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Adaptation Finance 'Must-Haves', Africa's Climate Costs, a New Climate Super Computer, and More

World Meteorological Organization says countries in Africa are losing 2-5% of GDP annually from climate damages

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Adaptation ‘Must-Haves’ in the New Climate Finance Goal

The long march to COP29 may be winding down, but the chatter over a New Collective Quantified Goal (NCQG) for climate finance is only ramping up.

The Stockholm Environment Institute (SEI), an international nonprofit, has waded into the debate on what the NCQG should look like with a report outlining certain “must-haves” for adaptation finance. It comes ahead of crunch talks on the new finance target scheduled for September 11-12 in Baku, Azerbaijan.

The report’s key recommendation is the inclusion of “a specific annual sub-goal or target” for adaptation that represents half of the total quantum of the overall goal. For example, if countries settled on a US$1trn per year goal, US$500bn should be earmarked for adaptation. Moreover, the SEI says the adaptation sub-goal should have a floor of US$215bn a year.

Other “must-haves” include a pledge by UN member states that the adaptation sub-goal be periodically revised, preferably every ten years or so, to account for the “unpredictability of global warming and its associated impacts.” On types of financing instruments for adaptation, the SEI adds that public grants and concessional loans should be recognized as “the core form of support.” This is in recognition of the fact that interest-paying financial instruments represent a heavy burden to developing countries that have scant resources to pay them back. 

Notably, the SEI waves off the effectiveness of private finance, arguing that it is not growing “at the rate or scale required to meet adaptation needs, especially in highly vulnerable countries like Small Island Developing States (SIDS).” It’s a rebuke of commercial financial institutions that reflects long-standing concerns that they aren’t ready or willing to pour dollars into climate-proofing activities.

There’s also a recommendation that existing mechanisms for holding countries to account on their climate actions be enhanced. For example, the SEI says that Biennial Transparency Reports should properly collect and publicize data on annual financial support provided and mobilized for adaptation.

SEI’s contribution to the NCQG debate won’t be the last ahead of COP29. But by aggressively setting out a pro-adaptation position, it may help nudge quarreling countries towards embracing the idea of sub-goals. As Climate Proof reported last week, the latest negotiating documents highlight seven competing options on the NCQG, only some of which explicitly carve out adaptation as a priority area. Perhaps this report, and the others that follow, will convince more US member states to embed adaptation targets in the overall goal.

ADB Pledges Half of All Financing to Climate Issues

The Asian Development Bank (ADB) has carefully cultivated its brand as the ‘Climate Bank’ for Asia and the Pacific under the stewardship of president Masatsugu Asakawa.

Now the bank is doubling down on this climate focus with a promise that 50% of its total annual committed financing volume will go toward climate objectives by 2030. This latest goal builds on a promise made in 2021 to deliver at least US$100bn in climate finance by 2030.

The announcement is part of a new roadmap published by the ADB last Friday, which identified climate action as one of five “Strategic Focus Areas” alongside private sector development, regional cooperation and public goods, digital transformation, and resilience and empowerment.

Asian Development Bank Strategy 2030 Midterm Review Snapshot

Key to the climate finance mobilization pledge is the support of the private sector. As part of its new roadmap, the ADB says it will facilitate $13bn of private sector financing by 2030 — a tripling of current volumes. The idea is that by spurring private sector development, economic growth will follow, helping generate the resources needed to buttress the region against climate shocks.

Separately, today (September 9), Masatsugu Asakawa announced his plan to resign from the ADB, effective February 23, 2025. Asakawa has been in office since 2020, and was a key figure in the decision to raise the ADB’s climate finance targets.

The election of a new ADB president will follow “an open, transparent, and merit-based process in accordance with ADB’s Charter,” the bank said.

