Report No. 78416 - ECA The World Bank Group Europe and Central Asia Region Adapting to Climate Change in Europe and Central Asia Lessons from Recent Experiences and Suggested Future Directions June 28, 2012 Table of Contents Acknowledgments iv Abbreviations and Acronyms v Executive Summary vii 1. Introduction and Analytical Framework 1 2. Adaptation Considerations in Current ECA Lending 9 2.1 Sustainable Land Management and Watershed Projects 9 2.2 Water Sector 12 2.3 Irrigation in Central Asia 15 2.4 Transport 16 3. Lessons Learned from Initial Adaptation Pilots 20 3.1 Energy Sector 20 3.2 Agriculture 23 3.3 Water in Southeastern Europe 29 3.4 Water in Central Asia 30 3.5 Income and Poverty Implications of Climate Change in Tajikistan 32 3.6 Climate Change Action Plan: Operationalizing the Agenda in Belarus, Moldova, and Ukraine 36 4. Lessons Learned from Newer Adaptation Pilots and Related Efforts 38 4.1 Tajikistan PPCR 38 4.2 Sustainable Cities 44 4.3 Social Dimensions in ECA 47 4.4 Development Policy Lending and Green Growth Studies 49 5. Accelerating Mainstreaming of Adaptation in ECA 51 5.1 Opportunities Ahead: A Cross-Sector Perspective 51 5.2 Opportunities Ahead in Environment and Natural Resource Management 52 5.3 Opportunities Ahead in Agriculture 54 5.4 Opportunities Ahead in Transport 55 5.5 Opportunities Ahead in Energy 57 5.6 Opportunities Ahead in Urban and Water 57 5.7 Opportunities Ahead on Social Dimensions 58 6. Lessons on Mainstreaming Outside of WB-ECA 60 6.1 Transferrable Ideas from Other WB Regions 60 6.2 EU Countries Adapt to Climate Change 66 6.3 Progress and Collaboration in the UN Family and the GEF 69 ii 6.4 New Directions in Climate Finance 71 7. Summary of Key Findings 74 Glossary 77 Figures Figure 1: Vulnerability of ECA Countries 5 Figure 2: Key Steps of Adaptation Process 7 Figure 3: Interactive Diagram of the Online HEAT Toolkit 22 Figure 4: Climate Change Impacts on Different Crops at the AEZ Level in Moldova 25 Figure 5: Benefit-Cost Analyses for Rehabilitated Irrigation Infrastructure in Moldova 25 Figure 6: Public Awareness of Climate Change Consequences in Tajikistan 32 Figure 7: Vulnerability Index of Regions in Tajikistan 34 Figure 8: Tajik Priorities for Additional Government Spending on Climate Change Adaptation 35 Tables Table 1: ECA Adaptation Pilot Program Components (as of June 24, 2011) 8 Table 2: Climate Adaptation Considerations in ECA’s ENV and NRM Portfolios 53 Pictures Picture 1: Anatolian Watershed Project 9 Picture 2: Irrigation Systems in Uzbekistan 16 Picture 3: Impact of Excessive Runoff on Road Pavement in FYR Macedonia 18 Picture 4: A Technician at a River Flow Monitoring Station in Dushanbe 42 Boxes Box 1: Adaptation vs. Development 2 Box 2: Climate Change Initiatives by the European Commission 3 Box 3: Enhancing Ecological Resilience through Sustainable Forest Management in ECA 11 Box 4: Lessons Learned from Other Bank Regions 19 Box 5: Climate Investment Funds 39 Box 6: Possible Social Impacts of Climate Change in ECA 47 Box 7: Social Dimensions of Climate Change in Other Bank Regions 49 Box 8: Climate Risks and Vulnerabilities in ECA 51 iii Acknowledgments The report was prepared by a team led by Ron Hoffer (Climate Change Coordinator) and Ivana Horvathova (research associate and principal editor), with input from a number of technical staff in the ECA region. Funding for the report was provided by the ECA Office of the Chief Economist, as part of the program of analytical work on “growing green and the economic benefits of climate action in ECA.� The main contributors of individual sections of the report from the ECA Region are Guy Alaerts, Aziz Bouzaher, Elisabetta Capannelli, Simon Croxton, Daryl Fields, Anatol Gobjila, IJsbrand de Jong, Marcel Ionescu-Heroiu, Ron Hoffer, Ivana Horvathova, Stephen Karam, Sunanda Kishore, Martin Henry Lenihan, Pier Francesco Mantovani, David Meerbach, Carolina Monsalve, Jessica Mott, Nicolas Perrin, Anthony Powell, Anna Reva, Nina Rinnerberger, Bill Sutton, Dina Umali-Deininger, and Salman Zaidi. The team is also grateful for contributions from staff in other Bank units, including Jocelyne Albert (LAC), Jesse Biroscak (MENA), Johanne Holten (MENA), Carole Megevand (AFR), Rawleston Moore (GEF), Dora Suwa Cudjoe (SAR), Agnete Tikjoeb (MENA), Dorte Verner (MENA; LAC), and Samuel Wedderburn (EAP). The report was finalized by Aziz Bouzaher and Jitendra Shah. Editorial support for epublishing was received from Jane Sunderland and Ana Hristoslavova Bachurova. iv Abbreviations and Acronyms AAA analytic and advisory activities ADB Asian Development Bank AEZ agro-ecological zone AF Adaptation Fund BB Bank budget BNPP Bank-Netherlands Partnership Program CDM Clean Development Mechanism CGE computable general equilibrium CIF Climate Investment Funds CIS Commonwealth of Independent States CPS Country Partnership Strategy CSIRO Commonwealth Scientific and Industrial Research Organization CTF Clean Technology Fund CVI Climate Vulnerability Index DFID Department for International Development (United Kingdom) DPL Development Policy Lending DRM disaster risk management EAP East Asia and Pacific (WB unit) EBRD European Bank for Reconstruction and Development EC European Commission ECA Europe and Central Asia (WB unit) ECSSD Environmentally and Socially Sustainable Development ECCU2 Belarus, Moldova, Ukraine EFO externally funded output EIA environmental impact assessment EMP environmental management project ENV/NRM environment and natural resource management ESMAP Energy Sector Management Assistance Program ESW economic and sector work EU European Union FIP Forest Investment Program FLEG Improving Forest Law Enforcement and Governance Program GDP gross domestic product GEF Global Environment Facility GHG greenhouse gas GWh gigawatt-hour HEAT Hands-on Energy Adaptation Toolkit IDA International Development Association I&D irrigation and drainage IFC International Finance Corporation v IPCC Intergovernmental Panel on Climate Change IUCN International Union for Conservation of Nature LAC Latin America and the Caribbean (WB unit) M&E monitoring and evaluation MDB multilateral development bank MENA Middle East and North Africa (WB unit) MIE multilateral implementing entity NES National Energy Strategy NIE national implementing entity NRM natural resource management NRDP Natural Resources Development Project NSSD National Strategy for Strategic Development NWMS National Watershed Management Strategy ODA official development assistance PPCR Pilot Program for Climate Resilience PSD participatory scenario development RKM river kilometer RRS Region of Republican Subordination, Tajikistan SAR South Asia (WB region) SCCF Special Climate Change Fund SCF Strategic Climate Fund SCI Sustainable Cities Initiative SDCC social dimensions of climate change SFM sustainable forest management SLM sustainable land management SRB Sava River Basin SREP Scaling Up Renewable Energy Program in Low Income Countries TA technical assistance TF trust fund TFESSD Trust Fund for Environmentally and Socially Sustainable Development TRACE Tool for Rapid Assessment of City Energy UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change USAID U.S. Agency for International Development WDR World Development Report WHO World Health Organization WWF World Wildlife Fund All dollar amounts are U.S. dollars unless otherwise indicated. vi Executive Summary 1. Like other regions, Eastern Europe and Central Asia is vulnerable to climate change and its potential socioeconomic impacts. While all countries are facing warmer temperatures, a changing hydrology, and more extreme events (for example, floods and droughts) and are concerned about the level of greenhouse gases in the atmosphere, they differ in their financial and institutional capacities to respond. Therefore, especially for the most vulnerable countries in the region (for example, those in Central Asia and southern Europe), adapting to climate risk adds a new dimension to the challenges of development, but also provides an opportunity to revisit priorities and accelerate reforms. 2. The Europe and Central Asia (ECA) Region of the World Bank has been actively working on climate-related projects and has advanced a number of initiatives in response to climate change since the 1990s. Nevertheless, up until a few years ago the region’s focus was mainly on emissions reduction (mitigation), rather than on helping countries respond to existing or expected impacts from climate change through adjustments in natural or human systems. But more recently, adding focus on climate adaptation had led ECA to initiate a program of analytical work and pilot investment projects to help develop the information and knowledge base necessary to help build staff skills as well as better respond to client needs. Key Lessons to Date 3. While the regional summary report1 gave helpful views on how vulnerability varies across the region, fine-tuning the analyses through the national and subnational pilots allowed much more substantive dialogue with country counterparts. We learned that:  Three of the initial five pilot projects—addressing agriculture, energy, and income/poverty questions—have been delivered and have clearly advanced staff and client capabilities. Analytical approaches demonstrated in the agriculture and energy work are being replicated in other ECA countries and are increasingly linked to investment planning. The approach to addressing income and poverty issues has positively shaped both economic planning and social development thinking in Europe and Central Asia (ECA) and other Bank regions.2  Both completed and active pilots demonstrate practical approaches for assessing subnational variability to climate impacts, and also yield tailored adaptation approaches. The agriculture pilots, for example, suggest that crop yields in all four initial pilot countries (Albania, the Former Yugoslav Republic of Macedonia, Moldova, and Uzbekistan) will generally be reduced over the coming decades, but impacts and needed response vary significantly by agro-ecological zones. Higher demands for irrigation in some agro-ecological zones may constrain other water uses - for example, hydropower and ecological needs. The pilot on income and poverty in Tajikistan similarly showed 1 Fay, Marianne, Richard I. Block, and Jane Ebinger, eds. 2010. Adapting to Climate Change in Eastern and Central Asia. World Bank: Washington, DC. 2 The two remaining initial pilots are in the water sector; while they are delayed, they hold similar promise for staff and client benefits. vii how creative population surveys can map out areas of differing climate vulnerability and institutional resilience, which is helpful information for targeting assistance.  While parts of Europe and Central Asia will likely be impacted most severely by higher temperatures and more extremes in hydrology, overall improvement in sector-specific efficiencies is the most logical first line of adaptation response. The pilot on energy in Albania, for example, showed that despite a projected 20 percent decrease in overall river runoff for this hydropower- dependent country, improvements in energy generation and distribution can effectively eliminate the vast majority of water supply shortfalls. Recommendations to improve the effectiveness of agricultural extension services or to introduce more heat-tolerant seed stocks are logical steps to take to bolster the agriculture sector, given recent climate trends, irrespective of climate model results.  Several ECA sector projects designed before the Region raised climate as an issue have likely benefits for climate resilience and the pilots have shown how these can be further enhanced. World Bank support for flood management in Poland and Croatia, for example, has probable long- term resilience benefits even if longer-term climate modeling was not factored in the design. Irrigation rehabilitation and agriculture sector projects in the portfolio are responding to past drought problems even if longer-term crop yield projections were not carried out. Subsequent projects in these sectors will benefit from the incremental improvement in knowledge and response from the agriculture and water pilots.  Cross-sector concerns arise from sectoral adaptation planning, and they will need to be addressed in stages. Both the energy and agriculture pilots, for example, were able to consider questions of availability and use of water with competing demands. Sound technical and policy recommendations could be made in those cases without necessarily requiring expensive, comprehensive water modeling work. On the other hand, both water sector pilots (that is, for the Sava and Amu Darya) have been slow to produce results in part because full transboundary river basin studies are not in place. Nevertheless, for the Sava, the preparatory phases have yielded valuable information on recent climate variability that will help guide the next phase of river basin planning, shaping investments in inland waterways transport and irrigated agriculture. A basin management organization is in place for the Sava, which should also speed acceptance of results.  Reasonable consideration of subnational, sectoral, and cross-sectoral adaptation implications takes additional time and budget and would benefit from more standardized approaches. At around one year, the pilot on energy in Albania took the shortest time from design-to-delivery. The timeline on the agriculture pilots is expected to shrink from the nearly three years of the first round, to two years in the next round. The pilots on water are taking over three years, because of shortages of staff time to guide the work and delays in coordinating work streams in a transboundary context. Despite these constraints, the pilots have been helpful in arraying techniques that vary in sophistication, cost, timeliness, and applicability.  The next phase of pilots addressing sustainable cities, the social implications of climate change, and adaptation in transport hold promise for greater partner engagement and investments in viii these important topics. Each of these topics has received new attention with respect to climate adaptation in fiscal 2011, with modest trust fund support either in hand or pending. The concept of sustainable cities is an interesting amalgam of the climate, competitiveness, and growth pillars, and one where the cross-sector benefits (and challenges) are most apparent.  Integrated country-focused adaptation planning and investments as demonstrated by ECA under the Pilot Program for Climate Resilience (PPCR) in Tajikistan, one of eleven global integrated adaptation programs under the Climate Investment Funds, will likely shape the next wave of climate financing. It is a likely model for future development bank engagement under any new climate financing schemes. ECA championed financial assistance among implementing partners in support of the successful application by the government for $52 million of investments and technical assistance. While the PPCR emerged following the launch of the ECA pilot program, experience under the pilots meant that Bank staff knowledge and expertise on adaptation was already well advanced.  The increasing AAA work on green growth complements both climate mitigation and adaptation actions. The Macedonia Green Growth and Climate Change AAA program, resourced at over $2.4 million, will build upon adaptation pilots in agriculture and water, while examining emissions- reduction options and national development considerations in a more environmentally-friendly path. Smaller green growth analytical and advisory activities (AAA) for Turkey and Bulgaria also build on the region’s increasing knowledge of adaptation tools.  Good partnerships and consultation between Bank staff and country counterparts have been instrumental for success, even if the extent of engagement varied. Nearly all pilots have benefited from national input, which included some combination of workshops, informal consultations, and contracts to firms or individual experts. These engagements have been extremely helpful for building understanding and acceptance. It was recognized that, in some cases (for example, where deadlines were tight and/or local expertise lacking), international consultants did a relatively higher percentage of the work, though this did not hinder acceptance of findings.  The ECA pilot program on adaptation focused largely on the first two stages of the adaption process defined by the UN Framework Convention on Climate Change: assessment and planning. Only in the case of the Tajikistan PPCR were the next two stages (implementation and monitoring/evaluation) also formally included. Nevertheless, there is considerable interest in investment and monitoring and evaluation (M&E) follow-up on the agriculture and water pilots. New thrusts on green growth and sustainable cities are inherently linked to investments and M&E. ix 1. Introduction and Analytical Framework Background 1. The Europe and Central Asia (ECA) Region of the World Bank has been actively working on climate-related projects and has advanced a number of initiatives in response to climate change since the 1990s. Over the last decade, Bank support to reduce greenhouse gas (GHG) emissions—mostly in the energy sector—with incentives provided by carbon finance, received the greatest emphasis. The Bank administered some of the first carbon funds to provide incentives for reducing harmful GHG emissions—the leading cause of global warming—and ECA was quick to help partner countries take advantage of these funds. The region’s lending and advisory services for the energy sector served to increase energy access and service delivery while improving efficiencies in generation and distribution. Innovative finance was added in the early 2000s to encourage renewable energy investments such as hydropower, geothermal, and wind resources. ECA also had some of the earliest successes in carbon finance that spurred carbon sequestration in forests. These investments assist clients in meeting their national and international commitments to lower GHG emissions, thereby helping slow global warming and related impacts. All of these interventions fall under the umbrella of mitigation. Since the 1990s, there were also many ECA projects in the agriculture, environment, and natural resources sectors that had been designed in part to address extremes in recent climate variability. Nevertheless, up until a few years ago the region’s focus was clearly on the emissions-reduction3 or mitigation question, rather than on helping countries respond to existing or expected impacts from climate change through adjustments in natural or human systems, or adaptation.4 Adding Focus on Climate Adaptation in the ECA Region 2. The year 2007 was pivotal for the Bank on climate change, and this had implications also for ECA. The Fourth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) was released in April and May 2007.5 The report was noteworthy for a number of reasons, including the IPCC’s view that climate projections in the coming decades will be even more severe than previously envisaged, and the stronger likelihood that global climate is being influenced by human activity. The Fourth Assessment Report also made a stronger case than previous assessments for a global response to meet the adaptation challenge. Adaptation means the adjustment in natural and human systems in response to climate variability and change, in a way that either moderates the harm (for example, adding flood defenses or shifting to drought-tolerant crops) or exploits the benefits (for example, taking advantage of more ice-free ports). 3 Twenty-one Bank-supported carbon finance projects in Europe and Central Asia generated 13,794,000 tons of avoided GHG emissions. For more information on the projects, see http://sdwebx.worldbank.org/climateportal/. 4 The UNFCCC defines adaptation as “Adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities. � Source: UNFCCC Glossary. 5 Available at http://www.ipcc.ch. 1 Box 1: Adaptation vs. Development Climate practitioners understand the essence of adaptation as responding to the perceived, and planning for the anticipated consequences of climate change. But with continuously rising attention on climate, some academics, climate practitioners and decision makers ponder whether adaptation interventions are all that different from good development work. Approaches to consider risk under uncertainty, the need to improve weather forecasts, or to ensure resilient infrastructure have all been in the development “tool kit� long before climate change became a household word. So is adaptation just good development planning under a new name? The importance of this question exceeds an academic debate; and there are real consequences that depend on the answer as donors seek to ensure that investments in climate go beyond the norm to provide addition benefits. Our experience in ECA actually supports both sides of the argument; adaptation can be both the same and also different depending on the context. A few examples follow. Subsection 2.1 focuses on the rich history of sustainable land management (SLM) and watershed projects in ECA. These projects enhance the stability of slopes, help bolster agricultural productivity, improve rural livelihoods, and help consider trade-offs across the plethora of water uses. All these positive factors will be helpful for clients already facing impacts from ineffective land and water policies under changing climate regimes. The chapter notes that these projects have clear climate benefits even if they were not specifically designed to deal with future climate change. Looking at specific adaptation pilots (for example, subsections 4.2–4.5 and 5.1), one finds similar interventions. The key difference in the latter, however, is that the best available knowledge on climate trends and projections (given cost and time constraints) is used to tailor suggested policy and technical interventions. As a result, the analyses and recommendations are more likely to be relevant and appropriate to changing conditions. The relevance increases, of course, as the viable life of the project lengthens. Traditional water management planning assumes that the past is the window to the future; but the newer adaptation work crucially includes a more thoughtful consideration of a possible wider range in impacts. Older SLM and agriculture sector efforts do not take into account projected severe increases in temperature (and consequent hydrologic impacts) in several particularly vulnerable regions of ECA (for example, Southeastern Europe, South Caucasus, and southern Central Asia). The newer pilots have already shown where changes in both land and agricultural practices are needed under new regimes, how climate impacts could pose both opportunities and constraints to growth, and what steps should be considered to respond. This supports more sustainable growth and improved livelihoods. Apart from these technical differences in development approach, adaptation considerations have tipped the balance on investments, and the example of improved hydrometeorological services is telling. Since the fall of the Soviet Union, professionals in the weather forecasting, flood forecasting, and water management fields have decried the breakdown of basic hydrometeorological systems. Economic arguments were raised to show how better data collection and management can be paid back in reduced flood losses and better crop yields. Nevertheless, raising finance for such improvements has been extremely hard; in the typical Bank-client dialogue on programming, it falls off the list. Experience in Southeastern Europe and Central Asia has shown, however, that when climate impacts are taken into account, such projects become that much more viable (see subsection 5.1). And with supplementary financing for adaptation increasing, we have seen a dramatic increase in such projects. ECA has led the way, with efforts in other Bank regions expanding. 2 3. The interest in adaptation in ECA also grew with the June 2007 release of a draft policy paper prepared by the European Commission, “Adapting to Climate Change in Europe: Options for EU Action.�6 The paper presented emerging climate science research that suggests Europe had warmed at a higher rate than global averages and that projected change will “heavily affect Europe’s natural environment and nearly all sections of society and the economy.� Vulnerable areas across the European Union and neighboring regions were identified, and a clear call for more action on adaptation was made—from research to policy analysis to financing. While the IPCC Fourth Assessment Report helped galvanize the entire United Nations family, including the World Bank, to increase focus on climate and on adaptation, the EC paper gave special impetus to the ECA Region. A more detailed overview of the climate change initiatives by the EC is summarized in Box 2. Box 2: Climate Change Initiatives by the European Commission The European Commission (EC), as the administrative arm of the European Union (EU), is one of the leading regional institutions addressing both climate mitigation and adaptation. In June 2007, the EC launched a “Green Paper� on adaptation that generated considerable attention. The paper made a very strong case that climate will seriously impact a number of sectors in Europe, and sought comment on several possible policy thrusts. The White Paper, released in 2009 after the consultation process had been finalized, outlined a response in two periods. From calendar year 2009 through 2012, the EC focus was set on (i) developing the knowledge base by establishing a clearing house of methodologies and approaches; (ii) reviewing where EU directives and policies need refocusing or amendments; (iii) outlining new sources of funding; and (iv) assisting countries outside the EU with adaptation planning. In a second phase, starting in calendar year 2013, the EC will be moving forward with new policies as well as concrete funding and technical assistance. Even before 2013, however, the EC’s adjustments in policies and funding are apparent. In June 2011, for example, the EC indicated that in the coming budgets, 30 percent of direct payments to farmers would be conditioned on environmental and climate-friendly agriculture. In addition, the EC’s base funding for environment under the LIFE+ initiative will now emphasiz e climate adaptation and mitigation benefits. Furthermore, the Directorate General (DG) for Research and Innovation supports DG CLIMA with expanding attention on both adaptation and mitigation. ECA’s Environmentally and Socially Sustainable Development Department (ECSSD) has been coordinating its adaptation work with the EC, mainly with the DG Environment and thereafter with the DG CLIMA. Bank staff have also used participation in major climate talks and events, management and technical staff visits in Brussels, and the ECA-EU Partnership and Learning series to further collaboration on climate change –related issues between the two institutions. 4. Yet another report—the Stern Review on the Economics of Climate Change7—commissioned by the British government and prepared by the Bank’s former chief economist, Lord Nicholas Stern, was also released in 2007. The Stern Review, analyzing the impacts of climate change on world economics and describing climate change as a unique and wide-ranging challenge to the economies, certainly contributed to the recognition that additional attention was needed to build staff and client awareness on adaptation. 6 Numerous EC publications on adaptation can be found at http://ec.europa.eu/clima/sites/change/index_en.htm. 7 http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/sternreview_index.htm 3 5. After assessing the existing capacities and expected opportunities and challenges, a two- pronged approach on adaptation in ECA was approved in January 2008, consisting of a summary report on adaptation for ECA region and of a pilot program of analytical work to help staff and clients better understands the impacts of climate change. Regional Survey Report on Adaptation 6. The main objective of the overall survey report—eventually titled Adapting to Climate Change in Eastern Europe and Central Asia8—was, according to its concept note, “to summarize in a nontechnical manner what is known about climate change and its likely impacts in ECA, and draw conclusions on the associated needs and options for adaptation in our client countries.� The report was meant to capture future needs such as awareness raising, institution building, and finance. It was also meant to support the second pillar of newly adopted regional action on adaptation. 7. The report, released in 2009, advanced the argument that Europe and Central Asia faces substantial threats from climate change and identified critical legacy and socioeconomic constraints from the formerly planned economies of the region as the obstacles to a suitable response. The report examined threats and opportunities in key sectors and concluded with a call for European and Central Asian countries to build greater climate resilience as their economies advanced. It provided a good baseline for reviewing adaptation questions across Europe and Central Asia and offered an opportunity for a number of ECA staff to gain knowledge of key sectoral issues and response options. 8. Perhaps the greatest benefit from the report was the increase in staff knowledge gained through topical research; many cases leading to follow-on trust funded work on the same topics. This includes water and land management, agriculture, energy and urban, and disaster risk management and weather services. The two areas which to date have not fully benefited from the survey work are transport and health; although, in both cases an increase in AAA work is expected in fiscal 2012.9 While many aspects of the water sector have been advanced in follow-on pilots (most notably irrigation and water resources planning), the region still needs to fully embrace implications for water utility management, as well as water quality. 9. The report established the relative ranking of European and Central Asian countries with respect to their vulnerability to climate change (see Figure 1), which has been an effective tool for discussion inside and outside the Bank. The figure is routinely used in briefings and training. It is also helpful to note that the vast majority of pilot projects are in countries clustered to the left of the figure, where the combination of exposure (strength of projected future climate relative to current climate variability) and sensitivity (natural and human) dominate with respect to national adaptive capacity. 8 http://go.worldbank.org/7OOC1E7AU0 9 Most of the sectoral work is included in longer supplementary papers noted in the survey report and available on request. 4 Figure 1: Vulnerability of ECA Countries. Adaptive capacity is shown as negative values because it decreases vulnerability. 10. Outreach events indicate that country counterparts are less concerned with broad regional climate impacts and solutions than they are on country-specific observations gained through more targeted AAA work or investments. To cite one example, the survey report includes a number of non- quantified descriptions of likely climate change impacts on the agriculture sector, broken down by ten ECA subregions. By contrast, the pilot work completed at the end of fiscal 2011 includes quantified impacts and cost-and-benefit information for specific crops in specific agro-ecological zones within each pilot country. It is easy to understand why the pilots work generated special interest (with ministerial and media response) at the sectoral counterpart level. 11. Media interest in the survey report was rather short-lived—and largely overshadowed by the World Development Report (WDR) that was presented in the region at the same time. However, the survey report continues to be among the sought-after resources on adaptation, available at the WB climate change website.10 10 http://www.worldbank.org/eca/climatechange 5 Pilot Program on Adaptation 12. The main objective of the second pillar of ECA’s two-pronged approach on adaptation was the launch of a multiyear pilot program of analytical work “to assist client countries understand the range and likely impacts from climate variability and change on vulnerable subsectors in sensitive subregions, and to develop candidate adaptation approaches.� The pilot program was designed to move staff and client knowledge from a general awareness of regional concerns regarding adaptation, to more specific responses that can be factored into sectoral planning and investments. The overarching framework for three years of AAA work began by leveraging several trust funds, sufficient to boost the program budget for initial AAA pilot work to over $3 million. More than 85 percent of the initial funding was expended by the end of fiscal 2011. 13. The program included three building blocks: (1) targeted reviews of impacts and vulnerability over timeframes of concern; (2) identification of adaptation options: technical, economic, and institutional aspects; and (3) stakeholder dialogue and capacity building. These blocks correspond to the first two stages of the adaptation process defined by the UNFCCC, assessment and planning (see Figure 2). Of course, as it was a programmatic economic and sector work (ESW), linking the investments was not a requirement but a favorable outcome. 14. An initial set of five pilots addressed several key sectoral questions: (i) reducing vulnerability of agricultural systems; (ii) adapting vulnerable energy infrastructure; (iii) examining income and poverty impacts; and (iv) examining water resource questions in critical basins. Bank-client dialogue on climate adaptation was also advanced. 15. In late fiscal 2010 and in fiscal 2011, the initial pilots were augmented by additional efforts on sustainable cities, social development, green growth, and national adaptation programming. These brought the total commitment of AAA funding to some $7.7 million, and will extend attention through fiscal 2013. 16. The present report summarizes progress and key lessons from all pilot projects and related endeavors as of the end of fiscal 2011. Opportunities to expand coverage and mainstream the results from the pilots are also explored. 