| Economics | Socium | Environment |
|---|---|---|
Environmental Economics and Sustainable Development, 2021, 10 (29): 77-86
UDC 338.2 : 504.062
DOI: 10.37100/2616-7689.2021.10(29).10
JEL CLASSIFICATION: Q 20, Q 28, Q 54
Viktoriia Yashkina
PhD student,
Public Institution «Institute of Environmental Economics and Sustainable Development of the National Academy of Sciences of Ukraine», Kyiv
ORCID: https://orcid.org/0000-0002-5292-5246
TOOLS FOR FINANCING ECOSYSTEM-BASED ADAPTATION TO CLIMATE CHANGE
Abstract: The article aims to determine the "portfolio" of financing ecosystem-based adaptation to climate change based on the analysis of traditional market instruments used to preserve, maintain and restore ecosystem services and biodiversity. The definition of ecosystem-based adaptation, its qualification criteria and elements of their application in contrast to traditional economic measures for biodiversity and nature conservation are revealed. The relevance of using ecosystem and nature-based approaches to adapt to climate change and reduce the risk of natural disasters given the increasing frequency of extreme weather events associated with climate change – severe droughts, floods, heatwaves, storms and other hazards are explored. Accordingly, the urgency of adaptation to climate-related risks and hazards in different economic sectors, e.g. agriculture, land use, fisheries, and natural components with a focus on the climate impacts prognosis for the European region, using effective and affordable measures with additional long term social and environmental benefits are explained. Trends and specific gaps in the international experience in financing climate adaptation measures are considered. The most common instruments for financing nature-based solutions and ecosystem-based adaptation to climate change, which are already used in world practice or have the potential of their practical implementation in various sectors, including environmental and carbon taxes, subsidies, tradable environmental permits, risk insurance, obligations, debt and equity instruments, as well as innovative forms of green loans, green bonds, and climate-related insurance types are systematized and represented. The specifics of financing such measures through international funds, development banks and European Union funds are considered. Possibilities of integrating financing of ecosystem-based adaptation to climate change to the current processes of climate change adaptation policy development of Ukraine, particularly in the context of performance of obligations under the Paris climate agreement, are considered.
Key words: climate change, ecosystem-based approach, ecosystem-based adaptation, financing instruments for adaptation, climate finance.
Language version: Ukrainian
References
1. Masson-Delmotte, V., & Zhai, P., & Pirani, A., et al. (2021) The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. IPCC. Retrieved from: https://www.ipcc.ch/report/ar6/wg1 [in English]
2. CBD (2019) Voluntary guidelines for the design and effective implementation of ecosystem-based approaches to climate change adaptation and disaster risk reduction and supplementary information. Technical Series, 93. CBD Secretariat. Retrieved from: https://www.cbd.int/doc/publications/cbdts-93-en.pdf [in English]
3. Bertram M., Blackwood K., & Rizv A. et al. (2017). Making Ecosystem-based Adaptation Effective: A Framework for Defining Qualification Criteria and Quality Standards (FEBA technical paper developed for UNFCCC-SBSTA 46). GIZ, Bonn, Germany, IIED, London, UK, and IUCN, Gland, Switzerland. Retrieved from: https://www.iucn.org/sites/dev/files/feba_eba_qualification_and_quality_criteria_final_en.pdf [in English]
4. EEA (2021). Nature-based solutions in Europe: Policy, knowledge and practice for climate change adaptation and disaster risk reduction. Retrieved from: https://www.eea.europa.eu/publications/nature-based-solutions-in-europe. doi: 10.2800/919315 [in English]
5. Olhoff, A. et al. (2016). UNEP’s Adaptation Finance Gap Report. Retrieved from: http://web.unep.org/adaptationgapreport/20164 [in English]
6. World Bank (2019). Financing Climate Change Adaptation in Transboundary Basins: Preparing Bankable Projects. Water Global Practice Discussion Paper. Retrieved from: https://openknowledge.worldbank.org/ handle/10986/31224 [in English]
7. Amerasinghe, N.M., & Thwaites, J., & Larsen, G., & Ballesteroset, A. (2017) Future of the Funds: Exploring the Architecture of Multilateral Climate Finance. World Resource Institute. Retrieved from: https://www.wri.org/publication/future-of-the-funds [in English]
8. OECD (2018). Tracking economic instruments and finance for biodiversity. OECD Publishing, Paris. Retrieved from: https://www.oecd.org/environment/resources/Tracking-Economic-Instruments-and-Finance-for-Biodiversity.pdf [in English]
9. The Food and Land Coalition (2019). Growing better: The critical transitions to Transform Food and Land Use. FOLU. Retrieved from: https://www.foodandlandusecoalition.org/wp-content/uploads/2019/09/FOLU-GrowingBetter-GlobalReport.pdf [in English]
