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 donor governments. 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 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. Presently a second commitment period between 2013 and 2020 of the Kyoto Protocol, under which the AF falls, has been agreed however the future of the fund is under review with a report expected in 2014.
Administrating Organisation The World Bank is the Trustee of the Adaptation Fund on an interim basis.
Objectives The AF aims to support concrete adaptation activities that reduce the adverse effects of climate change facing communities, countries, and sectors.
Activities Supported Activities supported 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.
Conditions and Eligibility Requirements In the first instance, developing countries must be Parties to the Kyoto Protocol and 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.

Country allocation also 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.

Those LDCs that are unable to access the Least Developed Countries Fund (LDCF) will also be given priority to AF funds.
Accessing the Fund Accreditation process:

  • Step 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.
  • Step 2: The Accreditation Panel reviews and assesses the application based on fiduciary standards
  • Step 3: The panel can request additional information/clarification from the organisation, including requesting that the organisation receive technical assistance to improve its capacity.
  • Step 4: The panel makes recommendation to the AF Board.
  • Step 5: AF Board announces their final decision on accreditation of entity.

The fund has a 50% funding cap for MIEs to encourage NIE applications. There is a US$10 million funding cap per country.

Fund Governance

Decision The AF is governed by the:
Making Structure
  • Adaptation Fund Board;
  • Accreditation Panel;
  • Secretariat;
  • TrusteeAdaptation Fund Board
    The Adaptation Fund Board 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.Board Composition:
    (a) Two representatives from each of the five United Nations regional groups;
    (b) One representative from Small Island Developing States;
    (c) One representative from the Least Developed Country Parties;
    (d) Two other representatives from Annex I Parties;
    (e) Two representatives non-Annex I Parties.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.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.Secretariat
    The GEF provides Secretariat research, advisory and administrative services on an interim basis to the Board.Trustee
    The World Bank serves as the interim trustee of the Adaptation Fund. 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 fund.

    Observers
    A group of observers is composed by UNFCCC Parties, NGOs and other Civil Society Organisations and International Organisations.
Non-Government Stakeholder Participation The level of consultation with civil society prior to the establishment of the fund is not known. In January 2011, the Adaptation Fund Board secretariat gave the opportunity to civil society representatives and other interested stakeholders to comment on five project proposals.

Since the 16th Adaptation Fund Board meeting in 2011, the fund has included civil society dialogue sessions at all Board meetings.
Information Disclosure Contributions are reported in the “Financial Status of the Adaptation Fund Trust Fund” or stated in meeting reports presented by the Adaptation Fund Board. A full list of projects is available on the Adaptation Fund website.
Issues Raised As of March 2016, the following Implementing Entities are accredited to the fund:

  • 23 National Implementing Entities (NIE)
  •  6  Regional Implementing Entity (RIE)
  • 12 Multilateral Implementing Entities (MIE)

Relationship with Official Development Assistance

Inclusion as Official Development Assistance The Fund is not wholly dependent on contributions of funding from developed countries, as it is primarily capitalised through a 2% levy on certified emission. Reductions from the Clean Development Mechanism (CDM).
Financial Instrument/ Delivery Mechanism Used (e.g. grant, loan)  Grants
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 should ensure that projects are driven by country needs and priorities. As of March 2016, 23 NIEs have been approved by the AF Board (see https://www.adaptation-fund.org/national-implementing-entities)Twelve Multilateral Implementing Entities (MIEs) have been approved: International Fund for Agricultural Development (IFAD), the Asian Development Bank (ADB), the United Nations Development Program (UNDP), the United Nations Environment Program (UNEP), the World Food Program (WFP), the World Meteorological Organisation (WMO), the United Nations Educational Scientific and Cultural Organisation (UNESCO), the World Bank (International Bank for Reconstruction and Development), the Inter-American Development Bank (IDB), the European Bank for Reconstruction and Development (EBRD), UN Habitat and the African Development Bank (AfDB) (See https://www.adaptation-fund.org/multilateral-implementing-entities).

The fund provides South-South Cooperation Grants to support experienced NIEs to assist other countries working to achieve accreditation.