6 Figure 2: Key Steps of Adaptation Process Key Steps in Climate Adaptation MONITORING & ASSESSMENT PLANNING IMPLEMENTATION EVALUATION •Develop & disseminate •Understand context methods and tools •Identify and •Implement •Monitor and evaluate •Provide data and scenarios appraise options targeted actions adaptation interventions •Assess impacts and vulnerability Stakeholder engagement and knowledge management Adapted from: United Nations Framework Convention on Climate Change, Assessing Climate Change Impacts and Vulnerability, Making Informed Adaptation Decisions. Bonn, Germany, 2011 Report Structure 17. The present report summarizes progress and key lessons from all pilot projects and related endeavors as of the end of fiscal 2011. The introduction is followed by:  Section 2: Highlighting where current lending and advisory services are providing adaptation benefits as a complement to other development objectives.  Section 3: Summarizing the goals, approach, and results from the first set of pilot projects launched in fiscal 2008/09.  Section 4: Summarizing the goals, approach and results from the set of pilot projects launched in fiscal 2010/11. This also includes adaptation-targeted ESW and lending which was not specifically identified in the initial ECA programmatic ESW.  Section 5: Summarizing the successes and limitations of adaptation efforts to date as well as possible future directions.  A list of key projects considered in the present report, including the respective team leaders in charge, and information on budget and current status, is included in Table 1. 7 Table 1: ECA Adaptation Pilot Program Components (as of June 24, 2011) Project title (short & full) Team leader Budget and status Initial Adaptation Pilots (FY09 launch) Agriculture William Sutton thru $500K TFESSD; $694K BNPP TF; Regional AAA Program on Reducing Vulnerability FY11 $223 BB for SEE & Uzbek completed to Climate Change in ECA Agricultural Systems Nicolas Ahouissoussi (P113336) in FY12 $300K TFESSD ; Caucasus begins FY12 ECCU2 Dialogue Elena Klochan $100 K BB ECCU2 Climate Change Action Plan Anatol Gobjila Completed Energy Daryl Fields $240 K TFESSD; $192 ESMAP TF Adapting Vulnerable Energy Infrastructure to $82K BB Climate Change (P113712) Albania completed Uzbekistan delivery in 2Q FY12 Income and Poverty Salman Zaidi $300 K TFESSD Economic and Distributional Impacts of Climate Report delivered FY11; follow-up FY12 Change (P114402) Water - Sava Basin David Meerbach $200 K TFESSD Increasing Capacity to Adapt Water Resources Activity to complete in FY12 Management, Planning and Operations to Climate Change in SE Europe (P113303) Water - Amu Darya Basin Daryl Fields $250 K TFESSD A Roadmap for Adaptation to Climate Change in Activity deferred to FY12 the Amu Darya River Basin, Central Asia (TF092963 will link to P123804) Additional Pilots and Related Efforts Bulgaria Green Growth Aziz Bouzaher $120K BB Climate Change and Green Growth – Bulgaria Began late FY11; active thru FY12 (P115335) Macedonia Green Growth Erika Jorgensen $1,014 K SIDA TF; $990 K Norway EFO Macedonia Green Growth and Climate Change $400 K BB AAA Support Program Started late FY11; active thru FY13 (P123048 and P096960) Social Dimensions Nicolas Perrin $300K BNPP TF; $300K TFESSD Integrating Social Dimensions of Climate Change; Country pilot studies begin in full FY12 Designing Equitable Green Growth Strategies (P codes pending) Sustainable Cities Stephen Karam $71.5 K DFID TF; $200 K Italian TF Sustainable Cities, Cultural Heritage and Urban Began late FY10; active thru FY12+ Regeneration (P124745); others Tajikistan PPCR Ron Hoffer $732K PPCR-TF and Pilot Program for Climate Resilience – Tajikistan $150K BB for Phase 1 finishes FY12 (P118038) $16.5M Phase 2 thru FY14+ Turkey Green Growth Aziz Bouzaher $350 K BB Sustainability Programmatic TA/Environment and Began late FY11; active thru FY12 NRM – Turkey (P115932) 8 2. Adaptation Considerations in Current ECA Lending 18. Much of the knowledge generation and lending operations in the ECA Region, particularly within the natural resource management, rural development, and water and urban portfolios, have clear benefits for building climate resilience. This section of the report outlines a selected set of these projects, many of which began implementation before the start of the adaptation pilot program. The first example is the Anatolia Watershed Rehabilitation Project, which supports sustainable natural resource management practices in 28 micro-catchments in Anatolia and Turkey’s Black Sea region, thereby improving international water quality, raising incomes of communities affected by resource degradation, and building adaptive capacity to climate change. Several other projects in the ECA portfolio have pioneered sustainable land management interventions in specific country contexts that could be further adjusted to focus more on climate adaptation. Picture 1: The Anatolian watershed project has piloted approaches to stabilize degraded watersheds, to improve water management (and thereby rural livelihoods), and to increase resilience to climate variability and change. 2.1 Sustainable Land Management and Watershed Projects Albania 19. The Natural Resources Development Project (NRDP) demonstrates that the best form of adaptation often starts with sound and sustainable development. Adaptation efforts have been implicitly mainstreamed through participatory planning and management of forest and pasture lands, which was successfully championed in more than 200 communes under the NRDP. While the project is not designed specifically for adaptation, it employs a holistic approach that strengthens climate- sensitive sectors, including land, water, and forestry, by focusing on livelihood improvement, poverty 9 reduction, landscape rehabilitation, and sustainable management of forest and pasture lands. The approach was first piloted in only 30 communes during the implementation of the Albanian Forestry Project financed by the World Bank (1996–2003). Since the start of the NRDP in 2005, the project has contributed to approximately a 200,000-ton reduction in erosion, a 25 percent increase in income earned from forest activities in communal forest and pasture land, and a 50 percent increase in income earned from forest and agriculture activities in micro-catchments. The project's success demonstrates that the best form of adaptation is often sound development of natural resources. Croatia 20. A bioregional approach to protected areas management is being implemented with support from the ECA Region, offering adaptation co-benefits in addition to the conservation of critical habitats and biodiversity. Croatia’s efforts are part of the EU-wide Natura 2000 Network, which aims to ensure the long-term survival of Europe’s most valuable and threatened species and habitats. While climate adaptation is not explicitly a centerpiece of Natura 2000, the system-wide approach is implicitly building adaptive capacity of ecosystems with an emphasis on sustainable future management, both ecologically and economically. Croatia’s National Ecological Network, established in November 2007, is the basis for the future Natura 2000 network in Croatia and includes 19 national and nature parks, or approximately 5 percent of Croatian land territory, managed by dedicated park administrations. It includes an additional 42 percent of land territory of national and regional conservation importance, including formally protected areas in different categories and non-protected lands with management oversight by country public institutions. The management of the network of protected areas will include data collection and analysis for national-level monitoring of the status and trends of biodiversity. This will provide a diverse and sustainable basis for better integration with other sectors such as water management, forestry, fisheries, agriculture, and regional development. A special focus of this bioregional approach is on livelihood improvements and particularly on establishing incentives for local people to cooperate and share the benefits of Natura 2000. Turkey 21. Current efforts in Turkey focus on improving national watershed management, a vital strategy on its own, but one that is commensurate with integrating climate variability in development planning and investment decisions. In particular, the ECA Region is engaged in guiding the development of a National Watershed Management Strategy (NWMS), which will provide a platform for articulating Turkey’s longer-term investment program in watershed rehabilitation and water management. Among the key objectives of the strategy are climate adaptation and mitigation as well as conservation and sustainability of natural resources. This will include the development and implementation of a methodology to account explicitly for climate variability and change in the design of future watershed management programs to help improve decision makers’ understanding of the contribution of watershed management to both adaptation options and mitigation benefits (carbon sequestration). The Turkey NWMS will be a critical component of a strong integrated natural resource management policy framework and strategy that meets EU environmental and water management standards and strengthens Turkey’s sustainable development agenda. 10 Bosnia and Herzegovina 22. The ECA Region is also supporting sustainable forest management, which is a critical element in protecting ecosystem services that contribute to human well-being, enhance ecological resilience, and reduce social vulnerability to climate change. Details on the Improving Forest Law Enforcement and Governance (FLEG) Program, implemented in several European and Central Asian countries, and on the Bosnia Forest and Mountain Protected Areas Project are in Box 3. Box 3: Enhancing Ecological Resilience through Sustainable Forest Management in ECA Sustainable forest management (SFM) is critical to mitigating the effects of climate change. Together with rural livelihood development, SFM forms a complicated, long-term natural resource management matrix. The forest and its resources are not one-dimensional, providing simply wood and paper products. Rather, the existence of thousands of rural communities in Europe and Central Asia is linked directly to forest resources— and their livelihoods depend on a healthy, productive forest. Several programs in Europe and Central Asia—including the Bosnia Forest and Mountain Protected Areas Project and the EU-funded Improving Forest Law Enforcement and Governance (FLEG) Program (jointly implemented by the Bank, WWF, and IUCN)—are designed to prevent forest degradation, strengthen sustainable forest management practices, and develop an environmentally, socially, and economically sound governance model with positive impacts on other important related sectors by doing the following:  Providing sustainable and renewable energy resources  Reducing carbon emissions from forest degradation and protecting existing carbon stocks  Improving water quality through better watershed protection  Improving biodiversity conservation through better protection/management of forest and protected areas  Increasing rural development opportunities  Mitigating climate change in a way that helps stabilize rural communities Tajikistan 23. Several active projects in the ECA environment portfolio have pioneered sustainable land management interventions that have built rural resilience in specific country contexts in Tajikistan. Some of these approaches could be further adapted to strengthen the focus on climate adaptation, addressing some of the most critical aspects of climate vulnerability and climate resilience facing the European and Central Asian region. 24. Through the Community Agriculture and Watershed Management Project, the Bank’s ECA Region has engaged with 400 rural communities in uplands to use participatory approaches that mainstream sustainable land management within investment decisions. The project has provided $7.4 million in 4,000 small grants to farmer groups for environmentally sustainable rural production investments. This support has generated significant adaptation benefits. For example, the project helped build the capacity of rural communities to deal with climatic risks such as droughts, floods, and shifts in agricultural calendars. It also developed training modules for participatory environmental assessment and monitoring, which can be further adapted to include specific indicators on climate 11 vulnerability and adaptation. A follow-on project, the Second Upland Agricultural Livelihood and Environmental Management Project, has been proposed for fiscal 2012 and is currently under consideration. 25. The Community Agriculture and Watershed Management Project and the Land Registration and Cadastral System Project have also supported farming competitions to recognize good practices in environmental land management. These competitions have highlighted sustainable land-use practices that decrease erosion, increase land fertility and productivity, and use water resources rationally; they have proved to be an effective dissemination mechanism. The Land Registration and Cadastral System Project, with related farmland restructuring support through a Programmatic Development Policy Program, has also increased land tenure security for over 40,000 individual and family farms throughout the country. This security provides essential incentives for sustainable resource management. 26. The Rural Vulnerability and Resilience Study is assessing the impact of operational efforts in farmland restructuring and sustainable agricultural land management on vulnerability among rural households in Tajikistan. The study will examine the adaptive capacity of rural households to maintain adequate livelihoods and economic security in the context of economic transition; institutional, economic, and environmental fragility; and the growing challenges of climate change. 2.2 Water Sector Uzbekistan and Kyrgyz Republic Water Supply Projects 27. Due to the anticipated impacts of climate change on the Syr Darya and Amu Darya watersheds, water utilities in the Central Asia subregion may increasingly experience reduced availability or quality of their surface water or groundwater supply sources. Faced with reduced water supply security, some utilities may have options to increase and diversify their water supply sources, including through displacement of irrigation allocations. However, given that cost-effective proximity resources are already mobilized, such an augmentation route would, in many cases, require the construction of new water mobilization and/or transfer infrastructure at increasingly unsustainable capital, operational, and environmental costs. Furthermore, these options would, of course, be out of reach for small urban and rural communities. 28. In Central Asian countries, like in most countries of the world, the preferable and often only answer to climate change adaptation challenges for water utilities rests on demand management. High hydraulic losses and energy inefficiencies, coupled with limited metering and accountability for water consumptions and discharges, are still the norm in local water utilities, resulting in very high per capita water demands and in unnecessary stress on local water resources. Comprehensive demand management strategies and policies based on water conservation investments and behavior change incentives—ones that will reduce water losses and wasteful usages, promote efficient water practices, and prevent water pollution in service areas—are needed to curb depletion and degradation of local water resources. Demand management strategies imply limited innovation risk, as they rely on proven policy and technical solutions, widely demonstrated around the world. Substantial demand 12 management gains, including reductions in operating charges, can also be secured with limited up-front costs and through high-return investments. Demand management solutions are thus easily accessible to local water utilities. 29. The immediate climate change adaptation challenge for countries and utilities in the subregion may in fact reside in the current levels of political awareness and utility management capacity. Strong political leadership is indeed needed to overcome long-established supply-management and construction-driven practices and to introduce new incentives in water management. Strong management skills are also needed to refocus and retool utilities for demand-management efficiency gains. Awareness raising and capacity building should thus be priorities in sector cooperation. 30. As the region is highly dependent on limited water resources, the Bank initiated the Bukhara & Samarkand Water Supply Project in Central Asia. The project, which closed in 2010, aimed at increasing water utility performance in the region. Unfortunately, due to lingering sector issues, the project did not significantly curb per capita water withdrawals, and it only reduced unit energy consumptions by 10 percent or less. 31. Similarly, the Dushanbe Tajikistan Water Supply Project, which closed in 2011, had little impact on reducing water demands and increasing energy efficiency. The follow-up project is expected to have a more significant impact on water demand and consumption through a stronger focus on metering and billing. It will thus help adjust the Dushanbe Vodokanal to more efficient/sustainable water withdrawals and energy uses. 32. Unquestionably, the sustainability of resource withdrawals and of energy uses must be improved in Central Asian utilities to better insulate their operations from potential climate change impacts, among other objectives. This would require Bank projects and clients to go beyond the already challenging priority to access and service rehabilitation needs. Croatia Inland Waters Project 33. The objective of the Inland Waters Project of Croatia is to improve water supply services, wastewater services, and flood protection measures in municipalities selected from the inland part of Croatia. The project’s two main components are technical assistance (TA), in which assistance is provided to Hrvatske Vode and participating utilities to implement the project, and investments to improve coverage and service of water and wastewater services in selected municipalities and flood protection measures. 