Financing climate change adaptation: Options for Asian

cities and the role of third-party brokers

Presented by

Verena Streitferdt (verena.streitferdt@uts.edu.au)

CDIA consultant

For the Session G3 at Resilient Cities 2012Financing the Resilient City: Public grants and

Market-based instruments

Statements regarding climate financing

Mexico City’s Mayor Marcelo Ebrard underlines: “The architecture that is available now is not working, why, because it is not designed to help the cities; it is designed to work with the national governments.”

Andrew Steer, the World Bank’s Special Envoy for Climate Change, says: “We have got to be more imaginative in our environmental financing, managing to make things more comfortable for investors, and maximizing returns”.

Outline

Cities development Initiative Asia Background

CDIA case study CDIA/PAKLIM study on cities and

climate finance Tips for cities who seek financing for

climate change measures

Asia’s Urban Challenge

Asia’s economic growth is predominantly urban based

The estimated urban environmental infrastructure investment need in the Asia-Pacific region is about $100 billion per year

Current urban environmental infrastructure investment is about $ 40 billion per year

=> Investment gap

Bridging the urban infrastructure investment planning and programming gap

CDIA Rationale

Cities often have macro-development strategies and spatial plans, but city infrastructure projects to implement them are often not adequately defined and prepared for financing

Particular issue for the 1,400+ medium-sized cities in Asia’s developing countries with populations of 250,000 to 5,000,000

Difficult to use standard feasibility study instruments for these purposes, need for additional instruments Cities Development Initiative for Asia

?

CDIA City Interventions (ongoing, completed)

I M P L E M E N T A T I O N S T A T U S , M a r c h 2 0 1 2

- 42 APPROVED CITY APPLICATIONS IN 13 COUNTRIES (67 PFS)

- SUPPORT COMPLETED IN 21 CITIES INCLUDING 33 PFS

- ONGOING SUPPORT IN 21 CITIES (34 PFS)

City example

Naga, PhilippinesInitiationMayor Bongat send an application letter to CDIAObjective: Integrated Naga River Revitalization Project 1. Urban Renewal (River walk)2. Wastewater Management, Drainage 3. Flood Protection/Climate Change Adaptation

Method5 months consultancy work and coordination with local governments

DurationAug – Dec 2011OutcomePre-Feasibility studies presented in March 2012

Cooperation:Cities Development Initiative in Asia (CDIA) and GIZ project: Policy Advise for Environment and Climate Change (PAKLIM) Support

Objective: To identify the financing possibilities to support the cities to implement respective climate change mitigation and adaptation activities

Approach: National study in Indonesia

Regional Study in the Asia Pacific

Studies on financing local climate action

Results – international

Only 2 out of 14 international funds are accessible to cities

Emerging climate financing- Green Climate Fund - Carbon markets and Green bonds- National appropriate

mitigation actions (NAMAs)

- National appropriate adaptation actions (NAPAs)

Þ Limited opportunities for direct finance access to cities

Results – Private Capital

Investment in public goods and infrastructure- Public Private Partnership (PPP)

Market Launch and diffusion of goods and companies on the supply side- Development partnerships- Carbon market financing (only mitigation)

Þ Market launch very dependent on enabling investment frameworks (e.g. guarantees for investment etc.)

Þ Investment package might attract private financing (e.g. Bus terminal in Banda Aceh)

Results – government

Limitations of Local (city) finance National finance in form of programmes (e.g. Indonesia: Special allocation fund for

drinkable water) Tax and levies Loans and municipal bonds

Þ Main opportunity for cities investment seem to come from national government programmes.

Advice for cities seeking climate finance

Prepare proposals (Vulnerability assessment and prioritisation)

Access to Private capital: Improve credit worthiness and leverage their existing assets and financial resourcesEngage in Public/private partner cooperations

Engage with NGOs and national and international technical assistance agencies - bilateral: CDIA, GIZ etc.

- multilateral: UNDP, UNHABITAT

Start with small projects now to create visibility!

THANK YOU!

Cities Development Initiative for AsiaSuites 202-203, Hanston Building

Emerald Avenue, Ortigas Center, Pasig City 1600 Metro Manila, Philippines

www.cdia.asia