10. Surminski, S. (2009). How can the insurance industry promote climate change adaptation? A case study from the UK. Climate Change Series, 3(18), Association of British Insurers. Retrieved from: https://www.cii.co.uk/media/848012/TP18_Surminski_Adaptation_20May2009.pdf [in English]
11. Warner, K. et al. (2009). Adaptation to climate change: linking disaster risk reduction. United Nations International Strategy for Disaster Reduction Secretariat (UNISDR), Geneva, Switzerland. Retrieved from: https://www.preventionweb.net/files/9654_linkingdrrinsurance.pdf [in English]
12. European Commission (2015). Towards an EU research and innovation policy agenda for nature-based solutions & re-naturing cities. Retrieved from: https://op.europa.eu/en/publication-detail/-/publication/fb117980-d5aa-46df-8edc-af367cddc202 [in English]
13. NAIAD (2021). Nature insurance value: Assessment and demonstration. Retrieved from http://naiad2020.eu [in English]
14. EIB (2017). HBOR Natural Capital MBIL (NCFF), European Investment Bank. Retrieved from https://www.eib.org/en/projects/pipelines/all/20170412 [in English]
15. Cummins, J.D. (2008). CAT bonds and other risk-linked securities: State of the market and recent developments. Risk Management and Insurance Review 11(1). Retrieved from: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.525.6812&rep=rep1&type=pdf [in English]
16. European Commission (2020). An EU level overview of biodiversity investment spending. Retrieved from: https://cohesiondata.ec.europa.eu/stories/s/Tracking-cohesion-policy-biodiversityinvestments/tdxi-ibcn [in English] 17. European Commission (2018). Proposal for a Regulation of the European Parliament and of the Council establishing a programme for the environment and climate action (LIFE) and repealing Regulation (EU) No 1293/2013 (COM(2018) 385 final. Retrieved from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2018%3A385%3AFIN [in English]
18. GIZ (2018). Finance options and instruments for Ecosystem-based Adaptation. Overview and compilation of ten examples. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Bonn. Retrieved from: https://www.greengrowthknowledge.org/sites/default/files/downloads/resource/Finance_options_and_instruemnt_for_EbA_GIZ.pdf [in English]
Article publication date: 2021
Date of online version: 2021
UDC 338.2 : 504.062
DOI: 10.37100/2616-7689.2021.10(29).10
JEL CLASSIFICATION: Q 20, Q 28, Q 54
Viktoriia Yashkina
PhD student,
Public Institution «Institute of Environmental Economics and Sustainable Development of the National Academy of Sciences of Ukraine», Kyiv
ORCID: https://orcid.org/0000-0002-5292-5246
TOOLS FOR FINANCING ECOSYSTEM-BASED ADAPTATION TO CLIMATE CHANGE
Abstract: The article aims to determine the "portfolio" of financing ecosystem-based adaptation to climate change based on the analysis of traditional market instruments used to preserve, maintain and restore ecosystem services and biodiversity. The definition of ecosystem-based adaptation, its qualification criteria and elements of their application in contrast to traditional economic measures for biodiversity and nature conservation are revealed. The relevance of using ecosystem and nature-based approaches to adapt to climate change and reduce the risk of natural disasters given the increasing frequency of extreme weather events associated with climate change – severe droughts, floods, heatwaves, storms and other hazards are explored. Accordingly, the urgency of adaptation to climate-related risks and hazards in different economic sectors, e.g. agriculture, land use, fisheries, and natural components with a focus on the climate impacts prognosis for the European region, using effective and affordable measures with additional long term social and environmental benefits are explained. Trends and specific gaps in the international experience in financing climate adaptation measures are considered. The most common instruments for financing nature-based solutions and ecosystem-based adaptation to climate change, which are already used in world practice or have the potential of their practical implementation in various sectors, including environmental and carbon taxes, subsidies, tradable environmental permits, risk insurance, obligations, debt and equity instruments, as well as innovative forms of green loans, green bonds, and climate-related insurance types are systematized and represented. The specifics of financing such measures through international funds, development banks and European Union funds are considered. Possibilities of integrating financing of ecosystem-based adaptation to climate change to the current processes of climate change adaptation policy development of Ukraine, particularly in the context of performance of obligations under the Paris climate agreement, are considered.
Key words: climate change, ecosystem-based approach, ecosystem-based adaptation, financing instruments for adaptation, climate finance.
