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NEWSLETTER

Photo: EEP Central America

Nordic

Development

Fund

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/ 2013

Innovative climate financing for small businesses in Latin America During the Annual Meeting of the IDB Board of Governors in Panama City in March 2013, NDF and IDB signed an agreement to establish a regional facility, PROADAPT. The project represents an innovative area of climate financing which enables the combination of adaptation focus and business development. The project will develop practical business models and tools to help micro-, small and medium-sized enterprises (MSMEs) anticipate and prepare for climate change-related threats to their assets, value chains and local communities, to become more climate-resilient, and to exploit business opportunities in specific sectors.

Climate change-related events, such as abnormally hot summers, droughts, floods, and shifting weather patterns impact negatively on the productive structures and business assets, value chains, labour conditions, local communities, water, energy and food supplies and public health. The vulnerability of local communities to climate change amplifies the threat facing enterprises. The response from MSMEs to climate change has largely been reactive, focusing on afterthe-fact damage and overlooking new business opportunities. There is a need for more proactive “preserve assets and increase resiliency” orientation in response to climate change. For MSMEs with

the right business models, know-how and strategies, climate change adaptation and resilience becomes a growing market with many new opportunities. “MSMEs play a critical role in the economic development of the developing world. They are the engine of economic growth providing employment and counting typically for about one third of GDP,” says Hannu Eerola, Country Program Manager at NDF.

“They are also closely embedded in local communities and share with them economic, social and natural ecosystems. Therefore, they provide a huge potential to reduce vulnerabilities to climate change and to seize related business opportunities,” he continues. The total cost of the project is EUR 9 million, of which NDF will provide EUR 3.5 million.

NDF and the African Development Bank signed an amended co-financing agreement NDF has signed an amendment to the co-financing agreement, set up in 1995, with the African Development Bank. The amended co-financing agreement reflects better NDF’s current mandate and co-financing modalities, and therefore enhances possibilities for cooperation in Africa, particularly in the area of development and climate change.


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NDF firms up its Mozambique grant portfolio loping insurance instruments. NDF supports this priority line of action through the Coastal Cities and Climate Change project plus the two regional projects Insurance Instruments for Climate Change Adaptation in Africa and Addressing the Vulnerability of Africa’s Infrastructure. The Transforming Hydro-

Meteorological Services Project will support the national climate change strategy priorities on risk reduction, water resources management and capacitybuilding. The extensive flooding in February this year caused widespread damage to roads, bridges and other transport infrastructure. The national roads admin-

istration (ANE) estimates that more than USD 150 million is needed immediately to repair and rebuild the flood-damaged roads and bridges. NDF is in a dialogue with ANE and the African Development Bank on developing adaptive capacity and strengthening resilience in the road sector in Mozambique.

Rights-based management of artisanal fisheries in Mozambique Fishing communities in Mozambique experience increasing destruction of coastal resources and decreasing opportunities for artisanal fishing. Widespread poverty among an increasing number of artisanal fishermen is contributing to the problems. Growing impacts from climate change make already vulnerable populations even more vulnerable. NDF provides EUR 4.0 million to the Scalable

Community-Managed Climate Change Adaptive Solutions Project which will promote rights-based management of artisanal fisheries in six pilot sites. The project seeks to improve common property management of coastal resources, supporting rights of access as opposed to open-access to fishing resources. The strategy is based on strengthening local ownership and responsibility for sustain-

able resource management. Local fishermen councils will play a key role in this transformation to be supported by the Institute for Small-Scale Fisheries Development (IDPPE). “Building stronger local ownership and the capacity to manage resources sustainably should increase the income from fishing and fishery-related activities. Livelihoods will improve and the community will become more resilient,”

says Aage Jørgensen, Country Program Manager at NDF. NDF supports the project together with the World Bank. Implementation is by the Ministry of Fisheries with technical assistance from the international NGO Rare Conservation.

