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Africa/Global: Falling Short on Climate Finance

AfricaFocus Bulletin
March 10, 2015 (150310)
(Reposted from sources cited below)

Editor's Note

Africa, the continent with warming deviating most rapidly from "normal" conditions, could see climate change adaptation costs rise to US$50 billion per year by 2050, even assuming international efforts keep global warming below 2 degrees C this century, according to a new United Nations Environment Programme (UNEP) report.

This AfricaFocus Bulletin contains the press release and excerpts from the Executive Summary of the new UNEP report Africa's Adaptation Gap 2: Bridging the Gap - mobilizing sources.

The report contains updated data on the expected cost of adapting to climate change under different scenarios for global warming, for the time horizons of 2020, 2050, and 2100. Key messages include the fact that Africa is already the continent where climate is already deviating from normal more rapidly than any other continent.

Projections for impact rise enormously even if global warming is held to less than 2 degrees C, and even more so if efforts to slow global warming are insufficient to make that goal. This means that the most important action to be taken is to limit the damage by "deep global emission reductions." Even if this is done, the costs of adaptation will rise rapidly, requiring action to find new sources of funding at national, continental, and global levels.

The report suggests a continent-wide levy (transaction tax) on four sectors: extractive industries, financial and banking transactions, international trade, and tourism. It also highlights the imperative for national tax systems to be made more effective, including minimizing reductions in the tax base from illicit financial flows.

For additional background on the current gap in international climate finance, see the Feb. 26 article by Brookings Instution analysts Martin Stadelmann and Timmons Roberts. They note that the UN has issued a "clarification note" admitting that their estimate of current levels of annual total North-South climate financing of $40-175 billion is almost certainly closer to the lower than the upper end of that range. See http://tinyurl.com/m9zo2pz

For talking points and previous AfricaFocus Bulletins on climate change and the environment, visit http://www.africafocus.org/envexp.php

Of related interest:
March 9 Guardian article by Bill McKibben
http://tinyurl.com/p2qg3we
"Pressure is growing. A relentless climate movement is starting to win big, unprecedented victories around the world, victories which are quickly reshaping the consensus view."

++++++++++++++++++++++end editor's note+++++++++++++++++

Costs of Climate Change Adaptation Expected to Rise Far Beyond Africa's Coping Capacity Even if Warming Kept Below 2 degrees C

Climate adaptation costs for Africa could soar to reach US $50 billion annually by mid-century.

United Nations Environment Programme

http://tinyurl.com/kb3llqg

Cairo, 4 March 2015 - Africa, the continent with warming deviating most rapidly from "normal" conditions, could see climate change adaptation costs rise to US$50 billion per year by 2050, even assuming international efforts keep global warming below 2 degrees C this century, according to a new United Nations Environment Programme (UNEP) report.

Released at the 15th African Ministerial Conference on the Environment (AMCEN), Africa's Adaptation Gap builds on UNEP's Emissions Gap Report 2014, which showed that the world is not currently headed in the right direction for holding global warming below 2 degrees C. This latest Africa Adaptation Gap report also builds on UNEP's Global Adaptation Gap Report 2014, which found that adaptation costs in all developing countries together could climb as high as US$250-500 billion per year by 2050.

Produced in collaboration with Climate Analytics and the African Climate Finance Hub, the report says deep global emissions reductions are the best way to head off Africa's crippling adaptation costs. It also finds that the continent's domestic resources are insufficient to respond to projected impacts, but would be important to complement international funding for African countries - including meeting the Cancun climate finance commitments by 2020.

"The accelerating rate of climate change poses great adaptation challenges, of which we have been well forewarned," said UN UnderSecretary -General and UNEP Executive Director Achim Steiner. "The best insurance against the many potential negative impacts of climate change is ambitious global mitigation action in the longrun, combined with large-scale and rapidly increasing funding for adaptation. Investing in resilience and adaptation as an integral part of national development planning can develop resilience to future climate change impacts."

Africa's looming climate crisis

Africa is the continent where a rapidly changing climate is expected to deviate earlier than across any other continent from "normal" changes, making adaptation a matter of urgency, the report says.

Warming projections under medium scenarios indicate that extensive areas of Africa will exceed 2 degrees C by the last two decades of this century relative to the late 20th century mean annual temperature. Under a high warming pathway, temperatures could exceed 2 degrees C by mid-century across much of Africa and reach between 3 degrees C and 6 degrees C by the end of the century. This would have a severe impact on agricultural production, food security, human health and water availability.

In a 4 degrees C world, projections for Africa suggest sea levels could rise faster than the global average and reach 80cm above current levels by 2100 along the Indian and Atlantic Ocean coastlines, with particularly high numbers of people at risk to flooding in the coastal cities of Mozambique, Tanzania, Cameroon, Egypt, Senegal and Morocco.

"This is not just a question of money; millions of people and their livelihoods are at stake," said Binilith Mahenge, President of AMCEN and Tanzania's Minister of State for Environment. "Africa's population will be at an increasing risk of undernourishment due to increasing food demand and the detrimental effects of climate change on agriculture on the continent. Global warming of 2 degrees C would put over 50 per cent of the African continent's population at risk of undernourishment. Yet, the IPCC showed that without additional mitigation we are heading to 4 degrees C of warming."