34. The project’s flood management component relies on “soft infrastructure,� such as restoring oxbows (old curved channels) and floodplains to allow greater climate resilience. Even though the project was not designed to specifically address climate change, it has significant positive climate benefits. 13 Odra Flood Management 35. Poland would appear—based on regional rankings (see Figure 1)—to be comparatively less vulnerable to climate change than, for example, Southeastern Europe or Central Asia. Nevertheless, the country has faced devastating floods that have been of increasing concern. The Bank has supported Poland on emergency response operations from floods in the 1990s, and is now helping the country on a proactive, watershed-based approach to bolster resilience to climate variability. The Odra River Basin Flood Protection Project (ORFPP) was developed to ensure better protection of the population in the Slaskie, Opolskie, and Dolnoslaskie provinces in southeastern Poland—in particular the city of Wroclaw and its surroundings—from loss of life and damage to property caused by severe flooding. These areas are heavily affected by recurrent devastating floods, most recently in 1997. The main partners are the Ministries of Interior and Administration and of Environment; implementing agencies, the Institute of Meteorology and Water Management, and Voievod (provincial) and local governments. In addition to the Polish government, key financial partners are the European Commission (EC) and the Council of Europe Development Bank. 36. The project will achieve its objectives through three main components:  Rehabilitation and modernization of dikes, river embankments, and other river infrastructure;  Construction of a flood retention dry polder (reservoir) near Raciborz town; and  Improving flood forecasting and flood management capabilities, including monitoring and evaluation. 37. The project will be implemented in four phases. In the first phase (completed in 2009), the project implementation structure was established and staff trained. Teams of experts were also brought in to provide technical assistance to the implementing agencies on a number of key topics. 38. In the second (ongoing) phase, the land for the civil works is being acquired, especially for the new construction of dikes for the dry polder in Raciborz, but also in and near Wroclaw. Furthermore, 180 residential and related properties need to be acquired and the families living there resettled. The procedures for these activities follow the Polish, European, and World Bank regulations. The third phase, now also ongoing, entails updating the old detail designs of these works and applying for the environmental and construction permits. The procurement process for the first four packages of works contracts was started in August 2010; works are expected to start by mid-2011. 39. The expected results from the project are  Improved protection for about 2.5 million people in the Wroclaw area, as well as other urban centers and towns upstream of Wroclaw, such as Raciborz, Kedzierzyn, Kozle, and so on, against moderate and (partially) extreme flood episodes;  Improved flood forecasting and flood management systems in Poland, which will allow for better prevention of flood damage and for minimizing those damages; and  Growing interest in Bank support for similar work, perhaps in the Vistula Basin. 14 2.3 Irrigation in Central Asia 40. Climate adaptation plays a critical role in the design and implementation of irrigation and drainage (I&D) lending operations in Central Asia, both in terms of support for capacity strengthening and institutional reforms and for investments in improved infrastructure. Examples of institutional strengthening include improvements in early warning systems (Tajikistan), capacity strengthening for climate change adaptation (Uzbekistan), improved agricultural extension services (Tajikistan) and conservation tillage (Uzbekistan), and increased farmer involvement in water management to better deal with variability (Kyrgyz Republic, Tajikistan, Uzbekistan). Examples of investments in infrastructure include heightening of flood protection dikes (Tajikistan), introduction of more efficient irrigation (Uzbekistan), rehabilitation and extension of I&D canals (Kyrgyz Republic, Tajikistan, Uzbekistan), rehabilitation of I&D pumping stations to increase pump efficiency and reduce costs (Tajikistan, Uzbekistan), enhancing hydrological and meteorological data collection (Tajikistan, Uzbekistan), and introduction of new crops (rice in Tajikistan). 41. In addition, adaptation to climate change plays an important role in a number of analytical exercises that the region has initiated; examples include the preparation of a regional I&D strategy, prioritization of investments in irrigation and drainage rehabilitation (Uzbekistan), an analysis of options for more effective water management through private I&D service providers (Tajikistan), and upcoming work in Uzbekistan on strategic support for I&D. 42. In Uzbekistan, in particular in the Amu Darya Basin, the soils have become saline and the drainage systems are inadequate. The common practice is to apply large quantities of water for leaching the soils of salts. This practice results in high groundwater water levels and causes, through capillary action, the salts in the soil profile to be brought to the surface. Climate change is expected to accelerate this process, leading to further soil degradation. The Uzbekistan Drainage, Irrigation and Wetlands Improvement Project—which is part of the Aral Sea Basin Program, approved by the heads of five Central Asian states in 1994—is located in the autonomous republic of Karakalpakstan and will (i) improve the safe disposal of the drainage effluent discharged from a nearly 100,000-hectare irrigated area in southern Karakalpakstan; (ii) rehabilitate I&D infrastructure within this area; (iii) protect and enhance several wetlands and archaeological sites; and (iv) establish water user associations to operate and maintain the lower part of the I&D systems. By improving drainage, the project will break the vicious cycle of high water applications, waterlogging, and secondary soil salinization, hence requiring again high water applications for leaching the next season. Future development will include the transformation of pumped irrigation—requiring large financial outlays to cover operation and maintenance costs—into gravity irrigation. 15 Picture 2: Irrigation systems in Uzbekistan. Lower water availability in many parts of Uzbekistan will necessitate more efficient irrigation systems. As shown in the picture, many irrigation systems in the country need significant rehabilitation. 2.4 Transport Sava Waterway Rehabilitation Project 43. Two water-related projects prepared by the Bank in Southeastern Europe explicitly factor in adaptation considerations in order to ensure climate resilience of the infrastructure financed from Bank proceeds: the Inland Waters Project, described above in subsection 2.2, and the Sava Waterway Rehabilitation Project (P108000, fiscal 2013), under preparation in Bosnia and Herzegovina.11 The Sava Waterway Rehabilitation Project has as its goal to improve the operational performance and safety of commercial and leisure vessels on the Sava River, thereby contributing to improved utilization of the river ports and broader economic development in the hinterland. 44. The project is responsible for the preparation of a detailed design for civil works and the environmental impact assessment/environmental management project (EIA/EMP) for the sector from Brèko (rkm 234) to Belgrade/Sisak (rkm 594), and will be financing the works between the river’s confluences with the Una and Drina Rivers. The preparation of the detailed design and EIA between Brèko and Sisak is being conducted by a consultant via the Croatian Ministry of the Sea, Transport and Infrastructure, with support from the European Union, as part of the wider program to rehabilitate the Sava River. 45. The project proposes to achieve its objective through three components, of which the rehabilitation of the Sava River to restore its full navigability is the largest one. The Bank team advised 11 The respective Bank teams make sure to coordinate the efforts of the two projects. The Croatian Inland Waters Project includes a number of flood management measures, such as restoring oxbows, renaturalization, and other “soft infrastructure� on both the Sava and Drava Rivers. Both projects will benefit from the climate projections being prepared under a separate Bank-executed AAA on climate impacts and adaptation for the Sava Basin. Hrvatske Vode, the Croatian authority responsible for water management, reviews all proposed measures to ensure consistency and to prevent conflicting hard infrastructures on the banks of the Sava. 16 counterparts of the need to consider the potential implications of climate change on the technical design and economic viability of the proposed investments. Available regional climate modeling suggests that the Sava River could experience an overall reduction in mean annual runoff of around 15 to 25 percent by the middle of this century. If proved accurate, it will pose a challenge for inland waterways by increasing the probability of low flow conditions and either reducing the number of navigable days or increasing the recurrent maintenance costs to maintain the required depth in the fairway. In either case, the economic viability of proposed capital investments could potentially be undermined. 46. To address this issue, further analysis was undertaken by the World Bank’s regional Pilot Program on Adaptation to Climate Change, financed under the Trust Fund for Environmentally and Socially Sustainable Development (TFESSD). As part of the program, the Bank requested an expert to (i) review the feasibility study and the terms of reference for the detailed designs and the EIA, in order to evaluate the extent to which climate change considerations were taken into account; (ii) provide recommendations for improving the proposed project preparation, with an emphasis on river management and climate change; and (iii) provide brief recommendations for further external expertise required to support the regional work. The expert concluded that a review of maintenance costs were necessary.12 47. This example illustrates a number of interesting points. First, the costs of factoring in climate change considerations in a project at the preparation phase can be modest.13 Second, making transport infrastructure resilient to climate change does not necessarily require developing a stand-alone climate change project or analytical piece. Third, ensuring that transport infrastructure is resilient to climate change does not always require special funding from climate change funds such as the Clean Development Mechanism (CDM), Global Environment Facility (GEF), or the Clean Technology Fund (CTF), from which few transport projects have succeeded to date in obtaining financing. 48. The second example is drawn from a road project under implementation in FYR Macedonia, the Regional and Local Roads Program (P107840, fiscal 2009). The primary objective of the project is to reduce the cost of access from municipalities throughout FYR Macedonia to markets and services by improving the condition and quality of the network of regional and local roads. As part of the institutional support component, the project will finance a study to address vulnerable critical road sections. The initial draft terms of reference for this study focused on a quick assessment of the situation to identify road sections that require further detailed study. The government attaches a high degree of importance to the study and to the implementation of its recommendations; it proposes a single study approach that would include a detailed design of prioritized sections, with relevant justifications. The Agency for State Roads has indicated that they would like to use the outcome of the study as a basis for seeking assistance from the Bank in the implementation of the study 12 A significant impact of the proposed works on bed erosion and sedimentation of the riverbed and banks could lead to changes in the calculated maintenance costs. The Bank team proposed that the hydrological and morphological modeling be included in the detailed design work before the commissioning of detailed designs for works on the waterway. 13 The additional cost of hiring a consultant to review the documentation, go on site visits, and make recommendations to strengthen resilience to projected climate change impacts, was under $10,000. 17 recommendations, with the support of the Ministry of Transport. The study will be included in the updated project plan, due in autumn 2011. The estimated cost of the study is $600,000. Picture 3: Impact of excessive runoff on road pavement in FYR Macedonia. Changing climate will mean increasing needs for stormwater management. 49. The limited work on transport infrastructure resilience to climate change done so far in the ECA Region is the result of a number of factors. Among the most important factors is the lack of strong counterpart demand, reflecting the fact that the threat is not seen as pressing as in other parts of the world, such as for island nations in the Caribbean or Pacific. But just as important has been the limited knowledge of climate change impacts and possible adaptation measures in the project teams, tight project preparation times and budgets, and the fact that infrastructure resilience has yet to be mainstreamed in Bank transport work across regions—there are few transport projects addressing the issue of climate change and adaptation. In many ways, this is still seen as pioneering, innovative work, which can lengthen project preparation times and costs as well as unnecessarily increase overall project complexity. It also echoes the fact that efforts to make transport infrastructure resilient are not widespread in developed countries either; for instance, an assessment in 2008 found that there had been minimal activity related to adaptation in the road sector within the United States.14 50. Other examples of climate adaptation activities in the transport sector are summarized in Box 4. 14 U.S. Department of Transportation, Federal Highway Administration. 2009. Adaptation of the Transportation System to the Impacts of Climate Change: Results of a Peer Exchange, December 2008, prepared for FHWA Webinar on Transportation and Climate Change, April 23, 2009. Two exceptions are Alaska and California —in the case of the former, loss of sea ice and melting permafrost pose major threats to infrastructure. Adaptation activities have included shoreline protection programs, evacuation route planning, relocation of at-risk infrastructure, permafrost protection, and enhanced data collection and collaboration across agencies. 18 Box 4: Lessons Learned from Other Bank Regions The Africa region has recently completed a study —Making Transport Climate Resilient—that focuses on adaptation in the road sector. The report brings together key findings from case studies in three countries and its objective is to prepare guidelines for climate change responsive planning practices, standards, and operational procedures. The report finds that the engineering solutions needed to make a climate-resilient road can to a very large extent be found in existing manuals, assuming that the rainfall and hydrology charts are accurately updated. It argues that new climate-resilient roads are more costly to build, so investment budgets have to be increased or the amount of new roads to be constructed will have to be reduced. The key element for ensuring resilience after the initial construction is sufficient maintenance. The general implication is that only in exceptional cases would it be economically beneficial to reconstruct or strengthen existing roads and structures before they are damaged or their normal life has expired. The report recommends (i) research on the accuracy of design parameters in predicting sedimentation and runoff and identifying flood-prone coastal areas in order to adjust design storm parameters; (ii) revision of design manuals so that climate change solutions are considered comprehensively; and (iii) an assessment of whether drainage systems in specific areas can be enlarged or changed. The report provides an extensive assessment of the kinds of impacts and responses required to ensure road infrastructure resilience, and these are likely to be similar for the ECA Region. The East Asia and Pacific Region also provides a good example from the road sector, where the Timor-Leste Climate Resilience Project aims to reduce the impact of the forecasted increase in the volume and intensity of rainfall on road infrastructure in mountainous areas. The project aims to (i) increase the longitudinal and transverse drainage to accommodate the forecasted rainfall; (ii) provide new or increased capacity culverts; (iii) construct new or reinforce existing slope stabilization structures; (iv) use bioengineering techniques to improve slope stability and decrease runoff; and (v) repair the pavement surfaces where they have been damaged. The project was prepared with inputs from a technical assistance project from another donor, which included developing a prioritized road network investment program as well as conducting a climate change assessment. To make Bank-financed road infrastructure projects climate-resilient, there is a need for additional analytical work at the preparation phase, which can feed into the prioritized road network investment program. Where climate change adaptation considerations are warranted, the focus is likely to be on drainage systems and structures, increased channel maintenance, culvert design, and new alignments. 