Other Stuff

Sustainable debt market passes US$5trn milestone en route to record year (Climate Bonds Initiative)

Biden-Harris administration announces US$7.5bn in available financing for water infrastructure projects (US Environmental Protection Agency)

New York fiscal watchdog researching risk, ethics of proposed Climate Superfund (State of Politics)

California IBank invests US$25mn in critical climate solutions, marking first climate catalyst revolving loan fund commitment (CA.gov)

Flood-prone Toronto neighborhood to get CAD$320mn in climate mitigation works (Toronto Star)

India’s taxonomy framework for green financing to be ready in 8-10 months: DEA Secretary Ajay Seth (The New Indian Express)

African Water Facility secures 12mn euros to invest in urban sanitation in Africa (African Development Bank Group)

Without water we cannot survive: How Adaptation Fund project is enhancing resilience on outer islands of the Federated States of Micronesia (SPREP)

Announcing MCJ Fund II $80.6mn to back founders rewriting industries to be cleaner and more profitable (MCJ Newsletter)

Counting the Cost of Climate Risks to Africa

Africa has long borne the brunt of worsening climate impacts. This year alone, flooding and landslides in East Africa have killed over 500 people, decimated local food systems, and accelerated the spread of water-based diseases.

Now, we have research showing just how much climate impacts are dragging on the continent’s economy. Countries in Africa are losing 2-5% of GDP each and every year on average because of climate-related hazards, and having to spend up to 9% of their budgets dealing with their fallout and preparing for future shocks. In the sub-Saharan region, adaptation costs alone are projected to range between US$30-50bn annually over the next decade — equal to 2-3% of GDP.

That’s according to the World Meteorological Organization’s (WMO) latest State of the Climate in Africa report, which sums up the latest intel on extreme climate shocks to the continent and their socioeconomic impacts. The report shows that in 2023 Africa recorded one of the three warmest years on record. It also described a range of “precipitation anomalies” — meaning weird rainfall behaviors — with some regions experiencing above-average rainfall and others dealing with prolonged dry spells. Flood, drought, and heatwave extremes all struck the continent last year, the report adds.

It is important to capitalize on the commitment of the highest African leadership to strengthen early warning systems and climate information services and to take early action to protect lives, livelihoods, and assets and inform long-term decision-making related to climate change risks

H.E. Ambassador Josefa Leonel Correia Sacko, Commissioner for Agriculture, Rural Development, Blue Economy and Sustainable Environment, African Union Commission

On how policymakers should respond to these crippling events and their economic costs, the report urges systematic investment in climate information and early warning systems, which can give communities precious time to prepare for disasters. The WMO says the cost-to-benefit ratio of these investments is one to ten — quite the return.

The report also calls for increased efforts to drive capital toward adaptation and promote financial structures, like debt-for-climate swaps, that can support government climate-proofing projects. Moreover, the WMO recommends that African countries provide a united front in NCQG negotiations and press for at least a doubling of adaptation finance.

Lessons From Europe’s Climate Resilience Dialogue

The European Union is getting hammered by climate impacts, from biblical floods to nightmarish droughts. These are inflicting financial losses that are sapping member states’ resources and crimping economic growth. 

One factor amplifying the pain is the so-called ‘climate protection gap’ — the delta between insured and uninsured losses. In the past, around three-quarters of climate-related damages have gone uninsured, placing the burden of recovery on individuals, businesses, and governments.

It’s a situation that policymakers cannot allow to continue. Hence why the European Commission convened a Climate Resilience Dialogue (CRD) in November 2021 to find ways to close this gap. All sorts were invited to join in — EU mayors, small business interest groups, UN-affiliated bodies, and, of course, representatives of the insurance and financial lobby. In July, their final report was published, which was recently made publicly available.

Many of the conclusions from the CRD are common sense. Some represent Hail Marys. In the former bucket, we can include recommendations like increasing data transparency, so that European countries have access to lists of economic and insured losses caused by climate-related disasters. There are also sensible suggestions on enhancing risk modeling, data gathering, and cross-sector collaborations.

Source: RicAguiar / Getty Images Signature

In the Hail Mary category, the report floats the notion of mandatory insurance — a requirement for everyone (or at least certain vulnerable groups) to insure against certain types of climate risks, or a requirement that insurers provide certain climate risk insurance packages alongside their standard fare. This isn’t a completely outlandish notion. After all, France and Spain already force insurers to provide natural catastrophe, although in these cases there are well-designed, state-based risk pooling mechanisms providing a necessary safety net. There are also ‘out there’ ideas on multi-peril insurance bundling and — this being 2024 — the deployment of AI to better align buyers and sellers of climate risk insurance.

How the effort to close the climate protection gap proceeds now the CRD has wrapped up remains to be seen. Much depends on the make-up and political priorities of the next European Commission. Ursula von der Leyen, heading into her second term as Commission president, has promised to take action on climate adaptation — but she is not likely to get all she wants done given a more right-wing European Parliament and strained public finances across many member states.