Language version: Ukrainian
References
1. Masson-Delmotte, V., & Zhai, P., & Pirani, A., et al. (2021) The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. IPCC. Retrieved from: https://www.ipcc.ch/report/ar6/wg1 [in English]
2. CBD (2019) Voluntary guidelines for the design and effective implementation of ecosystem-based approaches to climate change adaptation and disaster risk reduction and supplementary information. Technical Series, 93. CBD Secretariat. Retrieved from: https://www.cbd.int/doc/publications/cbdts-93-en.pdf [in English]
3. Bertram M., Blackwood K., & Rizv A. et al. (2017). Making Ecosystem-based Adaptation Effective: A Framework for Defining Qualification Criteria and Quality Standards (FEBA technical paper developed for UNFCCC-SBSTA 46). GIZ, Bonn, Germany, IIED, London, UK, and IUCN, Gland, Switzerland. Retrieved from: https://www.iucn.org/sites/dev/files/feba_eba_qualification_and_quality_criteria_final_en.pdf [in English]
4. EEA (2021). Nature-based solutions in Europe: Policy, knowledge and practice for climate change adaptation and disaster risk reduction. Retrieved from: https://www.eea.europa.eu/publications/nature-based-solutions-in-europe. doi: 10.2800/919315 [in English]
5. Olhoff, A. et al. (2016). UNEP’s Adaptation Finance Gap Report. Retrieved from: http://web.unep.org/adaptationgapreport/20164 [in English]
6. World Bank (2019). Financing Climate Change Adaptation in Transboundary Basins: Preparing Bankable Projects. Water Global Practice Discussion Paper. Retrieved from: https://openknowledge.worldbank.org/ handle/10986/31224 [in English]
7. Amerasinghe, N.M., & Thwaites, J., & Larsen, G., & Ballesteroset, A. (2017) Future of the Funds: Exploring the Architecture of Multilateral Climate Finance. World Resource Institute. Retrieved from: https://www.wri.org/publication/future-of-the-funds [in English]
8. OECD (2018). Tracking economic instruments and finance for biodiversity. OECD Publishing, Paris. Retrieved from: https://www.oecd.org/environment/resources/Tracking-Economic-Instruments-and-Finance-for-Biodiversity.pdf [in English]
9. The Food and Land Coalition (2019). Growing better: The critical transitions to Transform Food and Land Use. FOLU. Retrieved from: https://www.foodandlandusecoalition.org/wp-content/uploads/2019/09/FOLU-GrowingBetter-GlobalReport.pdf [in English]
10. Surminski, S. (2009). How can the insurance industry promote climate change adaptation? A case study from the UK. Climate Change Series, 3(18), Association of British Insurers. Retrieved from: https://www.cii.co.uk/media/848012/TP18_Surminski_Adaptation_20May2009.pdf [in English]
11. Warner, K. et al. (2009). Adaptation to climate change: linking disaster risk reduction. United Nations International Strategy for Disaster Reduction Secretariat (UNISDR), Geneva, Switzerland. Retrieved from: https://www.preventionweb.net/files/9654_linkingdrrinsurance.pdf [in English]
12. European Commission (2015). Towards an EU research and innovation policy agenda for nature-based solutions & re-naturing cities. Retrieved from: https://op.europa.eu/en/publication-detail/-/publication/fb117980-d5aa-46df-8edc-af367cddc202 [in English]
13. NAIAD (2021). Nature insurance value: Assessment and demonstration. Retrieved from http://naiad2020.eu [in English]
14. EIB (2017). HBOR Natural Capital MBIL (NCFF), European Investment Bank. Retrieved from https://www.eib.org/en/projects/pipelines/all/20170412 [in English]
15. Cummins, J.D. (2008). CAT bonds and other risk-linked securities: State of the market and recent developments. Risk Management and Insurance Review 11(1). Retrieved from: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.525.6812&rep=rep1&type=pdf [in English]
16. European Commission (2020). An EU level overview of biodiversity investment spending. Retrieved from: https://cohesiondata.ec.europa.eu/stories/s/Tracking-cohesion-policy-biodiversityinvestments/tdxi-ibcn [in English] 17. European Commission (2018). Proposal for a Regulation of the European Parliament and of the Council establishing a programme for the environment and climate action (LIFE) and repealing Regulation (EU) No 1293/2013 (COM(2018) 385 final. Retrieved from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2018%3A385%3AFIN [in English]
18. GIZ (2018). Finance options and instruments for Ecosystem-based Adaptation. Overview and compilation of ten examples. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Bonn. Retrieved from: https://www.greengrowthknowledge.org/sites/default/files/downloads/resource/Finance_options_and_instruemnt_for_EbA_GIZ.pdf [in English]
Article publication date: 2021
Date of online version: 2021