"Rising to the challenge and addressing the systemic harm that climate change may cause in Africa, thus undermining the post-2015 sustainable development agenda, warrants leaving no stone unturned in exploring opportunities for supporting adaptation actions and measures in Africa," he added.

Closing the funding gap

The report explores the extent to which African nations can contribute to closing the adaptation gap - especially in the area of identifying the resources that will be needed.

The evidence suggests that African countries - such as Ghana, Ethiopia and South Africa - are already committing some resources of their own to adaptation efforts. Country-case studies in the report suggest that by 2029/2030, under moderately optimistic growth scenarios, Ghana could for example - based on hypothetical scenarios - commit US$233 million to adaptation financing, Ethiopia US$248 million, South Africa US$961 million and Togo US$18.2 million. However, international funding will be required to bridge the growing adaptation gap even if African nations commit to ways to increase domestic sources. Current levels of international finance, through bilateral and multilateral sources, are not sufficient.

"Because of the magnitude of the challenge, further examination of the potential and the feasibility of mobilizing untapped international, regional and domestic sources should be explored further," said Mr Steiner.

Scaling up international climate finance under the UN Framework Convention on Climate Change (UNFCCC) may lead to sufficient funding for adaptation, but even in that case, implementation can only reach its full potential if complemented by comprehensive and effective national and regional policy planning, capacity-building and governance.

The promotion of an effective enabling framework for private sector participation in adaptation activities would also be a key contributor to closing the funding gap, the report finds.

For more information please contact: Michael Logan, News and Media Officer, UNEP, michael.logan@unep.org, +254 725 939 620


Africa's Adaptation Gap 2

Technical Report: Bridging the Gap - Mobilising Sources

Executive Summary

Climate change represents a clear and present danger to the development prospects of Africa. African countries are going to have to adapt to protect their peoples from the harsh impacts of climate change and to ensure that they are not derailed from their current development pathways.

Developed country Parties to the Climate Convention committed to "assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects." (UNFCCC Articles 4.3 and 4.4)

The first edition of Africa's Adaptation Gap Technical report (AAGr1) in 2013 provided an overview of the most relevant impacts of climate change in different sectors across Africa, as well as cost estimates for adaptation.

This report (2015 AAGr2) is directed towards exploring the extent to which African countries can contribute to closing the adaptation gap, in order to better understand the gap in the resources that will be needed and, thereby, the likely extent to which international climate finance must be urgently raised, leveraged and deployed in service of Africa's pressing adaptation needs.

Given the increasing severity of the adaptation challenge posed by climate change to Africa, no stone should be left unturned in looking for solutions for closing the adaptation gap, for two major reasons: firstly, the case for international solutions is even stronger if national and regional options are considered and evaluated; secondly, it is in the interest of African nations and their stakeholders at all levels to hedge against the possibility that the funding provided through the Green Climate Fund and other channels is insufficient or ineffective.

Building on the report's findings, and relating to the current negotiations towards the post-2015 agreement context under the UNFCCC, African policymakers may consider the three following findings:

  1. The best insurance against potentially catastrophic impacts of climate change and unmanageable adaptation and (residual) damage costs in Africa is effective and ambitious mitigation action that leads to deep global emission reductions;
  2. Cancun climate finance commitments need to be met by 2020, the historical imbalance between adaptation and mitigation in the allocation of resources needs to be corrected, and ease of access ('modalities') for African countries needs to be improved. Adequate (large-scale, rapidly increasing) and predictable funding must be mobilised for the subsequent periods;
  3. The potential for - and the feasibility of - mobilising untapped international, regional and domestic sources should be explored further.

An update on climate impacts shows increased urgency

  • Africa is beginning to experience annual-mean temperatures higher than any locally experienced in history. This is already happening in Central Africa and is projected to cover the entire continent in the next two to three decades; earlier across Africa than any other continent.
  • Warming projections under medium scenarios indicate that, by the last two decades of this century, extensive areas of Africa will exceed 2 degrees C relative to the late 20th century mean annual temperature. Under a high warming pathway ("over 4 degrees C world"), that exceedance could occur by mid-century across much of Africa and reach between 3 degrees C and 6 degrees C by the end of the century.
  • Combined with changes in water availability, for example, this will likely have a severe impact on agriculture. 97% of sub- Saharan agricultural systems are rain-fed, and 60% of the labour force relies on agriculture.
  • Sea level rise is generally higher along Africa's coastlines than the global average, particularly along the Indian and Atlantic Oceans. Sea levels are projected to rise at least 40cm above 2000 by 2100 in a below-2 degrees C scenario (close to 1.5 degrees C), and to 80cm in an over 4-degrees C scenario (compared to roughly 70cm globally). There are chances it could be much worse, with a 15% chance of 100cm sea-level rise above 2000 by 2100 and a considerable 5% chance of a rise exceeding 130 cm by 2100.
  • Particularly high numbers of people are at risk of flooding in the coastal cities of Mozambique, Tanzania, Cameroon, Egypt, Senegal and Morocco.

