Why we need to ramp up climate finance

As finance ministers from 20 developing states agreed to work on boosting funding for climate action, officials and experts called for more finance to protect the world’s poor from the effects of global warming.

Meeting for the first time in Lima, Peru, ministers from the Vulnerable Twenty (V20) group of countries – spanning Africa, Latin America and Asia-Pacific – said they expected rich governments to fulfill a pledge to mobilise $100 billion annually by 2020 from a range of sources, to help developing nations tackle global warming.

A study issued by the Organisation for Economic Co-operation and Development (OECD) and the Climate Policy Initiative showed donors are almost two-thirds of the way towards that goal, fixed in 2009, having spurred $61.8 billion in public and private climate finance in 2014.

“The world needs stronger voices from developing countries to draw more attention to their great needs for investment in fighting the impacts from climate change,” World Bank Group President Jim Yong Kim said in a statement on the V20 meeting.

“This new group of 20 countries, led by the Philippines, will play an important role in pushing for greater investment in climate resiliency and low-carbon growth at home and internationally.”

Aid experts said this week’s climate funding estimates highlighted a lack of money to help poor communities cope with worsening extreme weather and rising seas as the planet warms.

Just 16 percent of $114 billion in climate finance for developing nations over 2013 and 2014 was allocated purely for adaptation measures, with 7 percent more going to projects that support both adaptation and mitigation efforts to cut emissions.

An alliance of small island states and a group of 112 civil society organisations noted that only donor countries had been involved in deciding what should count towards the $100 billion.

Other experts said some development aid that was not tightly targeted at climate change adaptation had been included.

The V20 ministers called for “a rapid acceleration of progress” towards an equal balance of resources spent on adaptation and mitigation.

“In the absence of an effective global response, annual economic losses due to climate change are projected to exceed $400 billion by 2030 for the V20, with impacts far surpassing our local or regional capabilities,” said Philippines Finance Minister Cesar Purisima.

A senior U.S. administration official said this week that Washington recognised the importance of doing more to support adaptation and had been making policy changes to speed that up.

The fledgling Green Climate Fund, a global financing vehicle set up under U.N. climate talks, was aiming to spend half its resources on adaptation as it ramps up, the official noted.

“That will help drive public and private sectors to more focus on adaptation. There is reason to believe that number will go up,” the official said.

MILLIONS EXPOSED

OECD officials emphasised that their new estimate of the amount of private money mobilised by public investment was partial and preliminary, and the level of private financing for adaptation could be higher than they had identified.

But Tim Gore, head of climate change and food policy with Oxfam International, said although it was good business for companies to protect supply chains and staff from climate threats, they had little incentive to invest in helping the poorest cope, underlining the urgent need for more public money.

Oxfam is calling for a new global deal to curb climate change – due to be agreed in Paris in December and take effect from 2020 – to include a firm commitment on financing for adaptation.

The text of a new, slimmed-down draft agreement released this week says only that countries should “strive to balance” support for adaptation and mitigation.

“We have to have a specific agreement in Paris that gets money to the poorest countries to adapt to climate change,” Gore said.

The V20 countries – representing close to 700 million people – also vowed to make their own efforts to increase resources for tackling climate change.

They agreed to establish a sovereign climate risk pooling mechanism that would enable their economies to recover better from climate-linked disasters by increasing access to affordable insurance and encouraging adaptation measures.

They also backed the creation of an international financial transaction tax to raise extra cash to fight climate change.

“Financial constraints put up serious barriers for climate action and expose millions to disaster and hardship,” said Helen Clark, administrator of the U.N. Development Programme.

“We believe the V20’s vision to deploy innovation in finance, based on shared experiences, has great potential to knock down such barriers.”

This article is published in collaboration with Trust.org (Thompson Reuters Foundation). Publication does not imply endorsement of views by the World Economic Forum.

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Author: Megan Rowling covers aid and climate change issues, with a focus on social, economic and environmental justice

Image: A boy catches fish in a dried-up pond near the banks of the Ganges river. REUTERS/Jitendra Prakash.