Green Climate Fund (GCF) / Implementation of climate finance

Climate project or development project: A story of definition problems and double standards

Neben der Hilfe in Dadaab unterstützt die Diakonie Katastrophenhilfe auch die Bevölkerung, überwiegend Nomaden, in den extrem von der Dürre betroffenen Regionen Marsabit und Moyale im Osten Kenias. Menschen und Tiere finden kein Wasser mehr. Immer häufiger kommt es zu gewaltsamen Konflikten um die wenigen verbliebenen Weideplätze und Wasserstellen. In der Region um Marsabit warten tausende Menschen bis zu 12 Stunden täglich an den Brunnen, um ihre Kanister mit etwas Trinkwasser für sich und ihr Vieh zu füllen. Wegen der Reihenfolge und der Füllmengen gibt es immer wieder kleinere Auseinandersetzungen mit der Brunnenaufsicht. Frauen steigen bis zu 12 Meter tief in die Brunneschächte um einen Kanister zu füllen, zum Teil sind es lebensgefährliche Aktionen. Männer bilden lange Ketten bis zum Grund der Brunnen, schöpfen und reichen das Wasser in die Trinkbecken hoch. Foto zeigt: Mit Wassereimern fördern Männer Trinkwasser aus einem tiefen Brunnen hinauf in ein Trinkbecken.

Is this a climate change adaptation or a development project? This is not always easy to define. Photo: C.Krackhardt/Brot für die Welt

In the period from 13 to 15 December 2016, the Board of the Green Climate Fund (GCF) met for its 15th session to discuss current issues and project applications. It became clear that one issue was particularly controversial: what exactly is considered a climate change adaptation project, and thus eligible for support from the GCF? Can a clear dividing line be drawn between general development projects – ineligible for funding – and climate change adaptation projects?

This discussion was sparked mainly by one of the nine project proposals put before the Board for approval. While eight projects with a total funding of 315.2 million US dollars were approved, this project was withdrawn by the applicant because it became clear that it met with considerable resistance from some of the Board members. According to the project description, the project entitled “Enhancing Women and Girls’ Adaptive Capacity to Climate Change“, which was submitted by the United Nations Development Programme (UNDP), is designed to help women and girls adapt to climate change in high-risk coastal regions of Bangladesh. The main fields of application of the project are water management, diversification of income through direct payments of basic social support for the poorest and lowest-income women in the region, and structural improvements to the Ministry of Women and Children Affairs. A number of Board members wondered whether such activities – particularly the diversification of income sources through social support measures – might not be more along the lines of classical development policies rather than adaptation to climate change. This critical attitude was expressed mainly by the representatives of industrialized countries, while representatives of developing countries mostly spoke out in favor of the project.

Climate adaptation vs. development

The main objective of the GCF is to promote projects in two areas: climate protection and adaptation to climate change. In the first area it is relatively easy to tell whether a project serves climate protection or not. The most common indicator is whether a project contributes to the reduction of greenhouse gases in the atmosphere, and/or whether it increases the capacity of an ecosystem to absorb them. As these climate protection effects are intended to promote a transformative change – in the words of the GCF founding document “a paradigm shift towards low-carbon and climate-resilient development” – they also raise questions about criteria and definitions. Nevertheless, it is relatively easy to recognize a climate protection project.

For adaptation projects, however, there are a variety of definitions (cf., for instance, the IPCC definition in the box). Many projects blend characteristics of classical development activities with climate adaptation aspects. In these cases, the donors’ argument is: there are other funding instruments for development cooperation – including separate programs and funds for certain specific aspects (such as water supply or gender equality) – so that it would be inappropriate to use the scarce resources of climate finance to support these types of projects.

GCF IPCC Definition

Climate adaptation = development?

But is this distinction between adaptation and development useful at all? In addition to the need for protection against individual extreme events, for instance through appropriate infrastructure, the vulnerability of a society is strongly determined by structural underdevelopment. Such development deficits exacerbate the risk potential facing certain population groups or communities in the context of climate change. This means that any development projects that aim at mitigating these structural problems also make an important contribution to increased adaptive capacity.