Estimated adaptation costs point to a very rapid divergence between globally low and high warming scenarios

  • The first Africa's adaptation gap report (2013) stressed already that past (global) emissions commit Africa to adaptation costs of USD 7-15 billion/year by 2020.
  • This second report estimates that adaptation costs could rise to about USD50bn/year 2 by 2050 for a scenario holding warming below 2 degrees C.
  • The estimated costs double to about USD100bn/year by 2050 for a scenario reaching over 4 degrees C by 2100.
  • In the longer term, and relative to Africa's (growing) GDP, adaptation costs could rise to as much as 6% of African GDP by 2100 in an over 4 °C world, but in a below 2 °C world, these would be less than 1% of GDP.

Adaptation cannot prevent all damages: residual damages will always remain and are large

  • In a more general sense, the IPCC's recent Fifth Assessment Report (AR5) noted that even after implementation of potential adaptation options, residual risks remain for many sectors in Africa.
  • This, second Africa Adaptation Gap report confirms this in a more specific sense: even if all cost-effective adaptation is realised, Africa will still suffer large "residual" damages, which are estimated to be double the adaptation costs in the period 2030-2050.
  • Africa and the international community will need to find ways to cope with these residual damages, under any scenario of global mitigation and local adaptation efforts. Current international funding falls short and must be scaled up rapidly
  • The climate change challenge exceeds the capacity of the African continent to respond to projected damages and impacts through domestic resources, even if the base to raise additional funding is broadened. Scaled-up international support for African countries is therefore critical.
  • Current levels of international funding are not sufficient. So far, while difficult to estimate, roughly USD$1-2bn a year is flowing to Africa for adaptation, through a variety of sources.
  • A steep increase in adaptation funding from developed to developing countries would contribute significantly to closing the adaptation-funding gap. Therefore, increased adaptation funding disbursements – in line with the USD100-billion target as agreed by the Parties at the UNFCCC conferences in Copenhagen in 2009 and Cancun in 2010 - could result in bridging the deepening adaptation gap by 2020.
  • Such disbursements subsequently need to continue to grow rapidly to keep pace with warming, and most rapidly if global mitigation fails to put the world on a pathway to hold warming below 1.5 and 2 degrees C by 2100.
  • Recent positive developments in the operationalisation of the Green Climate Fund are of critical importance for adaptation financing in Africa. The GCF initial capitalisation was completed in December 2014, with pledges amounting to around USD10.2bn. The GCF Board has decided that 50% of its portfolio should be allocated to adaptation and, in turn, that 50% should go to particularly vulnerable developing countries including Least Developed Countries (LDCs), Small Island Developing States (SIDS) and Africa.

The report's approach: African case studies on adaptation

This report has taken the approach of exploring the additional options and opportunities that may exist in Africa through four country case studies – representing a reasonably diverse sample of the great variety of countries and economies to be found within Africa (Ethiopia, Ghana, South Africa and Togo).

  • Each of these case studies explores aspects of the adaptation response and, in particular, the scope for domestic adaptation financing, in terms of the increased domestic adaptation resources that could be generated through economic growth and tax reform, through adaptation-specific taxes and fees, and through regulation and market-making aimed at eliciting greater private investment.
  • The conceptually-simple calculations this report presents are primarily intended to be illustrative of the limits and potential for adaptation financing from domestic sources in a context where strong growth is assumed and tax reforms are successfully achieved.
  • The evidence suggests that African countries are already committing some resources of their own to adaptation efforts and that there are opportunities for doing more that can be considered and debated across the continent, with lessons to learn and share.

Options for sources of adaptation funds – international, national, continental

As the report shows, there are a lot of adaptation options, measures and sources that countries can mobilise and implement from the national level to the international level to limit the deepening of the adaptation gap under any level of global mitigation. The report assesses:

  • Options at the international level – scaling up countries' commitments and channelling through the Green Climate Fund and other channels
  • Options at the national level – resources from national budget
  • Options at the continental level – levies

...

To address the multiple challenges of adaptation in Africa, there will be no single solution that solves all the funding and implementation issues African countries face. Addressing these challenges will require the deployment of measures at the international, continental and national levels.

A levy on transactions to pay for adaptation?

This report assesses, amongst other complementary options, the potential effects of a levy applied on transactions.

Building upon similar international experiences in both developed and developing countries, and political as well as economic analyses, a levy on transactions in Africa is explored in four sectors: extractive industries, financial and banking transactions (including remittances), international trade and transportation (including exports) and tourism. The estimated revenue shows that even if such regional revenues were generated by the application of these levies, however, adaptation costs would exceed the revenue generation capacity as early as 2020.

Current and projected adaptation costs for Africa far exceed average climate finance over the 2010-2012 period. Addressing this urgent lack of funding will require the deployment of complementary measures at the international, continental and national levels. Even if for example a levy were regionally applied on transactions to raise revenue for adaptation costs which would already exceed the revenue generation capacity by 2020. Only a steep increase in adaptation funding from developed to developing countries will contribute to closing the adaptation-funding gap in Africa.

...


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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