Highlands Face Climate Perils

The Scottish Highlands are a region of outstanding natural beauty, and home to a rich array of flora and fauna. They’re also a key engine of the Scottish economy — and one that’s coming under increasing strain as climate hazards start to bite.

Highland Adapts — a partnership set up to help make the region climate-ready — published an assessment of climate change impacts to the Highlands economy last Friday. It makes for sober reading. The report forecasts the region’s GDP could drop by 1.5% a year by 2050, and that much of the economic damage can’t be avoided because of global warming effects that are already locked in. 

Source: Sky_Blue / Getty Images Signature

The Highlands storied whisky producers and salmon farmers are especially at risk. The whisky industry is a £5bn (US$6.5bn) contributor to Scotland’s economy, but could suffer losses in excess of £25mn (US$33mn) a year beyond 2050 as a result of extreme droughts. Whisky depends on the production of barley, much of which is grown in the Highlands. If the region’s farms can’t grow the quantity of crops needed because of dry conditions, distilleries can’t produce all the whisky they can — or have to pay more for additional shipments. In 2018, a drought resulted in a £1.3bn (US$1.7bn) loss to the industry because of the spiraling cost of malt. 

The salmon industry, meanwhile, could incur losses of £5-25mn (US$6.5-33mn) a year beyond 2050 because of higher sea temperatures and ocean acidification, which can erode fish health and promote the spread of invasive species and parasites.

Meaningful adaptation actions can head off some of the worst projected impacts, the report suggests. For example, the embrace of vertical farming and storm-resistant greenhouses could help with the regional food and drink sector.

The next steps for Highland Adapts include bringing key economic sectors and local communities together to better understand specific risks and develop worthwhile climate-proofing projects and embedding climate shocks into forward planning.

Other Stuff

Baku High-Level Dialogue launches global climate transparency initiatives ahead of COP29, highlights transparency as a crucial enabling tool to help countries boost climate action, ambition and finance (UN Climate Change News)

Climate change poses health risks. But it’s hard to fight when state policy ignores it (Stateline)

California Continues to prioritize water and climate programs despite budget cuts (Public Policy Institute of California)

South Carolina is considered a model for ‘managed retreat’ from coastal areas threatened by climate change (Inside Climate News)

Ghana partners with UN to develop comprehensive Disaster Risk Reduction and climate adaptation framework (Ghana Broadcasting Corporation)

Oman prepares national plan for climate change adaptation (Muscat Daily)

Uganda grapples with health crises fueled by climate change (AllAfrica)

US Invests in Weather and Climate Super Computer

Rhea is the latest public servant at the US National Oceanic and Atmospheric Administration (NOAA). However, you won’t find her doing field research or shuffling papers on Constitution Avenue.

That’s because Rhea isn’t a person — she’s a high-performance computer (HPC) system, one that’s just received US$100mn in funding from the Biden administration to bolster research on weather, climate, ocean and ecosystem prediction.

Modular computer data center at NOAA Environmental Security Computing Center. Source: NOAA

The government check will pay to house Rhea in a bespoke facility in West Virginia and hook her up to NOAA’s network of four other research and development HPC centers. Rhea’s installation and oversight will be managed by General Dynamics Information Technology (GDIT), part of the US defense behemoth General Dynamics, which was awarded the U$100mn via President Biden’s landmark climate laws: the Inflation Reduction Act and Bipartisan Infrastructure Law.

Once online, the new super computer will support NOAA’s efforts to apply artificial intelligence and machine learning to the tricky task of weather and climate modeling.

“The Rhea high-performance computer system adds needed computing capacity for NOAA to expand critical research that supports the nation’s climate resilience,” said Assistant Secretary of Commerce Michael Morgan.

Other Stuff

Mapping heat with drones is an innovative climate solution for Latin America’s mega-cities (LatinAmerican Post)

RESEARCH

What 2C of Warming Will Look Like: A Comprehensive Assessment (Earth.org)

Climate change key driver of extreme drought in water scarce Sicily and Sardinia (World Weather Attribution)

Learning from a climate disaster: The catastrophic floods in southern Brazil (Science)

Infectious disease responses to human climate change adaptations (Global Change Biology)

Thanks for reading!

Louie Woodall
Editor