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Adaptation Fund

Adaptation Fund

Summary

The Adaptation Fund is a financial instrument under the UNFCCC and its Kyoto Protocol (KP) and has been established to finance concrete adaptation projects and programmes in developing country Parties to the KP, in an effort to reduce the adverse effects of climate change facing communities, countries and sectors. The Fund is financed with a share of proceeds from Clean Development Mechanism (CDM) project activities as well as through voluntary pledges of contributing governments as well as non-governmental or individual contributors. The share of proceeds from the CDM amounts to 2% of Certified Emission Reductions (CERs) issued for a CDM project activity.

Basic Description

Name of the Fund Adaptation Fund (AF)
Official Fund Website www.adaptation-fund.org
Date Created
Date fund proposed: 2001

Date fund made operational: 2009
Proposed Life of Fund Indefinite.
Objectives The AF aims to increase resilience through concrete adaptation projects and programmes that reduce the adverse effects of climate change facing communities, countries, and sectors.
Financial inputs and fund size As of November 2020, the Fund’s total financial contributions received over time amount to approximately US$ 1.05 billion.
The contributors are: Austria, Belgium, Canada, the European Commission, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, Monaco, New Zealand, Norway, Poland, Spain, Sweden, Switzerland, United Kingdom, United Nations Foundation.
Further details on the financial contributions to the Adaptation Fund are available at: https://fiftrustee.worldbank.org/en/about/unit/dfi/fiftrustee/fund-detail/adapt.

The financial inputs are not fully ODA. In fact, the Fund is not wholly dependent on contributions of funding from developed countries, as it is also capitalised through a 2% levy on certified emission reductions from the Clean Development Mechanism (CDM); this finance can be considered new and additional to ODA.
Activities Supported The Adaptation Fund programmes primarily cover food security, agriculture, water management, and disaster risk reduction.
Activities supported by the Fund include:

  • Water resources management, land management, agriculture, health, infrastructure development, fragile ecosystems;
  • Improving the monitoring of diseases and vectors affected by climate change, and related forecasting and early-warning systems, and in this context improving disease control and prevention;
  • Supporting capacity building, including institutional capacity, for preventive measures, planning, preparedness and management of disasters relating to climate change;
  • Strengthening existing and, where needed, establishing national and regional centres and information networks for rapid response to extreme weather events, utilising information technology as much as possible.

Administrating Organization

Secretariat or Administrative Unit The Adaptation Fund is managed by the Adaptation Fund Board Secretariat, which provides research, advisory, administrative, and an array of other services to the Board. The Secretariat is based in Washington, D.C. and is comprised of a staff of 15-20 professionals. The list of current staff is available at:
Trustee The World Bank is the Trustee of the Adaptation Fund on an interim basis. On behalf of the Fund, the World Bank performs two core functions. It sells the Certified Emission Reduction certificates that support the fund and manages the Adaptation Fund Trust Tund.

Fund Finance and Access Modalities

Conditions and Eligibility Requirements Developing countries that are Parties to the Kyoto Protocol. The full list is available at:
https://unfccc.int/process/parties

In addition, these countries must be particularly vulnerable to the adverse effects of climate change. This includes: low-lying coastal and other small island countries, and countries with fragile mountainous ecosystems, arid and semi-arid areas, and areas susceptible to floods, drought and desertification.
Accessing the Fund
Access Modalities – The Adaptation Fund allows international access through multilateral implementing entities (MIE) and pioneered “fully operational direct access to climate financing” through national implementing entities (NIE) and regional implementing entities (RIE). Once accredited, NIE and RIE are allowed direct access financing and manage all aspects of climate adaptation and resilience projects. In international access, countries access AF financing going through an international intermediary organisation.
Financial Instruments – Grants
Accreditation process – Accreditation is valid for a five year period with the possibility for renewal through re-accreditation.

