Adaptation Fund

The adaptation fund (AF) refers to a fund created to provide financial assistance for concrete programs and projects that facilitate naive communities belonging to eligible developing nations to accommodate climate change. Thus, such financing is based on the priorities and requirements of these countries.

It was formed in 2001 within the United Nations Framework Convention on Climate Change (UNFCCC)—Kyoto Protocol. Private and government donors provided the initial funding as a 2% share of the proceeds of certified emission reductions (CERs) released by the Protocol's clean development mechanism (CDM) activities and various other finance sources.

The adaptation fund (AF) is financial assistance for the programs, activities, and projects that are initiated with the intention of aiding the vulnerable communities of developing nations to accommodate climate change issues. It was discovered during the 7th Conference of the Parties (COP7) to the Kyoto Protocol - United Nations Framework Convention on Climate Change (UNFCCC). It is commendable that the UNFCCC adaptation fund has successfully financed more than 160 projects, contributing to USD 1,147,555,041 to assist 43 million beneficiaries around the globe. For instance, during floods or other natural disasters, the disaster mitigation and adaptation fund goes hand in hand to help the victims.

The naive communities and poor sections of the developing nations are most influenced by climate change, like desertification, weather catastrophes, and high sea levels. Therefore, it becomes crucial to help these people in agriculture, rural development, water and food security, forests, coastal management, and disaster risk reduction. The former amount was arranged from a 2% share of the certified emission reductions (CERs) proceeds generated through the Kyoto Protocol's clean development mechanism (CDM) activities.

The developed countries came forward for financial contributions to this fund. These contributors are Austria, France, Belgium, Canada, Finland, European Commission, Germany, Flemish Region (Belgium), Iceland, Italy, Ireland, Japan, Monaco, New Zealand, Luxembourg, United Kingdom, United States of America, Norway, Poland, Walloon Region (Belgium), Switzerland, Portugal, Spain, Sweden, Qatar, Québec (Canada), South Korea, Slovenia, and Brussels Capital Region (Belgium).

The adaptation fund was formulated in 2001 amidst the Conference of the Parties (COP 7) in Marrakesh, Morocco, within the framework of the Kyoto Protocol—United Nations Framework Convention on Climate Change (UNFCCC). Its primary objective is to finance activities, projects, and programs that facilitate developing nations' coping with climate change challenges and enhance their resilience and adaptive capacity towards them. However, the AF became functional in December 2007, after COP 13.

The UNFCCC adaptation fund is managed and governed by the Adaptation Fund Board (AFB), which includes representatives of different nations and regions; it has 16 members together with 16 alternates. While the fund was initially supported by a 2% share of proceeds from the Certified Emission Reductions (CERs) generated by Clean Development Mechanism (CDM) projects under the Kyoto Protocol, it received subsequent contributions from other sources like the governments, private sector, and individual donors.

In its 10 years of accomplishment, it has aided 73 countries with USD 462 million for funding localized concrete projects that improved their national capacities to manage climate change. Further, it has been helpful in adapting to climate changes in diverse sectors, including water and food security, agriculture, forests, coastal management, rural development, and disaster risk reduction. The projects are headed in a decentralized manner through nominated entities like National Implementing Entities (NIEs), Regional Implementing Entities (RIEs), and Multilateral Implementing Entities (MIEs).

The developing countries qualify for climate adaptation fund on fulfilling the following eligibility conditions:

#1 - Country Eligibility

The Adaptation Fund's Strategic Priorities, Policies, and Guidelines - Paragraph 10 states the eligibility requirements of the nations to qualify for this fund. This fund is intended to fund projects and programs in developing nations that are prone to the unfavorable impact of climate change. Also, the eligible nations are the Parties to or part of the Kyoto Protocol. The Adaptation Fund Board (AFB) decides the resource allocation cap for each eligible host nation, program, and project after a proper periodic analysis of AF resources to achieve a fair and equitable distribution.

#2 - Implementing and Executing Entities

Eligible parties can submit their proposals for fund requirements directly with the help of their appointed National Implementing Entities (NIEs) and Multilateral Implementing Entities (MIEs) after ensuring that the Adaptation Fund accredits them. These implementing entities need government endorsement. 

The NIEs are the national bodies recognized by the AFB for fulfilling the established fiduciary standards. They are also responsible for managing projects for financial oversight, monitoring, and reporting. Notably, a group of member countries can also select regional or sub-regional entities as their implementing entities under the provisions of Paragraph 27. Conversely, MIEs comprise regional banks and multilateral institutions that comply with the AFB's fiduciary standards and comprehensively manage the AF-financed projects and programs.

The developing nations that are the Parties to the Kyoto Protocol of UNFCCC would qualify for the national adaptation fund for climate change, as per Paragraph 10 stated under the Adaptation Fund's Strategic Priorities, Policies, and Guidelines. Some of the countries which have received relief through such funding include Kenya, Syria Arab Republic, Ethiopia, Lesotho, Antigua and Barbuda, Costa Rica, Morocco, Rwanda, Uruguay, Panama, Jamaica, Chile, Dominican Republic, Nepal, Jordan, Mauritius, Maldives, Samoa, Malawi, Senegal, Mali, Colombia, Ghana, Tajikistan, Sri Lanka, Myanmar, Guinea-Bissau, Uganda, South Africa, Ecuador, Peru, Egypt, Lebanon, Cambodia, Indonesia, Argentina, Georgia, Pakistan, Bhutan, etc.

The adaptation fund and green climate fund are distinct climate change financing solutions for developing nations; the significant dissimilarities between these funds are discussed below: