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Financing climate change adaptation: Options for Asian cities and the role of third-party brokers

Financing climate change adaptation: Options for Asian cities and the role of third-party brokers. Presented by Verena Streitferdt (verena.streitferdt@uts.edu.au) CDIA consultant

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Financing climate change adaptation: Options for Asian cities and the role of third-party brokers

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  1. Financing climate change adaptation: Options for Asian cities and the role of third-party brokers Presented by Verena Streitferdt (verena.streitferdt@uts.edu.au) CDIA consultant For the Session G3 at Resilient Cities 2012Financing the Resilient City: Public grants and Market-based instruments

  2. Statements regarding climate financing Mexico City’s Mayor Marcelo Ebrard underlines: “The architecture that is available now is not working, why, because it is not designed to help the cities; it is designed to work with the national governments.” Andrew Steer, the World Bank’s Special Envoy for Climate Change, says: “We have got to be more imaginative in our environmental financing, managing to make things more comfortable for investors, and maximizing returns”.

  3. Outline • Cities development Initiative Asia Background • CDIA case study • CDIA/PAKLIM study on cities and climate finance • Tips for cities who seek financing for climate change measures

  4. Asia’s Urban Challenge • Asia’s economic growth is predominantly urban based • The estimated urban environmentalinfrastructure investment need in the Asia-Pacific region is about $100 billion per year • Current urban environmental infrastructure investment is about $ 40 billion per year • => Investment gap

  5. CDIA Rationale • Bridging the urban infrastructure • investment planning and programming gap • Cities often have macro-development strategies and spatial plans, but city infrastructure projects to implement them are often not adequately defined and prepared for financing • Particular issue for the 1,400+ medium-sized cities in Asia’s developing countries with populations of 250,000 to 5,000,000 • Difficult to use standard feasibility study instruments for these purposes, need for additional instruments Cities Development Initiative for Asia ?

  6. CDIA City Interventions (ongoing, completed) IMPLEMENTATION STATUS, March 2012 - 42 APPROVED CITY APPLICATIONS IN 13 COUNTRIES (67 PFS) - SUPPORT COMPLETED IN 21CITIES INCLUDING 33 PFS - ONGOING SUPPORT IN 21 CITIES (34 PFS)

  7. City example Naga, Philippines InitiationMayor Bongat send an application letter to CDIAObjective: Integrated Naga River Revitalization Project 1.Urban Renewal (River walk)2. Wastewater Management, Drainage 3. Flood Protection/Climate Change Adaptation Method5 months consultancy work and coordination with local governments DurationAug – Dec 2011 OutcomePre-Feasibility studies presented in March 2012

  8. Studies on financing local climate action • Cooperation:Cities Development Initiative in Asia (CDIA) and GIZ project: Policy Advise for Environment and Climate Change (PAKLIM) Support • Objective: To identify the financing possibilities to support the cities to implement respective climate change mitigation and adaptation activities • Approach: • National study in Indonesia • Regional Study in the Asia Pacific

  9. Results – international • Only 2 out of 14 international fundsareaccessible to cities • Emerging climate financing - Green Climate Fund - Carbon markets and Green bonds - National appropriate mitigation actions (NAMAs) - National appropriate adaptation actions (NAPAs) • Limited opportunities for direct finance access to cities

  10. Results – Private Capital • Investment in public goods and infrastructure • Public Private Partnership (PPP) • Market Launch and diffusion of goods and companies on the supply side • Development partnerships • Carbon market financing (only mitigation) • Market launch very dependent on enabling investment frameworks (e.g. guarantees for investment etc.) • Investment package might attract private financing (e.g. Bus terminal in Banda Aceh)

  11. Results – government • Limitations of Local (city) finance • National finance in form of programmes (e.g. Indonesia: Special allocation fund for drinkable water) • Tax and levies • Loans and municipal bonds • Main opportunity for cities investment seem to come from national government programmes.

  12. Advice for cities seeking climate finance • Prepare proposals (Vulnerability assessment and prioritisation) • Access to Private capital: Improve credit worthiness and leverage their existing assets and financial resourcesEngage in Public/private partner cooperations • Engage with NGOs and national and international technical assistance agencies - bilateral: CDIA, GIZ etc. - multilateral: UNDP, UNHABITAT • Start with small projects now to create visibility!

  13. THANK YOU! • Cities Development Initiative for Asia • Suites 202-203, Hanston Building • Emerald Avenue, Ortigas Center, Pasig City 1600 • Metro Manila, Philippines www.cdia.asia

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