Photo: Jørgen Schytte

Mozambique approved a national climate change strategy in November 2012. One priority line of action in the strategy focuses on urban adaptive capacity-building including improving territorial planning, mapping of vulnerable infrastructure, revising infrastructure norms and standards, and deve-


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GMS Environment Operations Center/Stephen Griffiths

NDF

Climate resilience and biodiversity conservation to be strengthened in the Mekong NDF will in partnership with the Asian Development Bank (ADB) finance a project that will deal with both climate change adaptation and mitigation within priority economic and biodiversity conservation corridors in the Greater Mekong Subregion (GMS). The support will be part of the second phase of the GMS Core Environment Program and Biodiversity Conservation Initiative, financed by Finland, Sweden, ADB and the Global Environment Facility (GEF). The project aim is to strengthen the capacity of communities to respond to climate change risks through climate modelling, risk assessment methods, and identification of cost-effective locallevel adaptation options such as IT-based early warning systems, climate tolerant crops and development of locally applicable micro-insurance schemes. Furthermore, the project will support the GMS countries to de-

velop Nationally Appropriate Mitigation Actions (NAMA) in sectors including transport, energy and agriculture. The institutional capacity to monitor, report, and verify CO2 emission reductions will be strengthened. In addition, low-carbon green freight interventions will be piloted. The GMS is vulnerable to climate change because many key sectors are dependent upon climate-sensitive natural resources including crops, livestock, forests, water resources and biodiversity. Climate change puts at risk current rapid economic development, poverty reduction efforts and biodiversity conservation objectives. “National adaptation responses have prioritised engineering/infrastructure based solutions and there is a clear need for adaptation that focuses on communities, livelihoods and ecosystems,” says Emeli Möller, Country Program Manager at NDF. The financing agreement between the ADB and NDF

ject is EUR 22.5 million and NDF will provide EUR 4 million.

was signed in the context of the ADB Annual Meeting in New Delhi in May 2013. The total cost of the pro-

Guangxi

Yunnan

Myanmar Laos

Thailand Vietnam Cambodia

The Greater Mekong Subregion (GMS) is a natural economic area bound together by the Mekong River, covering 2.6 million square kilometers and a combined population of around 326 million. The GMS countries are Cambodia, the People's Republic of China (Yunnan Province and Guangxi), Lao People's Democratic Republic, Myanmar, Thailand,

and Vietnam. In 1992, the six GMS countries entered into the GMS Economic Cooperation Program, which was designed to enhance economic relations among the countries by sub-regional projects in transport, energy, telecommunications, environment, human resource development, tourism, trade, private sector investment, and agriculture.


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Photo: Juhani Annanpalo

Enhanced emphasis on climate change in transport sector in Zambia

With a grant of EUR 4.0 million, NDF supports the planning of a climate change resilient transport sector in Zambia. The NDF-funded project is part of the Government of Zambia Strategic Program for Climate Resilience (SPCR), also supported by the World Bank, the African Development Bank and the International Financing Corporation. The Government of Zambia aims to gradually move from capacity-building to implementation of climate resilience priorities. Zambia is particularly vulnerable to climate and economic shocks given its reliance on a limited natural resource base. The Barotse and Kafue river sub-catchments have been selected as project areas because of their vulnerability to floods,

droughts and increased temperature. The rural population along the SPCR sub-catchments are amongst the poorest and, due to recurrent floods and droughts and socio-economic isolation, are the most vulnerable to climate change. NDF financing will focus on increasing emphasis on the systematic integration of climate change adaptation needs throughout the transport sector design and management process at policy level. At the same time, the NDF project will benefit greatly from collaboration with other investment projects which can test and contribute to the development of the most applicable tools. “NDF supports similar initiatives in Cambodia, Vietnam,

and Nicaragua, and is developing a niche in this area. The opportunities for future sharing of lessons learned from these transport sector projects will be highly beneficial

and valuable to NDF,” says Johanna Palmberg, Country Program Manager at NDF. The total cost of the project is EUR 70.7 million.

NDF becomes Green Growth Knowledge Partner At its meeting on 3-5 April 2013 in Paris, the Green Growth Knowledge Platform (GGKP) accepted NDF as a new Knowledge Partner. GGKP is a partnership between the Global Green Growth Institute (GGGI), the Organisation for Economic Co-operation and Development (OECD), the United Nations Environment Programme (UNEP), and the World Bank. GGKP Knowledge Partners are institutions or organisations of proven integrity and good reputation, active in areas related to green growth/green economy at the local, national, regional, and/or international level. Knowledge Partners constitute a network of institutions interested in periodic exchange and discussion about their respective work programs in the green growth space and, when mutually beneficial, collaboration. More information about the Green Growth Knowledge Platform at www.greengrowthknowledge.org

FINANCING FOR CLIMATE CHANGE PROJECTS IN LOW-INCOME COUNTRIES The Nordic Development Fund (NDF) provides financing for climate change interventions in low-income developing countries. NDF is the joint development finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with other development institutions.

Nordic Development Fund NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Erweko Oy.


NDF Newsletter 2/2013