Session Partner: The Commonwealth
The small island developing states (SIDS) are more vulnerable to the increased frequency and severity of extreme events, such as cyclones, floods, and heat waves, and the physical impacts of climate change, such as sea-level rise and ocean acidification. The cascading effects of climate change also result in significant threats to infrastructure. The role of infrastructure in disaster-resilient and climate-proof development is accentuated by the increasing demand and significant transitions in critical sectors, such as energy, transport, telecom, and health. As 79 percent of all greenhouse gas emissions and 88 percent of all adaptation costs are attributed to infrastructure.
Developing climate-resilient projects can help countries withstand the climate impact and make them prosperous. Climate adaptive measures could be building climate-resilient infrastructure withstanding climate-related extreme weather events such as floods and cyclones for some regions. It could be developing drought-resistant crops and redesigning communication systems for other regions. Investing in and paying for resilience and prevention upfront can help avoid much greater damages and costs in the future.
In this context, the role of climate and disaster-resilient infrastructure to accelerate economic growth is also significant. Therefore, it is imperative to adequately prepare for impacts and reduce vulnerabilities through comprehensive planning, delivery, financing, operation, and management of infrastructure. This calls for increased investment in climate and disaster-resilient infrastructure through technical and financial assistance to the most vulnerable.
Despite several benefits associated with climate adaptation, financing has fallen short of annual estimated adaptation needs as climate adaptation financing is tricky. International climate finance is used mostly in climate mitigation - less than half went to climate adaptation (~$20 billion in 2019). Unlike climate mitigation projects, most climate adaptation projects are not purely commercial as they do not generate cash flows, so they do not serve private investors’ interests. Limited fiscal space and low per capita income are making the countries ill-afford climate adaptation infrastructure. Financing climate and disaster-resilient infrastructure demand additional upfront costs, but the benefits realized over the lifecycle of a project in the form of avoided losses and damages, lower maintenance costs, and sustained infrastructure services to all segments of society significantly outweigh these costs. The resilience of infrastructure bears an extra cost component, however, if it is left unaccounted it can lead to locking in risks and in turn accumulating unsustainable infrastructures for the future. Here, international public climate financers play a critical role. However, there are challenges associated with accessing international climate finance for climate adaptation. One of the key challenges is related to the institutional and structural capacity to develop and operate climate adaptation projects to meet the needs of international public climate finance institutions.
On one side there is a lack of skill and capacity to prioritize the right climate adaptation project, identification of suitable project sites and technologies, feasibility studies, public bidding process, and preparing financial proposals meeting the condition of international public climate financers. On another side, there is limited capacity for the operation and maintenance of projects. Hence, there is a need for capacity development programs to develop a project pipeline serving the needs of the countries and conditions of international public climate finance institutions.
In this context, Commonwealth Climate Finance Access Hub (CCFAH) and Coalition for Disaster Resilience Infrastructure (CDRI) will organize a side event to discuss the climate adaptation development and financing issues in small and vulnerable countries and identify the key issues for an action-oriented work plan to address these challenges. The event will bring senior level Government officials and Commonwealth Climate Finance Advisors who can share their experience in the development of climate adaptation projects. CCFAH and CDRI will come out with a slew of interventions to develop climate adaptation projects and accelerate financing to the same in these countries.