Arrangements for the Management of the Adaptation Fund: Global Environment Facility (GEF)

1. Arrangements for the Management of the Adaptation Fund: Global Environment Facility (GEF) UNFCCC Workshop on the Adaptation Fund 3 May 2006 Edmonton, Alberta Canada

2. History Structure Principles Trustee Operations Evaluation GEF Support to Adaptation Stage 1 & Stage 2 Adaptation Beyond Stage 2 SPA SCCF LDCF GEF’s Strengths for Managing Adaptation Fund Outline

3. History • Pilot Phase: 1991-1994 ($750m) • Negotiations for Restructured GEF • GEF Instrument • GEF 1: 1994-1998 ($ 2.0 billion) • GEF 2: 1998-2002 ($2.75 billion) • GEF 3: 2002-2006 ($3.0 billion)

4. GEF: A Network Organization IAs/EAs ADB AfDB EBRD Evaluation Office CBD ASSEMBLY COUNCIL CEO/CHAIRMAN GEF SECRETRIAT UNDP UNFCCC NGO’s UNEP POPS W.B. CCD FAO Montreal Protocol IDB STAP IFAD International Waters UNIDO

5. In context of UNFCCC, CBD, ODS, & POPS, priority is implementing Guidance of COP’s Funding to meet agreed incremental costs of global environmental benefits Cost-effectiveness Country-drivenness Maintain Flexibility Full disclosure of information Stakeholder Consultation Eligibility (9a & 9b) Catalytic role—leveraging resources Regular and open Monitoring and Evaluation Operational Principles

6. GEF Trustee Operations • World Bank serves as Trustee of GEF Trust Fund, and the Trust Funds for the LDCF and the SCCF • WB manages more than 800 Trust Funds • Each fund managed separately • Responsibilities • Maintenance of distinct, appropriate records, including accounting and financial transaction records • Management of donor contributions • Execution of Commitments and Disbursements of trust fund resources • Monitoring and management of ‘commitment authority’, i.e., funding availability • Investment of liquid assets in funds and other cash management functions • Preparation of financial reports and coordination of independent annual audits • Regular reporting to the Council and donors

7. GEF Trustee Operations (cont) • WB Trustee Office has developed accounting, control systems & reporting infrastructure resulting in considerable economies of scale and cost savings • Services provided are compensated at actual costs which are minimal • In addition, draw upon experience of WB Treasury operations in trading on financial markets

8. GEF’s Office of Evaluation • Office of Evaluation (originally office of Monitoring & Evaluation, renamed and made independent, 2005) • Undertakes Climate Change Program Study (2000 & 2004) as input to independent evaluations • Sets standards and policy for project and portfolio monitoring • Monitoring & Evaluation Requirements • All projects must supply log-frame, allocate responsibilities for annual monitoring, independent mid-term and final evaluation, and set aside budget for M&E • Monitoring report (APR; PPR) must be made available on an annual basis

9. Independent Evaluations of the GEF • Prior to replenishment, GEF undergoes Independent Evaluation • Undertakes Climate Change Program Study (2000 & 2004) as input to independent evaluations • OPS1 (1997) • Effectively created new institutional arrangements • Relatively successful in leveraging resources • Had implemented guidance of conventions with respect to GEF’s own mandate and funding limitations • OPS2 (2001) • GEF achieved significant results • GEF had responded to guidance from conventions, but required more frank dialogue & exchange of ideas • OPS3 (2005) • GEF is a network organization, which is appropriate • GEF has effectively performed its role as financial mechanism responding to COP guidance--coordination has improved • GEF is a more stable and effective institution in 2005 than it was in 2001

10. GEF Response to UNFCCC Guidance on Adaptation • COP I Guidance: Stage I Adaptation through Enabling Activities (11/CP.1) • V&A Assessments part of enabling activities • From 1995 to 2005, over $160m allocated to EA’s in nearly 140 countries • V&A one of components of EA’s--optional • Over half of countries included some element of V&A • Up to $40m from EA’s devoted to V&A assessments

11. Stage II Adaptation: Planning Studies • COP 4 in 1998, Guidance provided to support Stage II activities (2/CP.4) • Further round of adaptation projects • CPACC-Caribbean Planning for Adaptation (WB, GEF $6.8m)* • PICCAP—Pacific Islands CC Assistance Program (UNDP, GEF $3.44m)* • MACC—Mainstreaming Adaptation to CC in Caribbean (WB, GEF $5.98m; Total $9.64m) • Cap Bldg for Stage II Adaptation to CC in C America, Mexico, Cuba (UNDP, GEF $3.64m, Total $4.90m) • Assessment of Impacts & Adaptation to CC (global, UNEP—GEF $8.23, Total $12.46m) • Took Steps to further understanding of country’s adaptation needs and logical next steps

