In recent years, ECO has observed, with concern, the negotiations on the future of the Adaptation Fund (AF) in the post-2020 agreement.
Among all of the financial mechanisms under the Convention, the AF has made unique progress. The AF plays an important role in the climate finance landscape by providing funding for small-scale adaptation projects. It now has a portfolio of 50 such projects, enabled especially through its direct access modality. Furthermore, the AF has successfully accredited 20 national implementing entities (NIEs) and helped build local capacity. The AF’s wings should not be clipped.
Unfortunately, the Co-Chairs’ earlier draft text did not recognise these achievements, and failed to paint a clear picture of the AF in the future finance architecture. Thanks to the last surgical insertions, the new version contains a good proposal featuring the AF as a key instrument of the Financial Mechanism.
ECO feels warm and fuzzy about the proposal by the African Group. Currently, adaptation finance is in crisis. Any enhanced action on adaptation requires contributions of all funds, particularly the AF. The AF can help recipient countries to implement their NAPs and their INDCs. Despite the scarcity of the resources, the Fund’s board received an unprecedented 15 proposals (including the first regional programmes) at its last meeting. The demand for and relevancy of the AF is real.
This burgeoning interest should be understood as a call for more pledges to help the Fund reach the fundraising target of US$100 million by COP21. However, this remains only a short-term solution. The long-term solution would be granting the AF a specific mandate under the new agreement. As the AF is a fund where all developing countries are eligible for financing in principle, it is a powerful tool for advancing the adaptation debate across the globe. Within a few years, the AF has pioneered a robust direct access and operationalised a streamlined and rapid project cycle that enables developing countries to maintain full ownership throughout project implementation and ensure monitoring and transparency at each stage.
A division of labor between the AF and GCF is needed in order to enhance complementarity and reduce the recipient countries’ burden in accessing the funds. ECO reckons that the new agreement should build on well-functioning institutions with proven track records, instead of dedicating all adaptation resources to a newly established Fund to meet the needs of the vulnerable countries. Given the GCF is well-resourced for some time and still has to learn how to spend money on effective adaptation, COP21 could also send an important signal through new financial pledges for the AF—and the Least Developed Countries Fund.