Financing climate adaptation with a credit mechanism: initial considerations

Abstract

Climate mitigation credits have mobilized considerable resources for projects in developing countries, but similar funding to adapt to climate change has yet to emerge. The Copenhagen Accord targets up to US$50 billion per year in adaptation funding, but commitments to date have been trivial compared to what is needed. Although there are some studies and suggestions, it remains unclear where the money will come from and how it will be disbursed. Beyond this, many development experts believe that the main hurdle in climate adaptation is effective implementation. A framework, based on the polluter pays principle, is presented here regarding the mobilization of resources for adaptation in developing countries using market mechanisms. It is assumed that mitigation and adaptation are at least partly fungible in terms of long-term global societal costs and benefits, and that quantifying climate vulnerability reductions is possible at least sometimes. The scheme's benefits include significant, equitable and flexible capital flows, and improved and more efficient resource allocation and verification procedures that incentivize sustained project management. Challenges include overcoming political resistance to historical responsibility-based obligations and scepticism of market instruments, and, critically, quantifying climate impact costs and verifying investments for vulnerability reduction credits.Les crédits liés à la mitigation climatique ont mobilisé des ressources considérables pour les projets dans les pays en développement, mais un financement similaire pour l'adaptation liée au changement climatique reste encore à se matérialiser. L'Accord de Copenhague cible jusqu'à US$50 milliards par an de financement pour l'adaptation, mais les engagements à ce jour ont été insignifiants comparés à l'effort requis. Alors que des études et suggestions ont été avancées, la source des fonds et la manière dont ils seront alloués reste incertaines. En outre, plusieurs experts sur le développement pensent que l'obstacle principal à l'adaptation liée au climat concerne la mise en vigueur. Un cadre basé sur le principe du pollueur-payeur est présenté pour la mobilisation de ressources sur la base des mécanismes de marché pour l'adaptation dans les pays en développement. Il est supposé que la mitigation et l'adaptation sont au moins partiellement fongibles en termes de coûts et bénéfices sociétaux planétaires à long terme et qu'une quantification de la diminution de la vulnérabilité au changement climatique est au moins parfois possible. Les bénéfices du système comprennent: flux de capitaux considérables, équitables, et flexibles; une allocation des ressources meilleure et plus efficace et des processus de vérification qui favorisent une gestion soutenue des projets. Les défis incluent: surmonter la résistance politique aux obligations liées à la responsabilité historique et le scepticisme vis-à-vis des instruments de marché, et, de prime importance, la quantification des coûts liés aux impacts climatiques et la vérification des inv...

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