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1. Allocating international loss and damage finance through national climate funds: prospects for African LDCs

Author:
Mariya Aleksandrova, Washington Onyango Kanyangi, Assouhan Jonas Atchadé, Joanes Atela, and Charles Tonui
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The new loss and damage funding framework under the United Nations Framework Convention on Climate Change (UNFCCC) emphasises the importance of channelling support through national systems and mechanisms. This approach could prove particularly challenging for African least developed ountries (LDCs), which have been prioritised for support. These countries remain confronted with major challenges to access and utilise international climate finance, especially through direct access. National climate funds (NCFs) can have a potential role in delivering international loss and damage finance to African LDCs that is in line with their national priorities. NCFs can be defined as entities mandated to finance the implementation of national climate strategies and to manage and/or coordinate domestic and international sources of climate finance. NCFs can enhance the institutional capacities of countries by supporting the development of loss and damage strategies, facilitating access to international funding, aligning resource allocation with local priorities, and ensuring the effective tracking of loss and damage finance. This Policy Brief explores the role of NCFs in the evolving global loss and damage finance architecture with a focus on African LDCs. We examine the design features of five NCFs against criteria for assessing their relevance to support measures that address loss and damage. The studied NCFs are: the Benin National Fund for Environment and Climate, Ethiopia’s Climate-Resilient Green Economy Facility, Burkina Faso’s Intervention Fund for the Environment, the Mali Climate Fund and the Rwanda Green Climate Fund. Key policy messages • Despite that only a limited number of African LDCs have established NCFs, these demonstrate their potential to channel loss and damage funding, especially for environmental rehabilitation and climate-resilient recovery efforts. Particular strengths relate to their role in priority sectors for climate change adaptation and in relation to biodiversity loss, drought, land degradation and desertification. • Existing NCFs in African LDCs have inadequate mandates and capacities to manage the complex funding needed for loss and damage. An emerging issue is their presently limited role in linking climate and disaster risk finance. • The NCFs of African LDCs can be instrumental to promote coherence and complementarity with other funding sources at the national level. Countries must establish comprehensive legislative, policy and regulatory frameworks to define the institutional roles of NCFs in loss and damage response, supported by international funding to strengthen their institutional capacities.
Topic:
Climate Change, Development, Climate Finance, and Sustainability
Political Geography:
Africa

2. The Untapped Potential of Global Climate Funds for Investing in Social Protection

Author:
Mariya Aleksandrova
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Social protection plays a central role in achieving several of the social and environmental goals of the 2030 Agenda for Sustainable Development. As a result, this policy area is gaining increased recognition at the nexus of global climate change and development debates. Various social protection instruments are deemed to have the potential to increase the coping, adaptive and transformative capacities of vulnerable groups to face the impacts of climate change, facilitate a just transition to a green economy and help achieve environmental protection objectives, build intergenerational resilience and address non-economic climate impacts. Nevertheless, many developing countries that are vulnerable to climate change have underdeveloped social protection systems that are yet to be climate proofed. This can be done by incorporating climate change risks and opportunities into social protection policies, strategies and mechanisms. There is a large financing gap when it comes to increasing social protection coverage, establishing national social protection floors and mainstreaming climate risk into the sector. This necessitates substantial and additional sources of financing. This briefing paper discusses the current and future potential of the core multilateral climate funds established under the United Nations Framework Convention on Climate Change (UNFCCC) in financing social protection in response to climate change. It further emphasises the importance of integrating social protection in countries’ Nationally Determined Contributions (NDCs) to access climate finance and provides recommendations for governments, development cooperation entities and funding institutions.
Topic:
Climate Change, United Nations, Climate Finance, Sustainable Development Goals, and Investment
Political Geography:
Global Focus

3. Weather Index Insurance: Promises and Challenges of Promoting Social and Ecological Resilience to Climate Change

Author:
Lu Yu and Mariya Aleksandrova
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Rural communities are particularly vulnerable to weather shocks and ecosystem decline. Traditionally, farmers have adapted to climate variability and extremes through various risk management strategies, either individually or cooperatively. However, climate change amplifies the frequency and intensity of extreme weather events and exacerbates environmental degradation processes. Market-based risk transfer instruments are now being developed as complements to these conventional risk management strategies to shield rural households from increasing climate risks. At present, risk transfer solutions play a central role in the global climate and development agenda. International- and regional-level initiatives such as the InsuResilience Global Partnership support vulnerable developing countries to increase their financial protection coverage through climate risk finance and insurance, including through innovative micro-level schemes such as weather index insurance. Over the last decade, index-based weather insurance has been gaining attention in the climate resilience discourse. These schemes compensate insured individuals based on a pre-defined weather index instead of individual losses, as with traditional types of insurance. Therefore, this instrument has several advantages, including greater time- and cost-effectiveness and reduced moral hazard risk. Although weather-index insurance holds great promise, there are several challenges in designing and promoting it in developing countries. First, on the demand side, there is a lack of accessibility to affordable insurance, especially for the poorest rural populations exposed to climate hazards. Second, on the supply side, insurance providers are facing an elevated risk of paying larger claims due to the increasing frequency and severity of weather extremes, while reinsurance services are often missing. Third, the ecological effects of implementing weather index microinsurance initiatives receive little attention in research and policy. Yet, protecting the environment and building ecological resilience are critical policy dimensions of climate risk management in rural regions, where the poor disproportionately depend on ecosystem goods and services for a living, as they often lack alternative livelihood strategies. Looking into the key challenges to microinsurance initiatives and drawing upon findings of a review of literature on weather index insurance and field research, this Briefing Paper derives recommendations for development cooperation, governments and insurers for an enhanced action agenda on climate risk insurance. The discussion is focused on the specific case of weather index insurance for the rural poor at the micro level. We emphasise the importance of enhancing knowledge on the potential positive and negative ecological effects of weather insurance schemes, and the need to develop a diverse set of climate risk management strategies for the poor, including social protection mechanisms.
Topic:
Climate Change, Development, Resilience, Weather, and Farmers
Political Geography:
Global Focus

4. Social Protection as a Tool to Address Slow Onset Climate Events: Emerging Issues for Research and Policy

Author:
Mariya Aleksandrova
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This discussion paper aims to further awareness of opportunities to address loss and damage caused by climate change-related slow onset events (SOEs) through social protection. The analysis is based on a review of interdisciplinary theoretical and empirical literature. The findings suggest that designing comprehensive, climate-responsive social protection strategies can strongly support proactive measures to avoid, minimise and address the complex, long-term impacts of SOEs on human health, livelihoods, poverty and inequality. This entails improving the effectiveness and extending the coverage of existing social protection systems; mainstreaming climate concerns, including risks associated with SOEs, into national social protection frameworks; integrating social protection with broader climate and development policies and strategies; and developing innovative and transformational approaches to social protection. To this end, several issues for research and policy are discussed. Overall, the paper attempts to set the groundwork for an advanced research and policy agenda on social protection and climate change as well as emphasise the need for wider consideration of social protection in global climate change debates. In addition, the study aims to inform the future work of the Executive Committee of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts in the working areas of SOEs and comprehensive risk management approaches.
Topic:
Climate Change, Health, Poverty, Inequality, and Social Services
Political Geography:
Global Focus