19 3. Lessons Learned from Initial Adaptation Pilots 51. An initial set of pilot efforts in vulnerable sectors—energy, agriculture, water, and poverty reduction—was launched in fiscal 2008/09. The following section summarizes their goals and approaches applied as well as lessons learned, which help explore business planning for further work. 3.1 Energy Sector Initial Efforts in Albania 52. Starting in 2009, the Bank and ESMAP15 financed a Climate Change–Energy Vulnerability Assessment in Albania16 to help the government and other energy sector stakeholders identify key direct risks to energy supply and demand arising from projected climate change. Part of the assessment was the prioritization of near-term actions that could support optimal use of water resources and operation of hydropower plants. The assessment also identified areas that need more detailed analysis. 53. The Climate Change–Energy Vulnerability Assessment screened the energy sector in Albania to identify and prioritize hazards and vulnerabilities to projected climate scenarios for the period 2030– 2050. It identified options for adaptation to reduce overall vulnerability, and their costs and benefits. A bottom-up consultative process was used to support stakeholders in identifying and prioritizing adaptation options for vulnerable and at-risk energy infrastructure along the entire energy supply-use chain. The project drew upon the approach developed by the Australian Commonwealth Scientific and Industrial Research Organization for the Australian Greenhouse Office (detailed in Climate Change Impacts and Risk Management: A Guide for Business and Government), similar work conducted worldwide (for example, United Kingdom Climate Impacts Programme), and work in Albania in support of their National Communications to the UNFCCC. The key question that the Albania study asked is how to best manage future energy supply security in the face of climate change. 54. Albania’s water resources are a national asset in the energy sector. The Drin River provides about 90 percent of Albania’s domestic electricity to local industry and households. However, high dependence on hydropower brings challenges: electricity production can vary from almost 6,000 gigawatt-hours (GWh) to less than half that amount in very dry years. Climate change will likely make matters worse, and by 2050, annual average electricity output from Albania’s large hydropower plants could be reduced by about 15 percent and from small hydropower plants by around 20 percent. In addition, other energy assets are likely to be affected by climate change as well. For example, there is a new thermal power plant that may be threatened by coastal erosion and, due to higher operating temperatures, the overall efficiency of all thermal power plants may be reduced by around 1 percent by 2050. 15 Energy Sector Management Assistance Program 16 World Bank. 2009. An Assessment of Climate Change Vulnerability, Risk, and Adaptation in Albania’s Power Sector. World Bank: Washington, DC. Available online at http://go.worldbank.org/2L5CL5D990. 20 55. Climate change also brings new opportunities, and solar power production could possibly increase by 5 percent by 2050. A marked shift in demand patterns is also expected, with significant changes in seasonal demand. Taking into account the increasing demand for irrigation water for agriculture, focus needs to shift to improving water resource management. 56. The study identified 20 risks, classified from “low� to “extreme.� Based on the outcomes of the study, recommendations were made to underpin a new National Energy Strategy (NES), and allow it to develop over time by using an “active scenario� to meet a sizable shortfall—estimated by the study to be 350 GWh per year by 2030 and 740 GWh per year by 2050. 57. The power sector’s “adaptive capacity� can be improved through resilience-building measures, such as diversifying supply (for example, using both renewables and thermal power); investing in new power interconnections; and improving energy efficiency. However, this alone will not be enough to mitigate all climate-related risks to future energy security as, even if the NES is implemented, shortfalls may persist. The changing climate patterns are an important contributor to these shortfalls, representing around 3 percent of total demand by 2050 due to climate change impacts. There are also additional challenges that go beyond national borders—for example, general climate impacts on regional energy supplies and the significant worldwide challenges of implementing broad energy efficiency programs. 58. The study’s cost-benefit analysis showed the most sustainable options were upgrading existing small and large hydropower plants and investing in small hydropower plants. However, in addition to investments, a key to making energy sector development more resilient is “doing things better ,� especially by improving hydromet monitoring, modeling, and forecasting, and then utilizing these weather and climate forecasts for energy planning. This in turn means increasing the interaction between hydromet and energy experts, making cross-sector climate risk assessments and sharing regional data and studies. 59. The key short-term recommendations are to prioritize addressing the “adaptation deficit� through the NES by improving energy efficiency and other demand-side management initiatives; reduce generation and distribution losses; and move quickly toward diversifying power generation. Power sector assets have a long life and can be made more resilient by including consideration of climate change into the design, standards, and planning of both new and to be rehabilitated assets, and also by reviewing emergency contingency plans for hydropower plants. This needs to act in parallel with increasing the knowledge and awareness of main stakeholders. 21 Expanding to Central Asia 60. The approach used in Albania by the World Bank team has been subsequently applied in Uzbekistan. A Hands-on Energy Adaptation Toolkit (HEAT) was developed to document the lessons, experience and process followed in implementing the pilot Climate Vulnerability Assessment program in Albania and Uzbekistan. HEAT is designed to lead users through a stakeholder-based semi-quantified risk assessment of climate vulnerabilities and adaptation options in the energy sector of their country (see Figure 3). Figure 3: Interactive Diagram of the Online HEAT Toolkit17 61. In Uzbekistan, the study focused less on hydropower—it provides only around 10 percent of the country’s energy generation—and looked also at the impacts on thermal power generation and the implications for using wind and solar power in the future energy mix. As Uzbekistan is the most energy-inefficient country in the ECA region—in terms of energy used per unit of GDP—the study also focuses on both the demand side and the supply side of the energy sector. 62. These country-level studies do not provide a detailed energy strategy, but rather a basis for discussions, taking onboard the additional issues caused by climate change impacts. A major benefit of this approach are the widespread consultations that bring together a wide range of stakeholders in the energy sector who, often for the first time, have the opportunity to consider how investments in generation and transmission may need to be different from “business as usual� in the light of predicted climate impacts. 63. The World Bank and USAID agreed to cooperate on further similar studies in other Central Asian countries, using the HEAT methodology. USAID will manage and finance studies in Kazakhstan, the Kyrgyz Republic, and Turkmenistan; the World Bank will finance a study in Tajikistan, as well as a regional overview, once all five Central Asian country studies are completed, probably in 2012. The consultations on the Uzbekistan report are currently ongoing, with clients’ comments expected in late 2011. The delivery of the report, scheduled thereafter, will include translation and development of communications tools for the distribution of the report. 17 http://www.esmap.org/esmap/node/312 22 3.2 Agriculture Regional AAA Program in Albania, FYR Macedonia, Moldova, and Uzbekistan (a) Background and summary 64. The regional survey report revealed that to date no rigorous empirical work had been conducted to analyze the potential impacts of climate change on agriculture in Europe and Central Asia. More important, no practical adaptation responses to increase resilience in this highly vulnerable sector have been developed so far. It also emerged that there was widespread lack of awareness on the part of the clients as well as Bank staff on the issues related to climate change and agriculture, and limited capacity on the part of either party to address this gap. 65. The Regional AAA Program on Reducing Vulnerability to Climate Change in ECA Agricultural Systems18 was thus developed to build on the outcomes of the recent regional survey report. The program has been implemented over the past three years, and is currently near its completion.19 The analytical approach developed as a part of this project is now being replicated in other European and Central Asian countries. 66. The objectives of this regional AAA program are to identify the exposure and vulnerability of the agriculture sector to climate change, analyze the potential impacts, and then design pragmatic adaptation responses to these impacts in the following four countries: Albania, FYR Macedonia, Moldova, and Uzbekistan. The study has successfully achieved these objectives by combining an innovative approach, rigorous modeling techniques, knowledge of international and local experts, and extensive stakeholder consultations at the national and subnational levels. It has contributed significantly not only to building greater awareness of the issues, but also to fostering increased commitment to take action by the partner governments and other stakeholders. (b) Study phases 67. In the first phase of the program in fiscal 2009/10, a Country Note on Climate Change and Agriculture20 was developed for each country based on existing information, including national communications under the United Nations Framework Convention on Climate Change, the World Bank Climate Portal, and historical and projected climate change data. It pulled together relevant information on agriculture and climate change in an easily readable format. 68. In the second phase, country-level awareness-raising and consultation workshops were organized to share and discuss the country notes. Each workshop was attended by over 70 participants, including officials from the Ministries of Agriculture and Environment, delegates of hydromet services 18 For more information on the program, visit http://go.worldbank.org/SYB3KOJVL0 19 The program received the ECA VPU Team Award and the Green Award 2011 for its innovative program design and progressive approach to leveraging existing information; bringing together international and country-level experts, farmers, and relevant stakeholders; and filling gaps and accommodating the uncertainties and complexities surrounding climate change issues related to agriculture. 20 Country notes are available online at http://go.worldbank.org/SYB3KOJVL0 23 and agricultural research centers, farmers and farmer associations, members of academia, and representatives of the private sector and civil society as well as other bilateral and multilateral development partners. The workshops served as a forum to share information, discuss priority issues, and agree on information gaps and needs for additional analysis related to climate change and agriculture. 69. In the third phase, an in-depth analysis of the level of exposure, extent of vulnerability, and potential impacts was undertaken (see Figure 4) and adaptation responses for the agriculture sector were developed. In addition to rigorous scientific modeling of future climate, water resources, and agricultural yields in the face of climate change, the innovative approach of the study also included quantitative economic assessment (that is, benefit-cost analysis; see Figure 5) of adaptation options and qualitative assessment of adaptation options, involving consultations with farmers in each of the agro- ecological zones (AEZs), and with a team of technical experts (agronomists, extension agents, economists, and water resource experts). Drawing on the results of all analyses, a report entitled Reducing the Vulnerability of Agricultural Systems to Climate Change: Impact Assessment and Adaptation Options was prepared for each country. 70. In the fourth phase, a high-level National Dissemination and Consensus Building Conference was organized in each country during March and April 2011, typically attended by ministers of both agriculture and environment and over 80 key stakeholders, to discuss the key results of the detailed analyses on climate impacts on agriculture, and the potential adaptation options to mitigate these impacts. Based on the analysis undertaken and the menus of practical adaptation options identified in the reports, countries are now preparing their Action Plans to Reduce the Impacts of Climate Change on Agriculture and to mainstream climate change in policies, programs, and investments in the agriculture sector. 71. As a part of the last phase, a Regional Knowledge Exchange Workshop was organized in June 2011 with the aim of bringing together representatives from each of the pilot countries to share updates on the development of their National Action Plans on Climate Change and Agriculture. This venue served as a forum for exchanging knowledge and sharing experiences across countries, and for creating a community of practice on climate change adaptation in agriculture in the ECA Region. It also encouraged collaboration on developing options for the mitigation of climate risks and improvement of resiliency of agriculture in Europe and Central Asia. Drawing on the regional workshop, a regional synthesis report will be prepared in August 2011, bringing together the results from across the four countries and sharing the approach, lessons learned, and good practices. 24 Figure 4: Climate change impacts on different crops at the AEZ level in Moldova. An analysis undertaken at the AEZ level evaluated the impacts on different crops across the three agro-ecological zones: northern, central, and southern. The darker the color, the higher the impact, and as the table shows, irrigated and rain-fed wheat across the three AEZs presents the highest reduction in crop yields, followed by pastures and alfalfa. Figure 5: Benefit-cost analyses for rehabilitated irrigation infrastructure in Moldova’s Central AEZ. Rehabilitated irrigation systems indicate a large benefit-cost ratio for apples, grapes, maize, and vegetables; there is a much smaller benefit for crops like alfalfa or wheat. 25 (c) Analytical results 72. Climate change risks can be managed effectively, and the opportunities they bring about can be effectively utilized once the exposure, vulnerability, and impacts of climate change are explored in detail. In-depth analyses undertaken in Albania, FYR Macedonia, Moldova, and Uzbekistan illustrated that climate change must be dealt with head-on. Following are the key results that emerged from assessing the exposure, vulnerability, and impacts on the agriculture sector in these four countries:  Temperature will increase and precipitation will become more variable across the four countries as a result of climate change.  The direct temperature and precipitation effect of future climate change on most crops is likely to reduce yields, with more severe implications resulting from decreasing water availability.  Declining precipitation and increased irrigation water demands will require better management of water resources, especially as economic growth will also increase general demand for water.  The direct effects of climate change on the livestock sector could be substantial, although they haven’t been observed so far.  National-level awareness raising and capacity building for adaptation is a high priority.  Measures at the AEZ and farm levels remain high priority for reconciling the adaptation deficit experienced by farmers. (d) Development impacts 73. One of the noteworthy aspects of the Regional AAA Program on Reducing Vulnerability to Climate Change in ECA Agricultural Systems is that it created an agricultural climate change adaptation response framework that can be applied across the ECA Region. Its strength lies in the fact that the adaptation options are geared toward not only achieving an overarching national response to climate change, but also focusing on specific investments designed to assist farmers and local governments in adapting to climate change at the farm and AEZ levels. 