Editing IPCC:AR6/WGII/Chapter-17 (section)

== Frequently Asked Questions ==

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<span id="faq-17.1-which-guidelines-instruments-and-resources-are-available-for-decision-makers-to-recognise-climate-risks-and-decide-on-the-best-course-of-action"></span>
=== FAQ 17.1 | Which guidelines, instruments and resources are available for decision makers to recognise climate risks and decide on the best course of action? ===

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Guidelines, instruments and resources to identify options for managing risks, and support decisions on the most suitable course of actions to take, can be collectively referred to as decision-support frameworks. These can include data services, decision-support tools, processes for making decisions and methods for monitoring and evaluating progress and success. Data services enable the identification, location and timing of risks that could manifest with negative impacts, as well as potential opportunities. Often, these are termed ‘climate services’ and assist with mapping hazards and how they are changing. Decision-support tools range from qualitative approaches to determining overlap of areas of concern with those hazards in the future, to more quantitative and dynamic simulation approaches that enable dynamic stress-testing of adaptation options and strategies to determine if proposed plans for adapting to the future could be successful. An important consideration is whether options for risk management or capitalisation on opportunities will limit options and flexibility for responding to unforeseen events in the future. If these options have a negative effect on other areas of concern, then they could be identified in these planning scenarios as maladaptations, and therefore avoided.

A great challenge for decision makers is how to choose effective options when the future is uncertain. Uncertainty can arise not just in the statistical error of the magnitude of risk but also in the nature and consequence of risk from uncertainty about mechanisms that link areas of concern to hazards, uncertainty in the decision processes themselves and so on. Methods are available to help develop no-regret options, commonly referred to as decision-making under conditions of deep uncertainty’.

Decision-support frameworks are most successful when they are iterative, integrative and consultative. Rather than a single decision be made, and an action taken, there are processes for making the best decision possible, then monitoring progress towards delivering a successful outcome. Given a set of suitable indicators with regular monitoring, decisions can be revised, updated or changed as the future unfolds and foundations for the original decision tested. This is important because climate responses need to be initiated well in advance of them being needed due to the time required to implement suitable responses. These forward-looking approaches allow errors to occur and corrections made before problems arise. They also enable action to be taken without having to wait for the circumstances to arise, which if this were to occur could result in only limited reactions being available and the outcomes then dependent upon recovery from events rather than proactive planning and avoidance of events. Integrated approaches to risk management are available to help manage portfolios of interacting risks, including the potential for compounding and cascading risks when climate-related events arise.

Managing uncertainty with forward-looking processes needs to be more deliberative and oriented towards building trust in a collaborative process. Building relationships through informal, bottom-up processes enables this to occur. Top-down planning processes are important for ensuring that the management of risks and opportunities do not end up with maladaptations and that the approaches are equitable and proportional to that which is needed to manage the risks.

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<span id="faq-17.2-what-financing-options-are-available-to-support-adaptation-and-climate-resilience"></span>
=== FAQ 17.2 | What financing options are available to support adaptation and climate resilience? ===

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What do we mean by ‘climate finance’?

The UNFCCC has no formally agreed upon definition of climate finance. The current IPCC definition is: ‘ ''the financial resources devoted to addressing climate change by all public and private actors from global to local scales, including international financial flows to developing countries to assist them in addressing climate change'' ’ (see Annex II: Glossary).

What needs to be financed?

Financial resources might be needed for a range of adaptation and resilience building activities. These include research, education and capacity building; development of laws, regulations and standards; provision of climate services and other information; reducing the vulnerability of existing assets, activities and services; and ensuring future development—such as new infrastructure, settlements, health services and business activities—is climate resilient. Finance is also needed to recover and rebuild from the damage of climate hazards that cannot be completely avoided through adaptation. Adaptation actions can be undertaken by many different actors, alone or in partnership, including national and sub-national governments, public and private utilities, businesses of varying size, communities, households and individuals.

'''Table FAQ17.2.1 |''' Examples of adaptation and resilience activities that might need to be financed

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| Training of agricultural extension officers so that their advice to small-holder farmers can support implementation of climate adapted agriculture. Additional financial support is needed for the costs of farmers transitioning to climate-resilient agricultural practices.

| A new urban development requires higher standards (and up-front costs) for buildings, roads, stormwater systems and water re-use and to be resilient to expected changes in heavy rainfall, runoff, temperature and water supply reliability.

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| A water utility requires capital expenditure to increase supply through a desalination plant and to reduce leakage from its reticulation system in response to a scenario of reduced surface water availability and an increase in customers.

| A catastrophe risk insurance facility is established to provide post-disaster (drought, hurricane, flooding, pest outbreaks) recovery finance to national governments. The facility requires capital to be able to underwrite the insurance products it offers.

|}

How much finance is needed?

The amount of adaptation finance depends on global, regional and local factors, including: the amount and timing of global warming, and how this translates into impacts and adaptation needs across the world; the levels of adaptation already in place; the type of risk being adapted to; and the adaptation options being chosen, including whether the adaptation required is incremental or transformational.