While the construction of a dike is easily identified as a climate-related adaptation measure in a coastal region threatened by rising sea levels, educational programs in a structurally weak rural area affected by climate change are more difficult to define. Education programs are “classical” development cooperation programs. On the other hand, they can also be crucial for long-term, structural adaptation to climate change (in the sense of the paradigm shift promoted by the GCF) if these additional educational chances open up new opportunities for the population to achieve income in areas other than agriculture, a particularly vulnerable sector when it comes to climate change. The withdrawn UNDP project involves both direct and structural adaptation measures. While the water management component is directly linked to adaptation to climate change, discrimination against women and girls and their greater vulnerability constitutes a structural problem. Strengthening the capacity of the Ministry and encouraging income diversification mitigates the overall vulnerability of this population group, which in turn results in higher adaptive capacity to climate change-related risks. The UNDP application included transfers, i.e. direct cash payments to specific groups of women intended to kick-start the development of new sources of income. This was where donor countries raised particularly critical questions. They feared that adaptation financing might become very expensive in the long run if such structural programs were recognized as climate adaptation measures. But the fact remains that adaptation cannot be solved alone with very costly dikes, wells and shelters, and that structural measures are also often necessary.

In this context it will also be interesting to see how donor countries at the upcoming GCF Board meeting in early April position themselves vis-à-vis a project involving the rehabilitation of a dam in Tajikistan. Here, the project developer – the European Bank for Reconstruction and Development (EBRD) – argues that replacing obsolete turbines in a Soviet-era dam will increase the “climate resilience” of the old facility. So does resilience building make more sense for infrastructure than for the poorest population groups?

The overarching question is whether it makes sense to view adaptation and development as distinct, especially as the GCF statutes explicitly state that all of its financial commitments must be embedded in the context of sustainable development. In the light of climate change, good development must be conceived and implemented so as to be sustainable and climate-sensitive. At the same time, adaptation can be effective only if the causes of structural underdevelopment and the concomitant increased vulnerability are addressed. It is therefore necessary to take climate adaptation measures into account in development projects and to consider the possible consequences of climate change in the implementation of development projects, and inversely, to consider sustainable development, including positive social, economic and gender-equitable impacts, in the design and implementation of climate projects.

How can adaptation projects be defined?

Should all development projects therefore be considered adaptation projects? Of course not. We need criteria to decide which projects should receive climate-specific financing. An adaptation project should be clearly linked to existing or anticipated impacts of climate change, and it should formulate an appropriate response to these problems. But this answer may also take advantage of instruments of classical development cooperation – and that is exactly the point. The question of whether a project is (also) a development project should not be relevant for the GCF or other forms of climate financing. The relevant question should be whether the project contributes to adaptation.

In order to bring more clarity to this issue, it would be, for instance, useful to start by agreeing on a clear definition of climate adaptation or by adopting and/or adjusting existing definitions (e.g. IPCC). There are also a number of questions that can be considered in the evaluation of a project:

  • Does the project directly address the vulnerability of a society or of particularly disadvantaged social groups/regions?
  • Are the adaptation measures imperative? What is the probability that basic functions might be disrupted?
  • Will the project significantly increase the adaptive capacity of the target group?
  • Are all components of the project “climate-sensitive”?
  • Are there any other projects that address the project components deemed irrelevant for climate change?

Double standards of donor countries

Donor countries who wanted to apply restrictive criteria with regard to the retracted GCF project in Bangladesh are much more generous with regard to their own bilateral funding. When it comes to the question of which amounts can be included in their own contribution to climate finance efforts, all of a sudden very many projects become adaptation projects. For reporting purposes, these projects are scored with the so-called Rio markers. Various studies on the use of the Rio markers have shown that projects with little or no climate relevance are nevertheless often defined with climate-relevant Rio markers.

Why, then, are projects such as the protection of archaeological sites or the financing of a love film festival categorized as climate-related projects, while a project supporting women and girls in a region that is highly vulnerable to climate change is rejected as being too little climate-related?

The political dimension of these different standards is obvious. When it comes to boosting numbers for a donor country’s own projects, thus fulfilling climate-finance commitments on paper but without actually providing the full amount of additional funds, the one standard applies. The other applies to multilateral cooperation concepts where developing countries develop and submit their own projects. This double standard on the part of donor countries damages their credibility on the international stage.

The way out is a more consistent and clear definition of adaptation projects. A schematic dichotomy between “adaptation or development” is, however, not at all helpful. Instead we must be recognize that adaptation projects must have a clear reference to coping with climate change impacts, but that coping mechanisms can of course also include socio-economic and structural approaches.

Lutz Weischer and Mario Wetzel, Germanwatch