Financing Climate Change Adaptation and Mitigation in the Pacific

1. “Poverty and climate change are the two great challenges of the 21st century. Our responses to them will define our generation, and because they are linked to each other, if we fail on one, we will fail on the other.” Lord Nicholas Stern, 2010 “Poverty and climate change are the two great challenges of the 21st century. Our responses to them will define our generation, and because they are linked to each other, if we fail on one, we will fail on the other.” Lord Nicholas Stern, 2010 Financing Climate Change Adaptation and Mitigation in the Pacific Coral Pasisi, 1 November 2012

2. Overview • What is climate change funding? – sources and financing landscape • Challenges for PICs in accessing and managing CCF (from any source) • Leaders direction • Multi-tiered response • Practical examples • How to determine optimal mix of modalities and sources – Country and task specific • Capacity supplementation • Conclusion Coral Pasisi, 1 November 2012

3. What is climate change funding? • Climate financing no globally agreed definition – OECD definition • Funds to address climate change – Domestic, CCF, ODA, financing institutions, private sector • Lots of grey area – development and climate change discourse are interlinked as are their resources. • Comparability and accountability very difficult. • Definition of CCF most meaningfully defined at country level.

4. Funds for CC Landscape Projected ODA by 2020 = USD117 billion per annum; Pledged Climate Change funding by 2020 = USD100 billion per annum ODAequate to a significant part of PICs economies (68% of Niue’s 2011/12 budget is ODA, 33% of Samoa’s 2011/12 budget is ODA (loans and grants) 18.6% of ODA is climate change funding and 75% of that is project based) . Hence the need for significant engagement by central line Ministries of financing, planning and aid management ODA access and management: Pacific region faces significant challenges with effective donor coordination, aid effectiveness and overall development effectiveness [The Compact]. • Focus on strengthening national systems for effective access to and management of these resources combined with national resources. • Work to increase donor harmonisation and use of country systems (Compact reporting found = Only %25 of ODA using country systems. 180 individual projects in Solomone Islands, 46 different development partners operating in Samoa) Climate Change funding • 80% mitigation funding, 20% Adaptation so far. • Complex requiring specialist knowledge to access. • Adaptation funding should accrue to PICs and not be diverted to larger countries with bigger capacity to access and develop projects; • Largely globally allocated, lowest common denominator (size and focus often not PIC compatible) • Fast start funds accounted for differently so not comparable. • No doubt significant ‘new and additional’ resources are required. This does not mean that climate funding should be provided as a separate stream of investment, with an eruption of self standing projects, policies and initiatives. It should rather be integrated with existing national planning financing processes, imperfect as these may be.

5. Supported key findings of SPREP commissioned report of 2010 – technical backstopping and potential for regional fund • Challenges for Pacific Island Countries and Territories • General assessment of options at: • national, level - budget support, trust fund arrangements, NIE • sub-regional, regional levels - technical backstopping mechanism (PCCR), sub-reg or regional fund potential; and • international level – SIDS friendly Green Climate Fund design, SIDS friendly modalities Climate Financing Options Paper 2011

6. KEY CHALLENGES FOR PICS • Access to international financing. The Global funding structure and architecture is messy, complex and requires specialist knowledge and capacity to access. Mitigation focused. • Access to bilateral funding - Improving development effectiveness and donor harmonisation. Significant source of funding for CC from bilateral donors. Highly fragmented, many players and outside country systems (75%). • Enabling environment – policy and institutional and strength of national systems. effectively mainstreaming climate change, including in M&E. • Capacity constraints in the region – PICs internal; donor capacity; regional organisations. • Maximising mitigation ,adaptation and development efforts. Mitigation efforts and resources offer clear co-benefits in key development areas

7. Complexity of accessing and managing/utilising Climate Change resources Japan PIFS SPC JICA ADB SPREP ‘Cool Earth’ MinHSS MinFIN World Bank Climate Finance to Country X GEF LDCF MinAGR MinFIN PPCR SCCF Climate Investment Funds MinENV MinFA UN-REDD SCF UNDP ICCAI CTF MDGF EU New Zealand Adaptation Fund Other UN agencies Australia UAE Israel USAID Turkey ‘Green Fund’

8. Leaders Direction • Help improve PICs access to and management of climate change financing • Relevant policy papers considered by Forum Leaders and Economic Ministers in 2011 • Climate change and development effectiveness • Budget support and trust fund arrangements • Regional funding arrangements • Capacity supplementation and institutional strengthening • Leaders tasked the Pacific Islands Forum Secretariat to detail of how national and regional options could work in practice.

9. Multi-Tiered Approach • Documenting practical experiences with a range of modalities • Country specific assessment of options – Pacific Climate Finance Assessment Framework and Nauru case study • Regional Technical Support Mechanism • Pacific Solutions Exchange • Potential regional funding arrangements • Improved access to international climate financing

10. Budget support – Samoa • National Trust Fund – Tuvalu • Sub-regional Fund – Micronesia • National Development Bank – Palau • National Implementing Entity – Cook Islands • Regional Implementing Entity – SPREP • Multilateral Implementing Entity – Solomon Islands and UNDP Practical Experiences with Modalities Relevant for Climate Financing

11. Build on existing global and regional assessment tools and frameworks • Further refined through Nauru Case Study, exploring 6 key dimensions: • Sources of Climate Finance • Policies and Plans • Institutions • Public Financial Management and Expenditure • Human Capacity • Development Effectiveness Pacific Climate Finance Assessment Framework

12. Technical assistance – increasing absorptive capacity of Pacific Island Countries and Territories • RTSM and associated rapid response fund – funded by Climate Investment Fund • Pacific Regional Organisations, ADB and World Bank to develop by mid 2013 Regional Technical Support Mechanism

13. Conclusions • Consideration must be given to complexities at the source as well as to country systems and capacity to implement. Country specific analysis necessary. • The ability to harness and effectively use climate change financing will benefit from strengthened national systems and increased use of those systems by development partners. • Capacity constraints in the Pacific region present a significant challenge which we must collectively and innovatively try to address. • Donors are likely to continue to use a range of modalities to deliver climate change resources. PICTs will therefore need to draw on a range of options to improve access to and management of these resources. • Project based implementation is likely to remain a significant access requirement no matter the modality of disbursement. • New and additional resources are necessary to respond to climate change. The way in which these are delivered is equally important as are the volumes.

14. Thank You Coral Pasisi coralp@forumsec.org.fj