The most-mentioned figure for finance need is the developed countries’ commitment to provide USD 100 billion per year by 2020 to support developing countries’ efforts in mitigation and adaptation. Negotiations will start in 2021 on updating this amount for 2025. While sometimes thought to represent the actual cost of responding to climate change in developing countries, this is not the case. More recent estimates of the global cost of adaptation by 2030 across developed and developing countries range between about USD 80 and 300 billion per year.

What types of finance are available?

Four main types (or instruments) of finance are currently being used to support adaptation. These different types are not mutually exclusive; grants can be combined with loans to provide blended finance.

'''Table FAQ17.2.2 |''' The main instruments through which adaptation is being financed.

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| '''Grants''' provide finance without any repayment requirements. Most grants for adaptation have been provided by multi-lateral funds such as the Green Climate Fund or a fund managed by a single OECD country such as Germany’s International Climate Initiative. Some countries have national climate or environment funds that provide grants for their own climate adaptation actions. Grants are also provided by philanthropic foundations and sometimes by companies as part of their environmental and social responsiveness mandate.

| '''Concessional loans''' require partial repayment of the finance provided. These involve either capital repayment coupled to below-market interest rates or capital repayment only. Concessional finance is almost entirely provided through multi-lateral development banks such as the World Bank. This finance is particularly important for developing countries where market interests are high due to poor credit ratings or other risk factors, or where the return on investment is too low make a commercial loan viable.

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| '''Non-concessional loans''' (or debts) are commercial instruments, where capital repayment and market interest rates apply. These may be provided through development banks or private banks. Green bonds are a relatively new form of market loan, designed to meet climate and other environmental sustainability criteria in terms of how the proceeds are used. In recent years, green bonds have offered better interest than ordinary bonds owing to oversubscription by investors who are looking to move towards environmentally sustainable investment portfolios.

| '''Budget re-allocation''' does not require raising of new finance; rather, it involves moving funds already secured away from other purposes towards adaptation. In government, this might involve re-allocation towards flood defence. In the private sector, a company might move budget from marketing, research and development, or perhaps dividends, towards increasing the climate resilience of operation, infrastructure or their value chain.

|}

Where are different types of finance most useful?

Grants are useful for a range of adaptation actions where it is hard to generate a financial return. These include capacity-building activities, piloting new adaptation innovations, high-risk investment settings or projects where there are considerable non-financial benefits. In contrast, loans and other debt instruments can often support larger investments, for example for scaling out of successful pilot projects or for building adaptation and resilience into general development investment. To date, a large proportion of international climate finance for adaptation in developing countries, especially in Sub-Saharan Africa and Oceania, has been grant led, sourced from OECD public funds, indicating that in many instances financing via loans is either considered too risky by the commercial investment sector or it has been hard to demonstrate sufficient return on investment.

[[File:21aed069f5c6b610df012ed92589bd04 IPCC_AR6_WGII_Figure_17_FAQ_17_2_1.png]]

'''Figure FAQ17.2.1. |''' '''The distribution of adaptation finance across different regions and different types of finance in 2015–2016, as tracked by the Climate Policy Initiative.''' The size of each circle represents the amount of finance, with amount in billions USD superimposed.

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<span id="faq-17.3-why-is-adaptation-planning-along-a-spectrum-from-incremental-to-transformational-adaptation-important-in-a-warming-world"></span>
=== FAQ 17.3 | Why is adaptation planning along a spectrum from incremental to transformational adaptation important in a warming world? ===

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In a warming world, incremental adaptation, that is, proven standard measures of adaptation, will not always suffice to adjust to the negative impacts from climate change leading to substantial residual risks and, in some cases, the breaching of adaptation limits; transformational adaptation, involving larger system-wide change (as compared with in-system change), will increasingly be necessary as a complement for helping individuals and communities to cope with climate change. As an example of incremental adaptation, a farmer may decide to use drought-tolerant crops to deal with increasing occurrences of heatwaves. With further warming and increases in heatwaves and drought, however, the impacts of climate change may necessitate the consideration of system-wide change, such as moving to an entirely new agricultural system in areas where the climate is no longer suitable for current practices, or switching to livestock rearing. Where on-site adaptation becomes infeasible and pull factors exist, the farming households may decide to seek employment in other sectors, which may also lead to migration for work. As another example, physical protection through sea walls to stop coastal flooding is a proven adaptation measure. With further projected flooding due to increasing sea level rise attributable to climate change transformational city planning, that would systemically change how flood water is managed throughout the whole city, potentially requiring deeper institutional, structural and financial support. Also, the deliberate relocation of settlements (managed retreat) is seeing attention in the face of increasingly severe coastal or riverine flooding in some regions. While transformational adaptation is increasingly being considered in theory and planning, implementation is only beginning to see attention.