12. Beyond Stage II: Toward Implementation—the SPA • GEF should support inter alia establishment of pilot or demo projects to show how adaptation planning and assessment can be practically translated into projects providing real benefits (6/CP.7) • GEF created new strategic priority in CC Focal Area entitled “Piloting an Operational Approach to Adaptation (SPA)” • Set aside $50m to be used for concrete adaptation projects in focal areas in which GEF works • Close to $30m of projects have already been approved

13. SPA Projects • Approved SPA Projects • Kiribati Adaptation Program (WB, GEF $2.07m; Total $6.69m) • Colombia National Adaptation Pilot (WB, GEF $6.07m; Total 17.5m) • Pilot Adaptation Measures in Dominica, St Lucia and St. Vincent & Grenadines (WB, GEF $2.61m, Total $6.4m) • Lake Balaton Vulnerability, Early Warning & Adaptation Strategy, Hungary (UNDP, GEF $1.13, Total $4.07) • Integrating V&A to CC into Sustainable Dev’t in Southern & Eastern Africa (UNEP, $1m; Total $2.25 m) • Recently Recommended SPA Projects • Community-Based Adaptation (UNDP, GEF $5m; Total $10m) • Responding to Shoreline Change in West Africa(UNDP, GEF $4.0m; Total $7.5m) • Coastal Zone restoration and Sust. mgt in Post-tsunami Sri Lanka(IFAD, GEF $4mLD + 1.9mSPA, total $15m) • Pipeline • Coping w/ Drought in Eastern Africa (4 MSPs) • Sustainable Land Mgt in Zambezi Valley(MSP)

14. Beyond Stage II: the Special Climate Change Fund • In Marrakech, COP7 established the special climate change fund to finance, inter alia, activities in adaptation and transfer of technologies (Decision 7.CP7) and requested GEF to manage it • GEF Prepared a programming paper and hosted a donor’s meeting • Defines “additional costs” imposed on country not incremental cost for global environmental benefits • Proposed sliding scale as a simplified procedure to estimate eligible additional costs • Donor’s contributed $31m to initial endowment in September 2004

15. SCCF: Open for Operations in September 2005 • Separate Pipeline Operation for SCCF • Approved: • Tanzania: Pangani River Basin (UNDP, GEF $1m, Total $2.57m) • Pipeline (GEF total estimated at $31m) : • Adaptation to CC thru Effective Water Governance in Ecuador (UNDP) • Piloting CC Adaptation to Protect Human Health Barbados, Fiji, Uzbekistan & Jordan (UNDP) • Pilot CC Adaptation measures in Andean Region (WB) • Pacific Islands Adaptation to Climate Change Project (PACC) (UNDP) • India: Climate-resilience Development and Adaptation (UNDP, SCCF)

16. Least Developed Countries Fund (LDCF) (1) • In Marrakech, COP7 created LDC fund to support NAPA’s (Decision 7/CP.7) and requested GEF to manage it • GEF established LDCF • Consulted with LEG, Feb/Mar 2002 • Developed Guidelines for funding NAPA’s • Two donor meetings were held • Stockholm, 2002 • Paris, 2004 • Raised $40.5m for LDCF • Support NAPA Preparation in 44 countries • LDCF still contains $29.2m for NAPA Implementation

17. Process COP11 Decision on NAPA Implementation (Decision 3/CP.11) Consultative workshop held in Dhaka, Bangladesh April 4-6, 2006 Reached agreement on Programming paper Donor’s meeting held in Copenhagen, April 28, 2006 New Pledges: $44.6m Total Available: $74m Programming Innovations Streamlined project cycle Review/approvals on rolling basis 4 Council member objections to halt project Projects up to $2m will be circulated on “no objection” basis Additional cost approach for funding costs imposed on LDC’s Full-cost funding for instances where case is proven No need to demonstrate global environmental benefits LDCF Implementation

18. Adaptation Fund • In Marrakech, COP 7 created Adaptation Fund (Decision 10/CP.7) and requested GEF to make arrangements to manage fund • GEF Council and World Bank Board accepted the request to establish the Adaptation Fund, including conversion of CER’s • GEF Secretariat, Trustee’s Office and UNFCCC Secretariat had begun discussions on Adaptation Fund arrangements • Summarized in GEF Report to COP 11

19. GEF’s Strengths for Managing Adaptation Fund • GEF’s governance is transparent, universal and responds directly to Guidance from Convention bodies • GEF has demonstrated flexibility in responding to guidance and new programming challenges • GEF already manages three different sources of adaptation funding • Structured Learning—”learning by doing” • Administrative Simplification & Savings

20. GEF’s Strengths for Managing Adaptation Fund • GEF’s Administrative Structure provides a sound foundation for AF • Trustee’s office to manage • Pre-existing structures results in savings • Experience with Treasury operations bring established experience in financial markets • GEF is a network organization with capacity to support the global environment and sustainable development • Council Constituencies represent all countries • Three IA’s: UNDP, UNEP, & World Bank • Seven EA’s: IFAD, FAO, UNIDO, ADB, AfDB, EBRD, & IDB • Other executing agencies can be utilized as appropriate

21. Thank you