74. The program has been catalytic in raising the profile of agriculture and climate change by creating high-level engagement by both the agriculture and environment ministers in the four pilot countries—and for the first time, in most cases. While it is natural for Ministries of Environment to play an overall coordinating role for climate policy in many European and Central Asian countries, in order to mainstream climate change actions it is necessary to involve the line ministries. 75. The innovative aspect of the study lies in the fact that the results on exposure, impact, and adaptation responses drew on three inter-related activities, conducted jointly by the consultants team and local partners: (1) quantitative economic modeling of baseline conditions; (2) qualitative analysis conducted by the expert team of agronomists, crop modelers, and water resource experts; and (3) input from a series of consultation workshops for farmers in each of the three AEZs. 76. The ultimate objective of the program has always been to transform analysis into actions. In this context, the respective Ministry of Agriculture in collaboration with the Ministry of Environment in each country committed to integrating the study recommendations into projects and investments. There is an 26 interest in the Albanian Ministry of Agriculture to integrate the recommendations into the new irrigation and drainage project—Ferghana Valley Water Resources Management Project. Additionally, the government of Albania has expressed interest in identifying a new GEF project specifically to pilot key adaptation options identified by the program. In Uzbekistan and Moldova, the governments are keen on mainstreaming the findings and recommendations in the preparation of new Bank-financed agricultural competitiveness projects. Additionally, in Moldova the environment minister has requested Bank assistance in implementing some of the recommendations supported by GEF resources. In FYR Macedonia, the results of the program feed into the Green Growth Strategy, which will help to operationalize the recommendations, and into the Water Strategy, which will integrate the results. (e) Policy recommendations 77. A summary of policy recommendations that emerged from the AAA program includes the following:  Increasing access to and dissemination of weather-related information and modern farm technologies is essential for increasing farmer resiliency to climate change.  Availability of climate-resilient seed varieties, appropriate production technologies, and better extension services is crucial for farmers.  Effective management of water resources and investments in water infrastructure are key priorities for the agriculture sector.  Strengthening institutions and identifying policy gaps are important.  Strong country ownership and participation is imperative.  Cross-sectoral issues have to be reconciled.  Combining quantitative and qualitative analysis is important for creating a robust analytical approach.  Rigorous modeling of water resources is central to understanding impacts in the agriculture sector.  It is important to include multiple agricultural subsectors.  Scope of the work needs to accommodate recommendations not just at the national level but also at the agro-ecological zone and farm levels.  Focusing on multiple benefits by identifying “win-win� and “win-win-win� measures is key. Expanding the Agriculture Program to the South Caucasus 78. Increasingly hotter and drier summers are expected to pose new risks, with more frequent, intense droughts in the South Caucasus. The South Caucasus countries are likely to be confronted with a decline in spring and summer precipitation, with small increases along the sea coasts in the winter, leading to a decrease in surface water, with alternative droughts and floods, depending on climate variability. The net effect could well be new limits on output, and far greater volatility in crop yields from 27 year to year. The South Caucasus region is emerging as a net loser in agriculture from climate change.21 The livestock sector will also be affected from warmer, drier seasons with changing rainfall patterns. Extreme heat affects livestock directly through heat stress and indirectly through reduced forage and feed yields. Moreover, the incidence of infectious diseases, such as brucellosis and rabies, becomes higher as a result of warmer temperatures. 79. It is important to provide Armenia, Azerbaijan, and Georgia—countries with predominantly agrarian economies—with the necessary support to examine their level of exposure to climate change, assess the extent of vulnerability, tie the vulnerability to impacts, and develop a menu of adaptation options for the agriculture sector to improve their climate resiliency. To take the study a step further, adaptation measures will also be assessed for their mitigation potential, which would help achieve multiple benefits. The team successfully applied for $600,000 in grants from the Bank-Netherlands Partnership Program (BNPP) for this program. The AAA program is currently at the concept note stage. 80. The upcoming regional AAA program covering the South Caucasus countries will draw on the findings of the survey report and other ongoing AAA studies, including the Regional AAA Program on Reducing Vulnerability to Climate Change in ECA Agricultural Systems, while building on them in several ways. 81. First, the upcoming AAA program will undertake a rigorous assessment of the vulnerability of the agriculture sector to climate change. The AAA study will qualitatively assess the extent of climate sensitivity and adaptive capacity of systems across four criteria that are relevant for the agriculture sector: (1) environmental management – environmental practices prevalent for land, soil, and water management at the farm level; (2) socioeconomic factors – farmers’ adaptive capacity, knowledge, access to extension services, production technologies, and so on; (3) national and subnational policy frameworks – national-level policies for land use, water resources management, and so on; and (4) institutional capacity. 82. Second, a more detailed evaluation of the viability of different adaptation options at the farm level across the projected climate scenarios will be undertaken. These adaptation options can range from changes in farming inputs, use of farming technologies, crop suitability, and crop adaptability to water availability and/or scarcity, irrigation options, and so on. 83. Third, the current AAA will build on the previous studies by evaluating adaptation measures across a predefined set of carbon emission mitigation criteria to assess their mitigation potential. These assessments will be undertaken in the current study to ensure that the focus remains on developing a robust menu of adaptation and mitigation options for farmers. 21 William Sutton, Rachel Block, and Jitendra Srivastava. 2008. eds. 2010. Adaptation to Climate Change in Europe and Central Asia Agriculture. World Bank: Washington, DC. 28 3.3 Water in Southeastern Europe 84. The goal of this study is to pilot mechanisms for the adaptation of water resources management to climate change in the Sava River Basin (SRB) in Southeastern Europe. The study is undertaken in cooperation with the International Sava River Basin Commission (ISRBC). The final product of the study will be a Water and Climate Adaptation Plan (WATCAP) that will take into account historic meteorological and hydrologic trends within the basin, as well as future projections of those variables to help distinguish the character of water resources in the basin. Included in the WATCAP will be a report discussing the major findings and analyses for a historic assessment and trends of water resource variables in the basin, an analysis of how those variables are being modeled into the future, and guidance notes that focus on sectors that have strong synergies with the water sector (agriculture, hydropower, navigation, and flood control). A hydrologic model is to be developed to help model and discern the impact of the future characterization on the river basin. This model will be developed using the information gained in the gathering of historic and future climate statistics as well as the input from the sectors listed above. Progress through fiscal 2011 is discussed in the next paragraph, followed by a description of final tasks for fiscal 2012. (a) Fiscal 2011 attention to climate trends 85. The key objectives of this phase of the study, completed at the end of fiscal 2011, include preparing the first quantitative analysis of historic climate records and trends for the Sava River Basin as well as an assessment to determine the most relevant of the many climate models for the basin. The trends report uses historic data from gauges and weather stations throughout the basin to provide a characteristic representation of the trends in the climate over the last decades. The characterization of the future climate scenarios is based on the outputs of general circulation models for the SRB, where are being completed by Exeter. The study also developed a computable general equilibrium (CGE) model for macroeconomic impacts of climate change on the water sector, which will be used in the finalization of the WATCAP. 86. The process of developing the historic trends was accomplished by cooperating with the local riparian hydrometeorological institutes of Bosnia and Herzegovina, Croatia, Serbia, and Slovenia. This approach allowed for climate and discharge data within the basin to be verified by the respective hydrometeorological institutes and delivered to the World Bank to be processed further to produce trends. Statistical trends were then created using the data to build a historic representation of the climate of the Sava River Basin and the recent trends of the climate and discharge variables. A river basin approach is used to identify models that best represent the historic characterization of the SRB, and then those models are applied to identify the future statistics of the variables of interest. This method makes the assumption that the relationship of historic climate in the basin and the modeled historic climate in the model will hold true in the future. (b) Fiscal 2012 plans 87. The hydrologic model is to be developed by a team of consultants who have already established a semicalibrated, one-dimensional model of the Sava River Basin and who have agreed to build a two- 29 dimensional representation of the basin to function as a method to gain information about the SRB A CGE model has been developed for the basin and the future statistics of the basin will be used in simulation with the CGE. 88. Because the study develops an approach for practical adaptation measures in the water sector in the SRB, it relies heavily on detailed basin data available from hydrometeorological institutes in the region. This led to significant delays due to initial unavailability of data. (c) Expected impacts of the study 89. The study currently influences the preparation for proposed investments in navigational improvements of the Sava (Sava Waterway Rehabilitation Project). The detailed feasibility studies for these investments include climate resilience analyses, which are conducted by the feasibility consultants. The study also provides climate data and analysis for the Bosnia and Herzegovina Vrbas Integrated Water-Energy Study, which will provide an update for the primary river basin plan for this tributary to the Sava River. 90. When developed, the WATCAP will serve as a guiding document for such projects as the existing water projects in Croatia (Inland Waters Project), proposed project investments, and possibly the development and rehabilitation of irrigation schemes in Croatia and Bosnia and Herzegovina (Irrigation Development Project). It will also build on and complement the preparation of the draft Sava River Basin Management Plan, funded by the EC. The output from the work could also inform some aspects of water sector alignment with the EU Water Framework Directive. 3.4 Water in Central Asia 91. The major rivers of Central Asia rise in the mountains of the Pamirs and Tien Shan ranges. Two major rivers, the Amu Darya and Syr Darya (and their tributaries), are key to the economies of the Central Asian states of Afghanistan, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. They provide water for irrigated agriculture and also for energy generation. 92. The impacts of climate change on these rivers are uncertain. However, all climate models predict changes, particularly warming, which will reduce snowfall levels and increase the rate of glacial melt. There is also a strong likelihood that storms and floods will increase in frequency and severity. Climate events of this nature may well have an adverse impact on river flows in the medium term. 93. Designing adaptation options to address these changes is made more difficult because of the paucity of data that can help assess how climate change will affect river flows and weather patterns. Modeling and understanding these changes is difficult because of the unsuitability of the currently used general circulation models to describe climate change impacts in mountainous regions. In addition, existing hydrological models, developed during the Soviet era and designed for agriculture, are outdated and the equipment used to provide data on weather patterns and stream flow has degraded since the collapse of the Soviet Union through a lack of investment and maintenance. 30 Improving Data Collection and Modeling 94. The ECA Region supported three related activities in Central Asia on improved data collection and modeling for both climate and hydrology. The Central Asia Hydrometeorology Modernization Project22 was approved by the Board in May 2011. Support to the hydromet services of Tajikistan and the Kyrgyz Republic will both build capacity of local staff and provide funds for new equipment. It will also link these hydromet services with others in the region (International Fund for Saving the Aral Sea, Kazakhstan and Uzbekistan) and with the global meteorological system. Funds come from a range of sources: the Pilot Program for Climate Resilience (Tajikistan; P118038), regional IDA, and the Central Asia Energy-Water Development Program (TF071664). The total budget for these activities is $27.7 million. 95. The Central Asia Energy-Water Development Program initiated work on developing hydrological models that can be used as decision support systems by technicians and policy makers. The project Understanding Energy-Water Linkages in Central Asia: Designing Effective Analytical Tools (P123804) undertook two consultative missions in the region in September 2010 and March 2011. The consultations brought together scientists and policy makers in the region to clarify and understand their hydrology information needs and the sorts of modeling that would provide useful insights for this purpose. This work is not focused solely on climate impacts, but it does cover them as well. Climate change impacts are particularly known to the upstream countries, which are aware of the changes already occurring in the mountain areas where these rivers rise. Developing the decision support system continued into 2011. The budget for this component was $250,000, allocated from TFESSD in fiscal 2011. The delivery of most activities, however, was deferred to fiscal 2012. 96. A third initiative, A Roadmap for Adaptation to Climate Change in the Amu Darya River Basin, Central Asia (P121300, TFESSD 092963), did not progress in 2011. In late 2009, $25,000 was spent funding a regional workshop on hydromet services that initiated the development of the Central Asia Hydrometeorology Modernization Project (see above). Terms of reference for this assignment were updated with the intention of moving forward with the study. However, the ongoing political sensitivities on water and energy in the region, combined with unclear and shifting client demand, meant that hiring of consultants was still pending at the end of fiscal 2011. Current political tensions, particularly over management of the Amu Darya waters for upstream hydropower development, mean that it is vital that regional initiatives such as this have the full buy-in of the relevant riparian states. This was not possible to obtain during the past two years. Fiscal 2012 is probably the final year that the trust fund can be used and the team will update funds projection in the 1QFY12. 22 Applicability to Tajikistan is also discussed in subsection 5.1. 31 3.5 Income and Poverty Implications of Climate Change in Tajikistan 97. Tajikistan is facing major development challenges, which are further exacerbated by climate change. As noted earlier, since the Bank identified Tajikistan as the most vulnerable country to climate change in the ECA region, it was logical to select the country for a study on the income and poverty implications of climate change. This was affirmed with the selection of Tajikistan as a PPCR country (further described in subsection 5.1). The ECA Region’s Poverty Reduction and Economic Management Unit carried out the study, with financial support from the Trust Fund for Environmentally and Socially Sustainable Development. 