While working on tracking adaptation finance for our Adaptation Finance Accountability Initiative project, we often get the question “What is adaptation finance?” or “What counts as adaptation finance?” To our embarrassment, we still don’t have a clear answer to either question, other than “Well… finance that funds efforts to adapt to the impacts of climate change qualifies as adaptation finance.”
We aren’t the only ones who struggle to define the very issue on which we work. Even some of the definitions that the Organisation for Economic Cooperation and Development (OECD) and multilateral development banks are developing do not provide a complete answer to the question of what types of investment are considered to be adaptation finance.
We decided to do some soul-searching on this subject. While it’s still too complicated to provide a cut-and-dry definition of adaptation finance, we identified three common traits surrounding the issue: Adaptation finance is context-specific, dynamic, and not just about finance.
Because climate change impacts vary a lot from place to place, what could count towards climate change adaptation finance in one country or region does not necessarily count as such in another. For instance, many people think of irrigation projects for agriculture as adaptation-relevant, yet climate change will have varying effects on agriculture outputs across the globe. Some areas are likely to receive less rainfall, so interventions like drought-resistant seeds and water-harvesting are good adaptation practices. In areas that are getting wetter, however, these interventions become a waste of time and resources. Not all irrigation projects can be counted towards adaptation finance, as it depends on the types of interventions and the local context.
This example also shows that adaptation funding is scale-specific. On a global level, investing in research to develop drought-tolerant seeds contributes to adaptation because many regions of the world will experience droughts. But at a national or provincial level, it might be irrelevant or even counter-productive.
Take, for example, India: a country with the seventh-largest landmass in the world and several physio-geographic areas that each face their own, unique climate change impacts. A single national adaptation strategy wouldn’t work. Adaptation strategies need to be tailored accordingly at a sub-national level. For example, adaptation finance to the coastal city of Mumbai will support very different programs than adaptation finance to the drylands of Western Rajasthan.
To complicate matters further, what counts as effective adaptation in a specific context today may no longer count as effective adaptation 25 years from now. Cash crops are a perfect example of this. At the moment, Colombia is one of the Arabica coffee powerhouses of the world, but production is facing challenges. Rainfall patterns are inconsistent, temperatures are rising, and coffee rust is spreading. Farmers have to adapt to these changes quickly in order to maintain coffee bean yields. While planting shade trees and developing new irrigation strategies may help farmers adapt in the short-term and could be counted as adaptation finance, these strategies seem likely to become less effective if current trends continue. In the long-term, farmers will most likely have to adapt by switching crops, moving out of Arabica coffee to alternative cash crops like fruit trees, cocoa, or flowers. What we consider as adaptation – and therefore adaptation finance – would have to be altered accordingly.
On the other hand, some farmers in West Africa could see an increase their cash crop yields. Climate change is providing farmers in West Africa with the opportunity to grow cashew trees, as increasing temperatures in the region will likely lead to a doubling in the suitable growing area by 2050. In the future, therefore, should planting cashew trees in West Africa count as adaptation?
It’s Not Just About Finance
Adaptation finance is not just about the money, and this is what makes it hard to count. In some cases, there is a direct relationship between climate change and a particular project. For instance, some activities—such as building sea walls—directly confront sea level rise or other impacts that are clearly attributable to climate change. Other activities enhance our understanding of the impacts, such as supporting weather monitoring or modeling climate change effects on crop yields. It is not difficult to argue that funding going to these activities counts as adaptation finance.
Most cases, however, are not as clear. Adaptation is about going beyond business-as-usual and incorporating the possible effects of climate change into the design of an activity. It sounds fairly straightforward, but deciding which part of “beyond business-as-usual” should count towards adaptation finance is difficult to determine. To make this a little easier to understand, an adaptation activity can be broken down into three steps:
- Realizing that climate change affects the activity;
- Designing the activity taking climate change into account; and
- Implementing the activity.