Adaptation Fund Board showcase

11 December 2009

Today, the chair of the Adaptation Fund (AF) will explain the achievements of the Adaptation Fund Board this year in a side event. ECO urges all those who still perceive the AF as a politicised negotiating body and not as an existing institution caring for effective adaptation to attend the event and update your knowledge.

At Bali two years ago, three innovative characteristics were already agreed: automatic funding through a 2% levy on CDM projects, majority developing country representation on the Board, and the mandate to provide direct access to funds.

The Board has recently added two other innovative features: a strategic priority directing Parties to give special attention to the most vulnerable communities when submitting proposals, and transparency in decision making (including live webcast of all meetings and the future possibility for public comment on submitted proposals).

The Board will soon approve the first projects. But resource limitations at present continue to make it difficult to adequately respond to programme-based needs.

But given the Board’s important advances, ECO is concerned the AF is getting little notice in the post-2012 financial architecture negotiations. Yes, it is a Kyoto Protocol instrument, but the lessons learned for developing appropriate institutional architecture and delivering fast-track action can be applied everywhere.

What ECO finds particularly worthwhile is the convergence between features and functions of the AF and the various proposals put forward for a new financial mechanism. The joint proposal by the UK, Mexico, Norway and Australia calls for direct access where fiduciary standards allow it with certain safeguards. The US submission proposes to let projects and programmes be administered by domestic institutions, while also calling for strong fiduciary standards. This resembles the AF direct access approach, where National Implementing Entities can be accredited if they meet certain fiduciary standards and are the direct recipients of AF resources.

The proposals however vary on governance structure. But as the Board model shows, a slight majority does not permit developing countries to rule by fiat. In practice, the Board is achieving consensus based on in-depth discussions of complex matters.

Another key issue is the generation of resources. The AF can receive funds from multiple sources, whether from a Kyoto mechanism or not. For example, if Parties chose a levy (e.g., for aviation and maritime transport) or to provide mandatory contributions to address historical responsibility for climate change, the AF could receive the resources.

ECO suggests again that the AF be scaled up through substantial additional financial resources in conjunction with the second commitment period of Kyoto Protocol and a legally binding agreement under the Convention, possibly as an operating entity under a reformed financial mechanism. The AF can play a role in both, although this may require political decisions and legal adjustments. ECO strongly cautions against drying up the AF if the CDM generates too little resources or is phased out. There have already been too many casualties from climate change.

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