulnerable countries, such as small island developing states (SIDS), as they face particularly high climate and disaster risks. A new partnership established in 2019, the Ireland Trust Fund for Building Climate Change and Disaster Resilience in Small Island Developing States, can help in this regard. It aims to improve SIDS’s preparedness and resilience to the effects of climate change.
Ensuring Environmental Sustainability
Strategy 2030’s approach to ensuring environmental sustainability promotes shifting to sustainable infrastructure and low carbon development, building climate resilience by investing in natural capital, and improving environmental governance and management capacity.
In 2019, ADB approved the Mainstreaming Climate Resilience and Environmental Protection for Secondary Green Cities Development Project. This aims to demonstrate how cities can be green and climate resilient even while being economically competitive. This project, with the support of the Global Environment Facility Grant and the Urban Climate Change Resilience Trust Fund under the Urban Financing Partnership Facility, is planting the seeds for a nationwide green secondary city development in Viet Nam. This type of project is critical for the region. Asia’s urbanization rate is accelerating quickly, and may well reach above 64% by 2050 if not managed well, worsening the effects of climate change.
The establishment of the ASEAN Green Catalytic Climate Fund (ACGF) in 2019 will aid the work of ensuring environmental sustainability in Asia. Through the partnership of the European Union and the ASEAN, the ACGF will provide loans to finance climate-friendly infrastructure projects across Southeast Asia.
Increasing Focus on the
Water-Food-Energy Security Nexus
No response to climate change will be effective without recognizing its connection to water, energy, and food security. Projects should be designed to address not just climate change, but the increased demand for food and water, as well as energy. Policies and projects need to prioritize the rational and proper management and allocation of water across sectors while keeping an eye out for environmental stability. One project that demonstrates this integrated approach is the Viet Nam: Water Efficiency Improvement in Drought Affected Provinces, which combines technology and water use efficiency to ensure farmers’ productivity and resilience amid widespread drought.
Another project, the Cambodia: Irrigated Agriculture Improvement Project, demonstrates how to address low agricultural productivity through responses that recognize the connection of water, and food security to climate change. This project is helping improve farmers’ harvest in Cambodia by making its irrigation systems efficient and climate resilient while promoting proper water resource management.
The need for increased climate finance becomes greater with each passing day. Given the rising toll of disasters, resilience remains a priority. ADB will continue to work on measures that enhance the management of climate and disaster risks, among them better natural resource management, climate-resilient infrastructure, and better access to credit and insurance. Transitioning to renewable energy while promoting energy efficiency and sustainable transport and urban development are also key areas for countries to address, while meeting their commitments under the Paris Agreement. Several financing partners, ADB included, have been leading the way in this field, and partnerships could further scale up their initiatives. Partnerships, in a nutshell, can mitigate climate change concerns while introducing innovations that can make the marginalized and vulnerable become more resilient.