FEATURE: Assessing climate finance opportunities in the wake of the pandemic
Ritu Thakur of CDKN Asia considers how climate finance is flowing and could flow to create more resilient ways of life.
We are living in challenging times. The coronavirus pandemic has pushed our world into uncertainty. The pandemic is unprecedented and has affected every aspect of human lives, disrupted operations and services at every level of government and left countries struggling with its grim realities.
We can clearly see how the current global health crisis has unveiled the deep vulnerabilities and unpreparedness of urban system,s healthcare and economy to absorb sudden shocks. The poor resilience capacity of urban systems has amplified the impact of the pandemic and made the production and distribution of communities more vulnerable.
Resilience is quite often related to infrastructure and readiness for climate impacts such as storms and flooding. However, we tend to ignore the fact that resilience is also about minimising systemic vulnerabilities and inequities, many of which have been highlighted during the pandemic.
According to UN Environment, in developing countries alone, adapting to climate change will require US$280 billion to US$500 billion per year by 2050. Also, the Global Commission on Adaptation finds that investing US$1.8 trillion globally in priority areas from 2020-2030 could generate US$7.1 trillion in total net benefits, while also minimising the negative impacts of natural disasters – which could apply to the current pandemic. However, current estimates show that approximately US$30 billion was made available in 2017-2018–indicating a huge gap in the funds required for mobilising climate adaptation actions.
Most of the dedicated climate funds, such as the Green Climate Fund (US$10 billion), the Climate Investment Funds (US$8 billion), the Adaptation Fund (US$0.75 billion), the Global Environment Facility (US$4 billion) and the Least Developed Countries Fund (LDCF) (US$1.6 billion) among others, can also be tapped for building the resilience of the urban system so that cities are more ready to deal with both climate-related impacts and pandemics. On the request of government agencies to better understand the climate finance trends and available avenues for resilient development, ICLEI South Asia through the Climate Development Knowledge Network (CDKN) is assessing various climate finance instruments available to South Asian countries, particularly, India, Bangladesh and Nepal and will be coming out with a finance compendium soon.
Considering the urgency of the existing situation, bilaterals and multilaterals are setting up emergency funds to assist developing countries get better prepared for disease outbreaks. For example, World Bank Group is planning to establish a new Health Emergency Preparedness and Response Multi-Donor Fund (HEPRF), amounting to US$160 billion over the next 15 months. This new fund will help countries respond to the immediate health consequences of the pandemic and bolster economic recovery. The Asian Development Bank (ADB) in response to COVID-19 has approved US$20 billion. Rapid access to finance is key to a successful response to a disaster – whether pandemic or climate related. Governments can access a variety of funds to help them mitigate disaster response, like national disaster funds, contingent credit lines (fast-disbursing loans) among others.
All the synchronised actions across the world will eventually help to overcome the current pandemic crisis. However, the lessons learned from existing gaps and unpreparedness need to be addressed to minimise the impacts of similar future events. In the above context of the raging pandemic and intensifying climate change related events and disasters, there is a pressing need for countries to adopt climate-compatible and resilient development pathways. Recently, the World Bank announced US$50 billion over five years for climate adaptation and resilience and will also pilot new approaches to increase private finance for adaptation and resilience.
I believe that this crisis could be used an opportunity to rebuild the global economy in a more equitable and greener way. This is, therefore, a call for climate finances to support more resilient initiatives and so potentially to prepare societies for future crises.
 The Global Commission on Adaptation Report finds that investing in climate change adaptation and resilience yields triple dividends: ‘Adaptation actions bring multiple benefits called the triple dividend. The first dividend is avoided losses, that is, the ability of the investment to reduce future losses. The second is positive economic benefits through reducing risk, increasing productivity, and driving innovation through the need for adaptation; the third is social and environmental benefits.’
Image: climate-smart village, India, credit CCAFS.