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<span id="faq-17.4-given-the-existing-state-of-adaptation-and-the-remaining-risks-that-are-not-being-managed-who-bears-the-burden-of-these-residual-risks-around-the-world"></span>
=== FAQ 17.4 | Given the existing state of adaptation, and the remaining risks that are not being managed, who bears the burden of these residual risks around the world? ===

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A warming climate brings along increasing risks, part of which can be reduced or insured. What remains is called residual risks and needs to be retained by households, the private and public sectors. People living in conflict-affected areas benefit only marginally from adaptation investments by governments, private sector or other institutions. These people bear most of the changing climate risks themselves. Higher-income countries generally have invested heavily in structural adaptation to make sure people are not exposed to extreme events (e.g., dykes) and have developed a variety of private or public insurance systems to finance the risk of the most rare or extreme events. In other, middle- or lower-income countries, these very extreme events are less likely to be insured, and the impacts are borne by the most vulnerable people. Absent risk reduction or insurance, coping with residual risks generally means reducing consumption (e.g., food) or drawing down assets (selling machinery, houses, etc.), which all can bring along longer-term adverse developmental implications. Adaptation investments in low-income countries tend to focus more heavily on increasing capacity and reducing vulnerability; people remain exposed to the changing climate risks and bear the burden of reacting and responding.

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=== FAQ 17.5 | How do we know whether adaptation is successful? ===

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Adaptation aims to reduce exposure and vulnerability to climate change by responding to dynamic and multi-scalar combinations of climatic risks. What might be seen as successful at one scale or at one point in time might not be at another, particularly if climate risks continue to rise. Moreover, the benefits of adaptation interventions may not reach all intended beneficiaries or everyone affected by climate impact and risk, causing different people to have different views on how successful adaptation has been.

There is, therefore, no universal way to measure adaptation success, but there is ''high agreement'' that success is associated with a reduction of climate risks and vulnerabilities (for humans and ecosystems) and an equitable balancing of synergies and trade-offs across diverse objectives, perspectives, expectations and values. Adaptation that is successful is also commonly expected to be inclusive of different socioeconomic groups, especially the most vulnerable, and to be based on flexible and integrative planning processes that take into account different climate scenarios.

Conceptually, the opposite of successful adaptation is maladaptation, that is, when adaptation responses produce unintended negative side effects such as exacerbating or shifting vulnerability, increasing risk for certain people or ecosystems, or increasing greenhouse gas emissions. Among the adaptation options assessed in this report (Figure FAQ17.5.1), physical infrastructure along coasts (e.g., sea walls) has the highest risk for maladaptation over time through negative side effects on ecosystem functioning and coastal livelihood opportunities. However, such adaptations may appear valuable in the short and even longer term for already densely populated urban coasts, demonstrating that an adaptation can be differently judged based on the context it is implemented in (Figure FAQ17.5.1). Many other adaptation options have a larger potential to contribute to successful adaptation (Figure FAQ17.5.1), such as nature restoration, providing social safety nets and changing diets/minimising food waste.

Assessments of adaptation need to be transparent about how they are measuring success. Monitoring and Evaluation (M&amp;E) can be used to track progress and evaluate success and to identify if course corrections during adaptation implementation are needed to achieve the envisaged objectives. Given the diversity of adaptation actions and contexts, no one-size-fits-all approach to M&amp;E and no common reference metrics for adaptation exist. To date, assessments of progress of adaptation have often focused on processes and outputs (i.e., actions taken, such as adaptation plans adopted) that are easier to measure than the effects of these actions in terms of long-term reduction of risks and vulnerabilities. However, knowledge about the outcomes in terms of reducing climate risk, impact and vulnerability is critically required to know if adaptation has been successful.

Tracking progress, in particular outcomes and impacts of adaptation, involves a number of challenges. First, to determine progress over time, risk and vulnerability assessments need to be repeated at least once after starting an adaptation process. This is rarely done, as it demands resources that are usually not factored into the adaptation response. Second, attributing changes in climate risks and vulnerabilities to the adaptation response is often difficult due to other influencing factors, such as socioeconomic development over time. Expected causal relationships between responses and their outcomes should already be outlined during the adaptation planning phase, for example by mapping the way from activities to outcomes, and they should be monitored during implementation. Third, as adaptation can occur in multiple forms and target multiple temporal and spatial scales, the engagement of a diversity of stakeholders is vital to understanding how responses enable adaptation and adaptation success across vulnerable groups. Although stakeholder engagement can be time intensive and costly, in particular when reaching out to populations that are usually not part of policy and planning processes, it can support evaluating co-benefits and trade-offs of adaptation responses. Consideration and analysis of co-benefits and trade-offs along with a focus on short, medium and long time horizons of adaptation goals, which is usually possible through flexible and strong institutions, facilitate successful adaptation and reduce the likelihood of maladaptation.

[[File:8d4a8c6aeb7ea3387c356e6d85a03c2d IPCC_AR6_WGII_Figure_17_FAQ_17_5_1.png]]

'''Figure FAQ17.5.1 |''' '''Contribution of adaptation options to potentially successful adaptation and to the risk of maladaptation.''' Note: A similar figure is part of [[#17.5.1|Section 17.5.1]] .

Box FAQ 17.5

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