The 21st Century climate challenge

4Adapting to the inevitable: national action and international cooperationThe best PRSPs linkwell-defined targets to ananalysis of poverty and tosystems of financial allocationunder annual budgetsand rolling medium-termexpenditure frameworksrole for supplementary financing, whether inthe direct financing of adaptation or in mobilizingadditional budgetary resources.‘Mainstreaming’ adaptationFinancing is not the only constraint on thedevelopment of successful adaptation strategies.In most countries adaptation is not treated asan integral part of national programmes. Bothdonors and national governments are respondingto the adaptation challenge principallythrough project-based institutional structuresoperating outside planning systems for budgetsand poverty reduction strategies.This backdrop helps to explain the lowpriority attached to adaptation in current aidpartnerships. While arrangements vary, inmany developing countries adaptation planningis located in environment ministries which havea limited influence on other ministries, notablyfinance. Most PRSPs—the documents that setout national priorities and define the terms foraid partnerships—provide a cursory treatmentof climate change adaptation (see box 4.7). Oneresult is that much of the aid financing for adaptationhappens though project-based assistance.Current multilateral delivery mechanisms andthe approach followed under NAPA point tomore of the same.Some projects on climate change adaptationare delivering results. Looking to the future,projects will continue to play an importantrole. However, project-based assistance cannotprovide a foundation for scaling up adaptationpartnerships at the pace or at the scale required.Project-based aid tends to increase transactioncosts because of in-built donor preferences fortheir own reporting systems, weak coordinationand strains on administrative capacity. Aidtransaction costs in these areas already imposea heavy burden on capacity. In 34 aid-recipientcountries covered by one OECD review in2005, there were 10,507 donor missions in thecourse of the year. 80There is a danger that current approaches toadaptation could push up aid transaction costs.Developing countries already face constraintsin integrating climate change adaptation intonational planning processes. They are alsoresponding to pressing demands in many otherareas—HIV/AIDS, nutrition, education andrural development, to name but a few—wherethey are often engaging with multiple donors. Ifthe route to increased financing for adaptationto climate change is through several multilateralinitiatives, each with its own reportingsystem, it can be confidently predicted thattransaction costs will rise. Making the transitionto a programme-based framework thatis integrated into wider national planningexercises is the starting point for scaling upadaptation planning.Small-island developing states have alreadydemonstrated leadership in this area. Facedwith climate change risks that touch all aspectsof social, economic and ecological life, theirgovernments have developed an integratedresponse linking national and regional planning.In the Caribbean, to take one example,the Mainstreaming Adaptation to ClimateChange programme was initiated in 2002 topromote integration of adaptation and climaterisk management strategies into water resourcemanagement, tourism, fisheries, agriculture andother areas. Another example is in Kiribati inthe Pacific, where the Government has workedwith donors to integrate climate change riskassessments into national planning, workingthrough high-level ministerial committees.The 2-year preparation phase (2003–2005)is to be followed by a 3-year implementationperiod, during which donors are cofinancingincremental climate change adaptation spendingin key areas.Working through PRSPsFor low-income countries, dialogue on PRSPsprovides an obvious vehicle for the transition toa stronger emphasis on programmes. The bestPRSPs link well-defined targets to an analysisof poverty and to systems of financial allocationunder annual budgets and rolling medium-termexpenditure frameworks. Whereas projectsoperate on short-term cycles, adaptation planningand financing provisions have to operateover a longer time horizon. In countries with aproven capacity for delivery, channelling donorsupport through national budgets that finance196 HUMAN DEVELOPMENT REPORT 2007/2008