Climate change can stall poverty reduction and reverse achievements in human development. Adaptation to climate change must therefore be integrated into poverty reduction strategies and national development planning. In order to address the need for additional financial assistance, Climate Investment Funds (CIFs), including the Special Climate Fund (SCF), were established to help pilot climate-resilient development. The governance structure of their respective Trust Fund Committees establishes equal representation of donor and partner countries, with decisions being taken unanimously.

The Pilot Program for Climate Resilience (PPCR) was the first programme to be developed and become operational under the SCF in November 2008. Pledges to the PPCR (as of 31 March 2011) amount to approximately USD 1 billion. Germany contributes EUR 50 million. The PPCR aims to identify ways in which developing countries can address climate risks, integrate climate resilience into their national planning, and share experiences from these innovative approaches.

Countries eligible for Official Development Assistance (ODA) and Multilateral Development Bank (MDB) assistance are generally eligible for PPCR funding. Priority is given to highly vulnerable Least Developed Countries (LDC) that are eligible for MDB concessional funds, including Small Island Developing States. Through a selection process, nine country pilots and two regional pilots were identified: Bangladesh, Bolivia, Cambodia, Mozambique, Nepal, Niger, Tajikistan, Yemen, and Zambia, as well as the Pacific and Caribbean regions, which encompass several countries and also include regional activities. Other countries have recently shown an interest in participating.

The PPRC provides support to the selected pilot countries in formulating Strategic Programs for Climate Resilience (SPCR) and builds on national programmes. These include public and private sector investments for scaled-up adaptation. As of November 2011, almost all country pilots’ SPCRs and some regional SPCRs have been endorsed. Approved funding amounts to USD 800 million. Measures already under implementation - e.g. in Tajikistan, Bangladesh and other pilot countries - are in the areas of hydrometeorology, capacity development for climate modelling, sustainable farming practices, and water and sanitation. Programmes are implemented through Multilateral Development Banks such as AfDB, ADB, EBRD, IDB, IBRD and IFC. Each operation follows the investment policies and procedures of the MDB, including its fiduciary standards and all safeguards. Germany closely follows the processes where our local or sector-specific know-how can add value. On a more strategic level, BMZ continues to advocate for the participation of civil society and the private sector, results orientation and gender mainstreaming. There are strong indications that the quality of proposals presented to the committee has significantly improved with regard to these issues.

The agreed range of funding available for a single country pilot programme is USD 40-50 million in grant resources. The first two SPCRs that were approved (Tajikistan and Bangladesh) still received funding up to the upper limit of USD 60 million. For each PPCR regional pilot, a range of USD 60-75 million may be programmed. Additionally, each country can access up to USD 36 million in concessional resources. At its November 2011 meeting, the PPCR Sub-Committee addressed possible debt sustainability challenges: countries assessed as being at high risk of debt distress are no longer eligible to access PPCR concessional loans for public sector projects (only for private sector investments); those assessed at moderate risk of debt distress are eligible, provided that a macro-economic analysis is conducted in conjunction with the MDBs and the International Monetary Fund. This decision was taken after many recipient countries requested access to the PPCR’s highly concessionary loans.

The focus of PPCR support is now on implementation and the effectiveness of measures. M&E orientation will become even more central to PPCR’s work programme. Lessons learned will be shared widely. To address the continued challenge in implementing the results framework for the PPCR and for the overarching CIF framework, gaps in linking results levels have been discussed. Germany offered to cooperate with the CIF Administrative Unit and the Asian Development Bank (ADB) to develop model indicators and improve capacity building, using Cambodia, and possibly other countries, as an example.

The author would like to thank Lisa Lebershausen and Miriam Kugele, both young development cooperation professionals currently working in the same division.

By Dr Annette Windmeisser, Climate Policy and Climate Financing Division, Federal Ministry for Economic Cooperation and Development (BMZ)

Further information

• Climate Investment Funds
  Pilot Program for Climate Resilience
  www.climateinvestmentfunds.org/cif/ppcr