The Addis Ababa Action Agenda (AAAA), adopted as the outcome of the Third International Conference on Financing for Development (FFD3), recognizes increased international attention to environmental challenges and the need to ensure that results and outcomes of development finance are resilient to climate change and related impacts.
“Since Monterrey we have become increasingly aware of the need to take account of economic, social and environmental challenges, including the loss of biodiversity, natural disasters and climate change, and to enhance policy coherence across all three dimensions of sustainable development.” (AAAA, Section 103)
The National Adaptation Plan (NAP) process, adopted by the Conference of the Parties to the UNFCCC in 2010 and currently under way in many developing countries, aims to integrate a development-first approach to climate change adaptation planning. This includes integrating adaptation considerations across relevant sectors and levels in line with national development strategies.
The principles and priorities of the AAAA and the NAP process present opportunities to ensure these two agendas are mutually reinforcing. In particular, the following outlines three specific entry points in the AAAA for building these synergies and leveraging various sources of development finance, with a focus on public sources of finance, in support of climate-resilient development:
- In-country coordination for climate-resilient domestic finance
- Leveraging and climate-proofing official development assistance (ODA)
- Building adaptation considerations into finance for priority sectors
In-country coordination for climate-resilient domestic finance
Both the AAAA and the NAP process emphasize the importance of country-driven, country-owned development strategies as a foundation for successful development. Especially considering the three pillars of sustainable development—social, economic, and environmental—the AAAA calls for strong domestic policy coherence, requiring coordination among relevant ministries.
The NAP process offers opportunities for building domestic policy coherence by convening a wide range of in-country actors whose efforts are critical to pursuing climate-resilient development strategies, including those involved in developing national budgets and financing frameworks. This is critical to the NAP objective of integrating adaptation considerations across sectors and scales in line with national development strategies.
In countries where NAP processes are already under way, countries are convening ministries of planning, finance, environment, and sectors such as agriculture, water, and infrastructure to define national adaptation priorities that align with development objectives. Involvement of local actors, often the ones implementing adaptation actions identified in national-level policies, is also being pursued by a number of countries through the NAP process.
Starting points for integration vary from country to country—in some cases beginning with a collection of sector-specific adaptation considerations and in others beginning with identification of national adaptation priorities to be integrated. In all cases, though, the NAP process implies a strong national coordination function that could be leveraged to support the domestic policy coherence that the AAAA identifies as crucial to effective (and climate-proofed) national financing frameworks.
Leveraging and climate-proofing ODA
The AAAA highlights the importance of ODA in complementing developing countries’ domestic resources for financing development. It also acknowledges the need to consider climate resilience in all international development cooperation and finance, and to ensure ODA aligns with national development priorities by linking needs and support. In 2013, only 8% of total bilateral ODA included adaptation considerations as a principal or significant objective (OECD 2015), a figure that should be much higher given amount of ODA that goes to climate-sensitive sectors such as agriculture, water, infrastructure, and health.
With its focus on integrating adaptation planning into national development strategies, the NAP process is an opportunity to address both climate-resilience of ODA and alignment with national development strategies. The NAP process is designed to facilitate articulation of adaptation priorities in conjunction with a country’s overall development strategy. It should therefore lead to an articulation of climate-resilient development objectives and needs that development partners can refer to in order to climate-proof their support.
Focusing in particular on bilateral aid, the NAP Global Network aims to facilitate this simultaneous alignment and climate-proofing ODA by ensuring developing countries have a say in how aid is used to support their climate-resilient development according to their NAPs, and helping bilateral development partners better understand how to leverage their portfolios in support of climate-resilient development.
Building adaptation considerations into finance for priority sectors
Although it encompasses support for all aspects of the sustainable development agenda, the AAAA identifies finance for “scaling up of efforts to end hunger and malnutrition” and “bridging the infrastructure gap” as particular priorities in the coming years. As highly climate-sensitive sectors, linking these priorities with ongoing adaptation planning for sectors such as agriculture and infrastructure under the NAP process will be a crucial opportunity for ensuring the resilience of initiatives financed.
While the initial focus of the NAP Global Network is on coordinating public sources of finance for climate-resilient development, in the context of the AAAA it is important to note that building resilience to climate shocks through NAPs is also important to protecting other sources of development finance and investment, including private finance and trade. For example, there is an opportunity for NAPs to include considerations of indirect impacts on climate change (ie: impacts in other countries with domestic consequences), such as effects on availability of key imports or demand for exports, or impacts on returns on foreign investments.
Building synergies between the AAAA and the NAP process provides opportunities to ensure that investment in sustainable development and adaptation planning are mutually reinforcing.
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Any opinions stated in this blog post are those of the author and do not necessarily reflect the policies or opinions of the NAP Global Network, its funders, or Network participants.
Photo: C. Schubert (CCAFS) (CC BY-NC-SA 2.0)