Ministers, we need to talk. I know this might sound technical, but it’s not; this concerns you. There can be no ambition with so little support for adaptation.
The Paris Agreement seeks to achieve a balance between adaptation and mitigation finance, as well as attending to the particular needs of least developed countries (LDCs) and small island developing states (SIDS).
We’re not there yet. Only 26% of the USD $55 billion in provided support went to adaptation projects in 2016, (the number from multilateral development banks” is even lower: 21%, according to figures from the Standing Committee on Finance’s (SCF) third biennial assessment report). Around half the bilateral finance provided to the LDCs and SIDS was earmarked for adaptation. That’s far from the “balance” agreed between adaptation and mitigation support.
ECO is even more concerned with the flows to vulnerable countries with less financial capacity to address adaptation and resilience efforts. 21% of finance approved by multilateral climate funds went to the LDCs. Funding directed at the LDCs represented 24% of bilateral flows, and that directed at SIDS accounted for only 2%. When developing countries say they need more support for adaptation, ECO understands why!
What’s more, according to SCF, only 9% of adaptation finance flowing through multilateral development banks was grant-based. That means 91% is made up of loans. All the more important for Article 9.7 to include grant equivalent reporting!
Have the MDBs forgotten the nineties, where 37 developing countries could not pay their debt back? (these were the heavily indebted, poor countries, or HIPC). In ECO’s view, these countries that have barely contributed emissions deserve much more funding in the form of grants from rich countries for resilience and adaptation. Climate finance is not a gift but an obligation. The recent OECD report writes about the increase in the level of loans. “Loans accounted for about 60% of bilateral and close to 90% of multilateral climate finance. Grants represent a third of bilateral and less than 10% of multilateral climate finance.”
ECO has reached the conclusion that public grant-based support from developed countries is too low for adaptation in LDCs, SIDS and other vulnerable countries. Ministers must take this into consideration as they enter into the final phase of these negotiations. The Paris Agreement promised to attend to their particular needs.
Finally, ECO wishes to acknowledge two specific international funds that are addressing the above concerns but have relatively low amounts of funding: the Adaptation Fund and the Least Developed Countries Fund (LDCF).