98. The objectives of the study and report, Tajikistan: Economic and Distributional Impact of Climate Change,23 were to analyze whether Tajikistan is at risk from climate change and if people in the country are aware of it; to identify which population groups and locations are particularly vulnerable; and to suggest adaptation measures. The report relied on diverse data sources: weather station records, household surveys (including a special survey commissioned specifically for this study), and census data, as well as interviews with stakeholders to address these issues. 99. The analysis of the collected data confirmed that Tajikistan is highly vulnerable to climate change. These findings are in line, of course, with the results of the recent regional survey report. The country’s social and productive structures are largely what make it very sensitive to climate change, with a very low adaptive capacity. The narrative below summarizes key findings of the report. Public Perceptions of Climate Change 100. The findings of the nationally representative household survey commissioned for the report show that public awareness of the different consequences of climate change is quite high and is comparable to prevailing levels in much richer countries (see Figure 6): the majority of respondents felt they were either very well or fairly well informed about the different consequences of climate change. Figure 6: Public Awareness of Climate Change Consequences in Tajikistan 100 9 10 9 90 80 Percent of respondents 33 37 34 70 60 50 40 48 48 30 49 20 10 9 5 9 0 EU27 countries Kazakhstan Tajikistan Very well informed Fairly well informed Not very well informed Not at all informed 23 http://go.worldbank.org/CVMKG4K800 32 Transmission Channels and Distributional Impacts 101. The primary impacts of climate change on the livelihoods of people will be observed mainly as (i) reduced water quantity and quality, affecting agriculture and health (through the rise of waterborne diseases); and (ii) increased frequency and severity of disasters: mudflows, floods, and droughts.24 These physical impacts can potentially deepen poverty and increase the possibility of permanent poverty traps. Poor people already struggle with a number of stresses. They have limited resources and the least capacity to adapt their livelihoods to changing conditions. 102. Agriculture. There are three interconnected channels through which adverse climate conditions can affect people’s livelihoods from agriculture: (i) decline in agricultural productivity (yields), (ii) reduction in agricultural wages, and (iii) increase in relative food prices. Simulations based on household data show that a 20 percent decline in agricultural productivity can increase the national poverty rate by 13 percent and the poverty gap by 24 percent. A similar increase of relative food prices can lead to a rise in the poverty rate by 16 percent and the poverty gap by 25 percent. A drop in income from agricultural wages will have a much smaller impact on poverty (a 20 percent drop in agricultural wages increases the poverty rate by 2 percent and the poverty gap by 7 percent), as their share in the total income of most households is insignificant. These effects will have a stronger impact in rural areas than in urban areas, because rural areas have a much greater concentration of population around the poverty line, and even a modest decline in income/purchasing power will have a significant impact on poverty. 103. Health. The major health impacts of climate change in Tajikistan will be observed through the increased thermal stress, waterborne diseases, and disaster effects. The poor are more likely to suffer from the increased health risks associated with climate change than the non-poor due to (i) the inability to cover out-of-pocket expenditures for medical services, (ii) a higher prevalence of waterborne diseases, and (iii) weaker immune systems stemming from malnutrition and adverse living conditions. Analysis of the 2007 Tajikistan Living Standards Survey data shows that 46 percent in the poorest quintile of households found it impossible/very difficult to pay for health care, compared to 27 percent in the richest quintile. The incidence of diarrhea is 1.4 times higher among the poorest versus the richest quintile. There are also pronounced differences in calorie intake by welfare status; children from the poorest quintile are almost twice as likely to be severely underweight as those from the richest. 104. Disasters. While there is no sufficient survey data in Tajikistan to quantify the impact of disasters by welfare status, evidence from global studies shows that the poor tend to be disproportionately affected by disasters, as their housing is of inferior quality and often constructed in hazardous locations. They also cannot afford the costs of migration to less hazard-prone locations. Lastly, after disasters occur, it takes them longer to restore their livelihoods, as the poor tend to have nondiversified incomes and little savings. 24 Also identified by the second national communication of Tajikistan under UNFCCC 33 Regional Vulnerability to Climate Change 105. Household vulnerability to climate change depends on diverse factors, and not only on likely physical impacts of climate change. The study analyzed vulnerability as a function of three main factors: (1) exposure to climate change and variability, (2) sensitivity to impacts of that exposure, and (3) ability to adapt to ongoing and anticipated changes. These were the same criteria used in the regional survey report to rank ECA countries’ vulnerability to climate change. 106. The study established a regional vulnerability index for Tajikistan based on the simple average of exposure, sensitivity, and adaptive capacity sub-indices. Indicators of past climate variability and the frequency of disasters are used to assess exposure to climate change; health, livelihood, food security, and demographic characteristics are used to determine sensitivity to climate impacts; and social, economic, and institutional characteristics are used to assess adaptive capacity. The results show that vulnerability varies across different regions of Tajikistan according to socioeconomic and institutional factors in ways that do not follow directly from exposure, geography, or elevation. 107. In their efforts to direct funding toward areas with the highest vulnerability to climate change, policy makers in the country should focus on rural areas, in particular the eastern RRS Mountains, southern Sughd hills, and Khatlon hills and lowlands (see Figure 7). Although these zones are vulnerable for somewhat different reasons, they share a high degree of sensitivity to climate change, particularly food insecurity, disaster sensitivity, and reliance on agriculture. They also have weak adaptive capacity, in part because of low income and education levels. Their exposure is only moderate, but their high sensitivity and fairly moderate adaptive capacity render these areas vulnerable. By contrast, urban areas as a composite group have the lowest vulnerability, far lower than any of the rural zones, mainly because they have the lowest sensitivity, the second-highest adaptive capacity, and average exposure. The results from the study are being considered as a guide to target Phase 2 implementation of the PPCR. Figure 7: Vulnerability Index of Regions in Tajikistan 34 Adaptation Priorities 108. The results of the study argue that climate change adaptation strategies for Tajikistan are in close conformance with its general poverty reduction and development objectives. In fact, development is an integral and the most important tool for adaptation: greater income diversification, improved health and education, as well as better access to information, services, resources, and infrastructure enhance the adaptation capacity of households, particularly for the poor. 109. The identified reforms correspond to the households’ vision of the government priority spending on adaptation. Figure 8 sums up respondents’ answers about the single-most important priority for additional government spending related to climate change. These priorities are also in line with the latest Poverty Reduction Strategy25 for Tajikistan from 2009. Figure 8: Tajik Priorities (in percentage points) for Additional Government Spending on Climate Change Adaptation, According to Population Survey 4 3 Invest in increasing availability of electricity 5 22 Improve extension services and provide seeds more resilient to climate extremes 7 Provide clean drinking water Provide more help and relief after natural disasters occur Reforestation to prevent soil erosion 7 Provide more reliable weather forecasts Invest in health facilities and provision of health services 8 18 Invest in irrigation infrastructure Develop disaster early-warning systems Facilitate out-migration of people from areas prone to 10 14 high climate change risk Dissemination 110. The findings of the report were presented and well received at several meetings, workshops, and events that involved the participation of Bank staff, the donor community, and national counterparts in Tajikistan. These included a brown bag lunch on the “Economic and Distributional Impact of Climate Change in Tajikistan,� organized as part of the ECA Climate Change Learning Series; the Economists Forum in the World Bank; the Economics of Climate Change Workshop for ECA staff in Vienna; and presentations for the counterparts in Tajikistan. 25 http://www.imf.org/external/pubs/ft/scr/2009/cr0982.pdf 35 3.6 Climate Change Action Plan: Operationalizing the Agenda in Moldova, Belarus, and Ukraine 111. The objective of the activity was to provide the underpinnings for operationalizing the climate change agenda adaptation in the ECCU2 countries: Belarus, Moldova, and Ukraine. A deliberate choice was made to focus on climate change adaptation, given the crosscutting nature of the problem and its relevance for a sustainable development agenda. Through analytical studies and subsequent stakeholder consultations, the activity generated considerable knowledge on vulnerabilities and priorities, as well as on perceptions, understanding, and attitudes toward climate change. This knowledge helps the country management unit with informing country partnership dialogue and in formulating and pursuing further analytical and/or investment activities in the three countries. 112. To engage stakeholders in the three countries effectively, the activity started with an initial round of consultations about the objectives of the activity. A major consultation in Kiev was done in conjunction with the rollout of the 2010 WDR and regional adaptation survey report. Each country- based initial discussions set individual agendas for the three countries, and clarified sector priorities for future analytical work to be supported under the activity. In the next stage, the Bank team presented country or region-specific notes in a series of national and regional workshops. The workshops resulted in much clearer and specific signals to the Bank as to the direction, in both substance and process, for future climate change adaptation work in the three countries. Moldova 113. Initial discussions in Moldova led to a clear imperative to focus the activity on agriculture. A fortunate alignment of goals and approaches allowed this activity to be implemented in concert with the Regional AAA Program on Reducing Vulnerability to Climate Change in ECA Agricultural Systems (P113336). The two activities contributed to carrying out initial assessments of climate change exposure and adaptive capacity in agriculture, raised awareness through consultation workshops, and developed menus of region-specific adaptation options to increase climate resilience. In parallel, recommendations emerging from these activities have been included in the ongoing Disaster and Climate Risk Management Project (P115634), which has a dedicated component to support pilot farm-based investments in increasing resilience to climate risks. Additionally, the climate change adaptation agenda continues to receive a lot of attention in the recently approved Country Partnership Strategy (CPS) progress report for Moldova, with a project in the pipeline that focuses on the competitiveness of the country’s agriculture sector. This project will further build upon the analytical knowledge gained in the pilots above to expand the reach of adaptation efforts in the country’s agriculture sector. Another follow-up activity comes from other donors and international development institutions, such as the International Fund for Agricultural Development, and the Food and Agriculture Organization. Belarus 114. Initial discussions in Belarus indicated the need for a deeper focus on highlighting vulnerabilities in the country’s agricultural and forestry ecosystems (biodiversity preservation) and river basins in the south. On the other hand, there was an interest in exploring opportunities in the agriculture sector from 36 a warming climate in the center and the north of the country. Subsequent analytical work led to the development of a country note that focused on these priority areas. Indeed, the country note has presented facts that confirm that the climate in Belarus is changing, with the northern agro-climatic zone virtually disappearing. Recent climate phenomena have been negatively impacting agriculture and forestry, and river basins are prone to more unpredictable extremities. The country note was presented at a May 2010 workshop in Minsk; it was the foundation for an interesting and substantive discussion with stakeholders. The message to the Bank was that Belarus counterparts are aware and concerned about the impacts of a changing climate on their country. In particular, there is a lot of interest in working with the Bank in pursuing further analytical and technical assistance activities focused on drafting sector adaptation strategies in agriculture and forestry. Also, investment support is being sought in the two sectors, as well as delivery of more timely and accurate hydrometeorological services. Ukraine 115. Initial discussions in Ukraine suggested a different approach to further stakeholder engagement, resulting from the country’s size and geo-climatic diversity. The thrust of substantive discussions was moved toward regions (the south and east of Ukraine), not toward central authorities. This allowed for the discussions to be contextualized in local conditions, and therefore more meaningful. The regional discussions focused on presenting information on climate change phenomena, vulnerability of regions to climate change, and assessment of adaptation priorities of various sectors in these regions. These discussions resulted in the crystallization of a number of region-specific priorities for adaptation, with a main and overarching imperative for developing regional adaptation strategies that are tailored to their specific natural, economic, and social contexts. Another important emerging priority was the need for a stronger public and/or private response to the demand for further scientific and technological research into adaptive technologies in agriculture. Finally, adaptation in urban setting had also been flagged as an extremely salient issue. Findings from the regional discussions were presented in two events with the participation of representatives of central authorities and were seconded by the latter to be highly relevant. The main message to the Bank was that more assistance, both technical and investment, is welcome in (i) creating a framework for interagency and national-regional cooperation on climate change adaptation and the mainstreaming of climate change agenda in the country’s development plans; (ii) strengthening delivery of hydrometeorological services; (iii) increasing focus on adaptive research for agriculture; and (iv) support to big cities for adaptation. 37 4. Lessons Learned from Newer Adaptation Pilots and Related Efforts 116. As highlighted in the previous section, an initial set of five pilots was launched with fiscal 2008 and 2009 trust funds and internal Bank funds. Fortunately, with the growing attention on adaptation both inside the Bank and among donors, this initial work was augmented by new pilots and related AAA and investments in fiscal 2010 and 2011. The goals, approach, key results (as of the end of fiscal 2011), and future prospects of each of these activities are described in the following subsections. 4.1 Tajikistan PPCR The Role of the PPCR: Linking Analysis to Investments for Transformational Change 117. Oftentimes, the Bank begins engagement in a new area with analytical work, which is then followed by investment support as clients embrace the most promising pathways. One of the issues with climate change, however, is the perception by many recipient countries that funds for mitigation—and even more so adaptation—should be additional to regular development funds. The multidonor Climate Investment Funds (CIFs) were launched in autumn 2008 as a response to this need, Tajikistan already suffers from demonstrating new approaches to scale up climate action (more droughts and floods and climate information about the CIF is summarized in Box 5). While the change will worsen the situation, bulk of $6.5 billion in total pledges were put toward mitigation, a further straining rural critical $972 million was pledged to the Pilot Program for livelihoods. Better sustainable land management, more Climate Resilience (PPCR), with nine national and two regional resilient seeds, improved land adaptation pilots eventually selected for support.26 An expert tenure, and improved irrigation group recommended Tajikistan, identified in the ECA survey systems are proposed report as the region’s most vulnerable country to climate investments under the PPCR. change, for inclusion into the PPCR. This recommendation was endorsed at the January 27, 2009, PPCR subcommittee meeting. 