  1. Organisations with access to funding for Adaptation Fund projects are national implementing entities (NIE), regional implementing entities (RIE), or multilateral implementing entities (MIE). Any organisation that wishes to implement Adaptation Fund projects must submit an application for accreditation providing documentation indicating that it meets the fiduciary standards adopted by the Board.
  2. The Accreditation Panel reviews and assesses the application based on fiduciary standards.
  3. The panel can request additional information/clarification from the organisation, including requesting that the organisation receive technical assistance to improve its capacity.
  4. The panel makes recommendation to the AF Board.
  5. AF Board announces their final decision on accreditation of entity.
  6. One year prior to the expiry of the five year accreditation period, the entity, if so desired, needs to reapply for accreditation. Steps 2-5 then repeat for re-accreditation.
Overview of implementing entities – To have direct access to the Fund, entities need to be accredited as an implementing entity. Accredited implementing entities can be multilateral (under international access) or national and regional (under direct access). The vast majority of the implementing entities of the Fund, which pioneered direct access, are direct access entities.
The following Implementing Entities are accredited to the fund (as of November 2020):

  • 32 National Implementing Entities (NIE)
  • 6 Regional Implementing Entity (RIE)
  • 13 Multilateral Implementing Entities (MIE)

The list of actual implementing entities is available at: https://www.adaptation-fund.org/apply-funding/implementing-entities/national-implementing-entity/
Nature of recipient country involvement – At the 7th Adaptation Fund Board meeting in September 2009, the board operationalised the Direct Access Modality, which allows recipient countries to have direct access to its funds through National Implementing Entities (NIE). This approach ensures that projects are driven by country needs and priorities. In addition, “Designated Authorities” are government officials who “act as points of contact for the Adaptation Fund. On behalf of their national governments, the designated authorities endorse:

  • The accreditation applications of National or Regional Implementing Entities before they are sent to the fund’s secretariat for assessment; and/or
  • Proposals by National, Regional, or Multilateral Implementing Entities for adaptation projects and programmes in the DA’s country”.

The list of actual Designated Authorities is available at: https://www.adaptation-fund.org/apply-funding/designated-authorities/
Allocation criteria – Country allocation takes into account the Strategic Priorities, Policies and Guidelines of the Adaptation Fund, specifically:

  • Level of vulnerability to climate change;
  • Level of urgency and risks arising from delay of action;
  • Ensuring access to the fund in a balanced and equitable manner;
  • Lessons learned in project and programme design and implementation to be captured;
  • Securing regional co-benefits to the extent possible, where applicable;
  • Potential for maximising multi-sectoral or cross-sectoral benefits;
  • Adaptive capacity to the effects of climate change;
  • Potential for learning lessons in project and programme design and implementation.

Furthermore, the fund has a 50% funding cap for MIEs to encourage applications by direct access entities. There is a US$10 million funding cap per country.
Safeguards, Gender and Indigenous Peoples
Safeguards – The Adaptation Fund has its own formal Environmental and Social Policy. This policy was described in 2017 as “strong, exemplary safeguards to be followed by others” by John H. Knox, United Nations Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment. The Policy sets out mandatory requirement for all projects and programmes supported by the Fund and declares that all implementing entities shall:

  • Have an environmental and social management system that ensures environmental and social risks are identified and assessed at the earliest possible stage of project/programme design,
  • Adopt measures to avoid or where avoidance is impossible to minimize or mitigate those risks during implementation, and
  • Monitor and report on the status of those measures during and at the end of implementation.
Gender – Gender is presented as being a strategic priority for the Adaptation Fund. The Fund has a formal Gender policy and Action Plan with the following objectives:

  • To ensure that the Fund will achieve more effective, sustainable and equitable adaptation outcomes and impacts in a comprehensive manner in both its internal and external procedures;
  • To provide women and men with an equal opportunity to build resilience, address their differentiated vulnerability, and increase their capability to adapt to climate change impacts; recognizing the need for targeted efforts in order to ensure women’s participation;
  • To address and mitigate against assessed potential project/programme risks for women and men in relation to concrete adaptation actions financed by the Fund;
  • To contribute to addressing the knowledge and data gaps on gender-related vulnerabilities and to accelerate learning about effective gender-equal adaptation measures and strategies; and
  • To consult with affected women and men actively, taking into account their experiences capabilities and knowledge throughout Fund processes.

Further details on how gender is incorporated in AF operations can be found at: https://www.adaptation-fund.org/knowledge-learning/knowledge-themes/gender/
Indigenous Peoples – The Adaptation Fund does not have a separate policy for Indigenous Peoples. However, the Environmental and Social Policy intends to ensure that the projects/programmes supported by the Fund address the rights and protection of Indigenous Peoples. The following two principles need to be followed:

  • Projects/programmes shall avoid “imposing any disproportionate adverse impacts on marginalized and vulnerable groups including indigenous people”.
  • The Fund shall not support projects/programmes that are “inconsistent with the rights and responsibilities set forth in the UN Declaration on the Rights of Indigenous Peoples and other applicable international instruments relating to indigenous peoples”.

