ASSESSING INVESTMENT & FINANCIAL FLOWS

FOR CLIMATE CHANGE: INTRODUCTION

Bay Gardens Hotel, 22 May 2009, Castries, St Lucia

PROJECT CONTEXTHernan Carlino, Argentina

Why consider climate change in development planning

Climate change impacts different sectors, cross-cutting

If not addressed in long-term action, climate change costs will be high

Countries may want to position themselves To ensure that the negotiation outcomes are

coherent with national interests & priorities To be able to participate in the mechanisms

that will be created

Why consider climate change in planning

Importance of planning tools To identify national priorities To facilitate cooperation among different

ministries To build strategies to deal with climate

change To create a coherent base of information

of climate change impacts on and opportunities in key sectors

These points are addressed in the project

Project context

Why an I&FF assessment

Objective of this session Introduction to the project and its 3 stages Introducing the concept of I&FF assessments How to proceed: Workplan preparation

PROJECT STAGES & SUPPORTBhujang Dharmaji, UNDP

Sequencing of national activities

Pre-workshop preparation (2 months)

National workshop

on Bali Action Plan,

national issues

Assessment of I&F flows to address CC mitigation/adaptation options for up to 3 key economic sectors (6-8 months)

National workshop to present

results, policy

options• Key line

ministries engaged

• Key sectors identified

• National issues papers prepared

National workshop on:

• Bali Action Plan

• Adaptation, mitigation, technology transfer,

financing + LULUCF

• Key sectors

UNDP methodology on assessing I&F flows

Backstopping from regional centres of excellence

• Update on Bali Action Plan negotiations

• I&F flows assessments presented

• Post-2012 preparation

Preparation stage Implementation stage Reporting stage

Define & agree National objectives/goals Key sectors/scope I&FF team Capacities/needs: methods, information… Institutional arrangements On workplan/budget Available scenarios

Preparation stage (1- 2 months)

Conduct I&FF assessment in key sectors selected by the country using the UNDP I&FF methodology and the sector specific guidance & reporting guidelines

Guidance & procedures for Documentation & archiving Spreadsheet management Quality control & quality assurance

procedures

Implementation stage (5 – 6 months)

Ongoing activity, not starting at the end of the assessment

Define outcome (decision making tool, policy tool), target group (internal/external) to draft report

Ensure good drafter for preparation of report(s)

Purpose: documentation of steps and processes for interpretation of outcomes & for later follow-up work

Reporting stage

Support to the 3 stages of the project Work plan guidance Methodological guidance Reporting guidance

Regional Centres of Excellence Training on assessment of I&FF 20 days of technical backstopping incl.

Review of workplan, draft and final assessments

Guidance on scenarios, data, approach

Guidance available + support provided

Guidance available + support provided

Knowledge platformPublic space Provides database of documents on climate

change Provides information on the project Dynamic: Users can upload resources;

results and updates “pushed” to site visitors

Member space Faciliate sharing of experiences in groups

(country groups, thematic groups) Private access for national project activities

THE I&FF ASSESSMENTAngel Menendez, ITDT

Investment Flow An investment flow (IF) is the capital cost

of a new physical asset with a life of more than 1 year

Limited to new physical assets, because of climate change implications for the duration of the operating lives of the facilities & equipment purchased

Definition I&FF and O&M

Financial Flow A financial flow (FF) is an ongoing

expenditure on programmatic measures; financial flows encompass expenditures other than those for expansion or installation o few physical assets.

Primarily ‘operation & maintenance’ (O&M) costs: salaries, raw materials, equipment maintenance, depreciation, utilities, rent, insurance, taxes etc.

Definition I&FF and O&M

Operation & Maintenance (O&M) costs of new physical assets

The physical assets purchased with investment flows will have operation & maintenance (O&M) costs associated with them

Can vary considerably among investment flow types & have a significant effect on the total cost of an investment

Definition I&FF and O&M

Goals Development of national policy options to

address climate change in key sectors Increased capacity to co-ordinate negotiating

positions at national level & participate in the UNFCCC process

Outcomes National awareness raised Investment & financial flows assessed for key

sectors Web-based knowledge platform populated

http://www.undpcc.org/

Project goals & outcomes

What questions does the I&FF assessment help answer?

What are the adaptation/mitigation options in certain sectors in the next 25 years?

Who is investing in the sector/major players & sources?

What shifts/increase in I&FF will be needed in the sector?

What will be the overall needs for additional I&FF?

Why an I&FF assessment?

IMPORTANT ISSUES FOR WORKPLAN DEVELOPMENTAngel Menendez, ITDT

How to scope a sector Determine specific subsectors that will be

included e.g. within agriculture: crop cultivation,

livestock, fishing … Determine which processes, activities,

entities and geographic regions are included in the sector

Define scope of the sector

Water

Health

TourismForestry

Energy

Agriculture

GLOFs

Electricity

Oil/gas

REDD

Livestock

Coastal zones

Water-borne diseases

MangrovesBioenergy

Energy plantations

BiofuelTransportFood security

Hydropower

Potential sectoral overlaps

Define scope of the sector

Any of these analytical approaches can be used to develop scenarios, & associated streams of annual I&FF and O&M costs A suitable sectoral model A sectoral plan A projection of sectoral trends The current situation in the sector A combination of those approaches

Select analytical approach

Sources of information

Sources of information include National Communications (1st, 2nd) National strategies & plans System of National Accounts (SNA) Systems of integrated environmental and

economic accounts (SEEA) etc.

What is a scenario? An internally consistent & plausible

characterization of future conditions over a specified time period

A baseline scenario reflects business-as-usual conditions, describes what can occur without new policies to address climate change

A mitigation scenario incorporates measures to mitigate GHG emissions

A adaptation scenario incorporates new measures to respond to the potential impacts of climate change

Scenarios

Team composition

Reporting

Sectoral results are compiled so that mitigation/ adaptation investments for each source & investment entity, & for each year, can be compared across sectors & across mitigation/adaptation

“Reporting Guidelines for the Assessment of Investment & Financial Flows to Address Climate Change” contains spreadsheets for this

Define purpose & target group to prepare report accordingly

NEXT STEPSBhujang Dharmaji, UNDP

Workplan development

Workplan Outlines clearly how the I&FF assessment

will be done during the following 6-8 months

Defines clearly The scope of the sector Data needs, availability and gaps

Proposes the organisational framework how the assessment will be done

I&FF training

The I&FF training Is a technical training for the country

teams of each selected key sector Will be conducted by the Regional Centre

(PASS, ITDT, TERI, Oxford Consultant) Will provide hands-on training how to

conduct the I&FF training in the selected national key sectors through the sector teams

Steps in the Sectoral Assessments of I&FF to Address Climate Change

Q&A CLARIFICATIONS

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