Fund Governance

Decision Making Structure
In the AF, decisions are taking by the:

  • Adaption Fund Board
  • Accreditation Panel
Adaption Fund Board
The Adaptation Fund Board is the governing body and is established to supervise and manage the Adaptation Fund under the authority and guidance of the Conference of the Parties, serving as the meeting of the Parties to the Kyoto Protocol. It is fully accountable to the Conference of the Parties, which decides its overall policies in line with relevant decisions.
The Adaptation Fund Board meets at least twice a year. The meetings generally take place usually in Bonn, Germany unless the Board decides to convene in conjunction with meetings of the parties to the Kyoto Protocol (CMP) or the subsidiary bodies of the UN Framework Convention on Climate Change.
The Board is composed of 16 members and 16 alternates representing Parties to the Kyoto Protocol. Board members serve for a two-year term, renewable once. The composition is equitable with a majority of members (about 69%) representing developing countries.

  1. Two representatives from each of the five United Nations regional groups;
  2. One representative from Small Island Developing States;
  3. One representative from the Least Developed Country Parties;
  4. Two other representatives from Annex I Parties;
  5. Two representatives non-Annex I Parties;

An alternate is elected for each representative.
Decisions of the Adaptation Fund Board are taken by consensus. If all efforts at reaching a consensus have been exhausted, and no agreement has been reached, decisions are then taken by a two-thirds majority of the members present at the meeting on the basis of one member, one vote.
The list of actual Board Members and Board Alternates is available at: https://www.adaptation-fund.org/about/governance/board/
Accreditation Panel
In order to ensure that organizations receiving Adaptation Fund money meet the fiduciary standards, the Board has established an Accreditation Panel. The Accreditation Panel reviews applications from organisations for receiving and managing Adaptation Fund monies. It consists of three independent experts and two board members, who serve on the panel for two-year terms.
Accountability Mechanisms
Implementing entities have to report to the Adaptation Fund on the progress achieved along the different stages of project implementation. The Methodologies for Reporting Adaptation Fund Core Impact Indicators offers guidance to project proponents on how to define and measure core indicators in order to assess progress at the project level.
In order to fulfil the reporting process requirements, implementing entities need to submit the following reports to the Adaptation Fund Board:

  1. Project/Programme Inception Report,
  2. Project/Programme Performance Report,
  3. Project/Programme Mid-term and Terminal Evaluations,
  4. Audited Financial Statement and
  5. Project Completion Summary.
Independent evaluation
The Technical Evaluation Reference Group of the Adaptation Fund (AF-TERG) is an independent evaluation advisory group accountable to the Board. It aims to ensure the independent implementation of the Fund’s evaluation framework. In addition, it proceeds to independent monitoring, evaluation and learning of the Adaptation Fund’s work. Further information can be accessed here.
Complaints mechanisms
The AF has two complaint mechanisms. At the Fund level, the AF Board has an As Hoc Complaint Handling Mechanism (ACHM) that promotes “accountability to the Fund and help responding to complaints raised against a project or programme financed by the Fund through a participatory approach”. At the Implementing Entities level, the Fund’s risk management framework requires that IEs establish their own grievance mechanism. This mechanism needs to be accessible, transparent, fair and offer an effective process for receiving and addressing people’ complaints about environmental or social harms caused by any such project/programme.
Participation of Observers and Stakeholders The level of consultation with civil society prior to the establishment of the Fund is not known.
Meetings of the AF are open to a group of observers composed by UNFCCC Parties, NGOs and other Civil Society Organisations and International Organisations. To be able to participate to in AF Board Meetings, observers need to

  1. be part of UNFCCC observers organizations and
  2. complete an on-line registration prior to the meeting.

Since the 16th Adaptation Fund Board meeting in 2011, the fund has included civil society dialogue sessions at all Board meetings. However, civil society observers do not have the option to intervene directly in AF Board Meetings.
Transparency and Information Disclosure The AF’s Open Information Policy details the Fund’s overall approach to information disclosure.
Contributions and Pledges are reported in the “Financial Status of the Adaptation Fund Trust Fund” or stated in meeting reports presented by the Adaptation Fund Board. These documents as well as other issues discussed by the Board and its two committees are available under the “Documents and Publications” tab of the official website.
Details about individual funded projects and access to project documents can be found at: https://www.adaptation-fund.org/projects-programmes/
Other Issues Raised