118. Being selected meant that the implementing multilateral development banks (MDBs) needed to assist the government in shaping a program of analysis/technical assistance (TA) and investments that would both pilot new approaches to scaling up climate resilience and accordingly reshape national development planning to respond to the climate challenge. The World Bank has played the lead MDB role for the Tajikistan PPCR, working with government along with the Asian Development Bank (ADB) and European Bank for Reconstruction and Development (EBRD). While the resources devoted to analysis/TA have been considerable, it is the linkage to investments that gives the AAA work additional influence and urgency. As outlined in the following paragraphs, the example of the Tajikistan PPCR is setting the stage for a new approach for effective coordination and action under newly emerging climate funding. 26 Details on the PPCR can be found at http://www.climateinvestmentfunds.org/cif/node/4. 38 Box 5: Climate Investment Funds The multidonor Climate Investment Funds (CIFs) were launched in autumn 2008 as a multidonor trust fund administered by the World Bank to demonstrate new approaches to scaling up climate action. They comprise two major funds: the Clean Technology Fund (CTF), which focuses on large-scale emissions reduction or mitigation, and the Strategic Climate Fund (SCF), which has elements of both adaptation and mitigation. While the bulk of the $6.5 billion in total pledges were put toward the CTF, a critical $972 million was pledged to the Pilot Program for Climate Resilience (PPCR), a component of the SCF, with nine national and two regional adaptation pilots eventually selected for support; Tajikistan, identified in the ECA survey report as the region’s most vulnerable country to climate change, was one of the pilot programs. The other major SCF that addresses some adaptation needs is the Forest Investment Program (FIP); however, no ECA country has been selected for inclusion in this program, because the FIP largely focuses on tropical ecosystems. The remaining CTF is the Scaling Up Renewable Energy Program in Low Income Countries (SREP), which primarily focuses on mitigation, albeit with some adaptation co-benefits. No ECA country has been included as a pilot in the SREP, although Armenia is on a reserve list of countries pending further consideration if pledges increase significantly. At the end of fiscal 2011, all CIF funds were allocated and the possibility of additional funding uncertain, especially since the CIF mechanism is meant to end in several years, so as not to compromise any implementation mechanism more directly linked to the international climate treaties. It is also unclear if donor countries will make new pledges to the CIFs to meet their nearer term commitments to help developing countries. Should additional funds arise, ECA countries in Central Asia, the South Caucasus, and Southeastern Europe would likely show interest. ECA would be alerted to any possibilities through the World Bank Climate Change Management Group. A Lesson in Team Building 119. After the government of Tajikistan affirmed its interest in the PPCR, the Bank organized a small workshop, in April 2009, to discuss the shape of the emerging program with the government, donors, and numerous stakeholders. As the consultations confirmed that there was no preexisting government program to coordinate national and donor-assisted actions on climate, significant external support for the government in shaping the PPCR was critical. The ADB and EBRD also affirmed that they would join the Bank in implementation. The offer of the U.K. Department for International Development (DFID) to further provide a small team of international and national consultants was very much welcomed. They assisted the MDBs in preparation for the Phase 1 TA component ($1.5 million plus Bank fees) and the Phase 2 investment component ($47.5 million plus Bank fees). 120. Three successive joint missions occurring October 2009 through October 2010, additional missions by the consulting team, and frequent conference calls and work planning sessions were a sign of a strong and productive collaboration between the MDBs and government. This partnership was instrumental in the approval by the PPCR subcommittee of a set of Phase 1 activities (in June 2010) and Phase 2 investments (in November 2010), addressing adaptation needs in nearly all major sectors: water management, agriculture, land management, and energy/hydropower. Institutional capacity at the national and subnational level is also being strengthened through establishment of coordination 39 mechanisms across government, which includes training and cooperation with the donor community and civil society. Update on Technical Assistance (Phase 1) 121. The first three of the six Phase 1 components approved by the PPCR subcommittee are implemented by the World Bank. All Phase 1 work was ongoing at the end of fiscal 2011 and, except for the EBRD-led energy sector analysis, will be completed by the end of calendar year 2011. Inception workshops for the World Bank activities took place in fiscal 2011, as well as several interim and final workshops.  Institutional analysis and capacity needs for climate resilience. The objectives are to review government structures and national policies to see how government can successfully integrate climate resilience in development policies, plans, and programs. The work is being carried out through a partnership of the World Bank and the United Nations Development Programme (UNDP) in Tajikistan. Modalities for inter-ministerial cooperation are being reviewed, and a framework will be developed to encourage and facilitate effective engagement with civil society organizations, the donor community, and local institutions. The budget is $150,000.  Awareness raising. The objective is to enhance the Climate change will affect rural understanding among government and others regarding populations more than urban projected climate change impacts on Tajikistan and populations in Tajikistan, approaches to enhance climate resilience of vulnerable negatively impacting children who already face poverty and sectors. This Bank-led Phase 1 activity, comprising training malnutrition as well as the workshops and learning events in Dushanbe and agricultural-based rural livelihoods elsewhere in the country, will also help design a larger of women. The PPCR serves as the capacity-building effort in Phase 2. The activity budget is base to build climate resilience across government programs in a $100,000, with UNDP-Tajikistan again as the implementer. strong, coordinated partnership  Analysis of Sustainable Land Management Approaches for with donors and civil society organizations. Changing Climatic Conditions in Tajikistan. The objective of this $200,000 study is to review current sustainable land management activities in the country and prepare an inventory of those activities as well as a review of associated land policy issues that can help identify possible investment projects and policy support programs, to be demonstrated under Phase 2. The assessment is being carried out by the Centre for Development and Environment at the University of Bern under a contract with the World Bank, with a national workshop taking place in September 2011.  Enhancing the Climate Resilience of Tajikistan’s Energy Sector. The objective of this study is to assess the climate vulnerability of the energy sector with a particular focus on hydropower and provide recommendations on how resilience investments in this sector could improve Tajikistan’s energy security. The activity budget is $300,000, with implementation by EBRD. 40  Analysis of River Basin Approach to Climate Resilience. The objective of this study is to develop a replicable methodology to identify and enhance climate resilience at the river basin level in vulnerable areas of Tajikistan. Analysis will be conducted on the benefits and challenges of applying a cross-sector ecosystem-based approach with a pilot in the Pyanj River Basin. The activity budget is $400,000, with implementation by ADB.  Tajikistan Climate Science and Impact Modelling Partnership. The objective of this study is to review current capabilities in Tajikistan for projecting future climate scenarios and assessing impacts on various sectors, thereby assisting in the prioritization of adaptation investments. The activity budget is $350,000, with implementation by ADB. Update on Investments in Climate Resilience (Phase 2) 122. The first two of the six Phase 2 investment projects approved by the PPCR subcommittee are implemented by the World Bank. Except for the first project managed by the Bank, all were pending Phase 1 analytical results. The projects will be implemented over a three-to-five-year horizon.  Improvement of Weather, Climate, and Hydrological Service Delivery. Aimed at improving the national hydrometeorological monitoring system to provide timely warnings on dangerous events, support water management, and build the evidentiary basis for climate variability and change. It includes a major technical re-equipment of the observation networks and strengthening of the information base of the service. Service delivery will be improved through expanded provision of hydromet products to consumers and bolstering the national forecasting, warning, and response system. Institutional strengthening of the hydromet services to improve its personnel and financial sustainability is another major component. The World Bank leads this effort. It is the first and only Phase 2 investment approved by an MDB Board, with $7 million from the PPCR and $6 million from a regional IDA credit.27  Agriculture and Sustainable Land Management. Aimed at replicating and scaling up effective, existing land management practices to ensure that climate resilience becomes an integral part of land management and agricultural production. The exact detail of initiatives will be determined through a countrywide analysis and broad-ranging consultation process, funded through PPCR Phase 1. The results from the analysis will inform the World Bank and government’s project preparation, which began in the second quarter of fiscal 2012, with delivery in the second half of fiscal 2013. The PPCR allocation of $9.45 million could be combined with other financing. 27 Part of the Central Asia Hydrometeorology Modernization Project; currently including grants to Tajikistan, the Kyrgyz Republic and the International Fund for Saving the Aral Sea. 41 Picture 4: A technician at one of the few river flow monitoring stations upstream of Dushanbe. He uses the cable car, pulled by a mule, to cross the river and take a measurement. The operator has to measure water level and flow manually and report the data by telephone when he is back on land. Rapidly advancing storms and floods cannot be assessed without more automated and advanced technologies to collect, report, and manage data— systems which will be provided through the PPCR.  Building Capacity for Climate Resilience. Aimed at strengthening institutional capacity and awareness of climate change among a variety of stakeholders groups, including civil society, the media, and highly vulnerable groups, such as women, youth (particularly young men), and children. This component extends the life of the PPCR Secretariat and coordination mechanisms through the full PPCR timeframe, with replication thereafter, ensuring effective implementation of PPCR activities, and maximizes their development impact. ADB leads this $3 million effort, which will be informed by the Bank-led Phase 1 TA.  Climate Science and Modeling Program. Aimed at enhancing Tajikistan’s capacity to conduct climate science and glaciology research, develop climate change models, and interpret the outputs from those models, will provide policy makers and sector specialists with the data they need to plan for climate change. This component also includes training of local experts to ensure the sustainability of this work beyond the PPCR. ADB leads this $3 million effort.  Enhancing the Climate Resilience of the Energy Sector. Aimed at piloting the integration of climate change analysis and climate resilience measures into investments in hydropower facilities using the rehabilitation of the Kairakkum hydropower plant as a pilot. This activity will also help build the capacity of the Tajik authorities to conduct climate change analysis as part of investment planning in the hydropower sector. EBRD leads this effort, with $10 million in PPCR funds expected to co-finance hydropower rehabilitation loans to the energy utility company.  Building Climate Resilience in the Pyanj River Basin. Aimed at increasing climate resilience in critical ecosystems, communities, and infrastructure that are based in major glacier-dependent river basins and containing a large proportion of agricultural land, such as the Pyanj River Basin. Measures aimed at integrating sector-based climate-proofing measures in vulnerable eco- systems and critical infrastructure will be piloted in the Khatlon target area and Pyanj tributaries. ADB leads this effort, which includes $15.3 million in PPCR funds. 42 Coordination Enhanced and Sustained 123. Each component has been, and will continue to be, closely coordinated with other PPCR components to prevent overlap and take advantage of synergies. The PPCR Secretariat was established in late March 2010 to identify, develop, and promote coordinating actions and to ensure that the results from each component and the overall PPCR are widely and effectively communicated. 124. A number of links between components were already evident and have been taken into account in the preparation of the underpinning Phase 1 activities and project design to date for Phase 2. For example, the component that focuses on “Improvement of Weather, Climate, and Hydrological Service Delivery� targets the basic acquisition and use of hydromet data nationally. The Climate Science and Modeling Program aims at improving and sharing the scientific bases—for example, in glaciology and climate modeling. Nevertheless, as Tajik hydromet will have an important role in projects, data outputs and capacity building will be harmonized. Similarly the component “Building Climate Resilience in the Pyanj River Basin� may require additional water monitoring stations over and above the national system (and other pilot area) to more fully characterize basin hydrology. Project implementers will ensure there are close links in terms of instrumentation, telemetry, data analysis, and other aspects to ensure complimentary results and avoid duplication. The component dealing with “Enhancing the Climate Resilience of the Energy Sector� also outlines a need for Tajik hydromet to be included in the planning of hydropower investments given the importance of reliable hydromet data. Demonstrating Innovation for Future Climate Financing 125. The Tajikistan PPCR is helping set a new direction for MDB support on climate action by:  Providing the opportunity to move away from a reactive type of assistance to a more proactive approach by expanding the time horizon taken into account in the planning of government- financed and donor-supported investments;  Being a catalyst for coordination among relevant ministries and policy departments in the government, and with multilateral and bilateral donors operating in-country and in the region;  Contributing to the development of institutional mechanisms that ensure a focus on climate impacts and adaptation, and the building of institutional and human capacity in areas relevant to climate resilience;  Supporting transformational investments that pilot innovative approaches to improving climate resilience in vulnerable sectors, providing demonstration impact that can be scaled up in Tajikistan and beyond, and facilitating transition toward a sustainable and climate-resilient economy; and  Supporting the creation of a solid knowledge base (grounded in climate change impact science and risk management expertise) for adaptation-related policy making that strives to keep people-centric development at the crux of the climate change discourse. 126. The program was selected as one of the three most innovative projects in ECA that were highlighted—together with projects from other regions and networks—during the fiscal 2011 Innovation Days forum in June 2011. Noteworthy aspects of the PPCR include the following: 43  Innovation. The World Bank brought together all three MDBs working in the country as well as key bilateral agencies to form one cross-sector, cross-institutional partnership supported by around $52 million in grants. A consensus for joint multisector action was built through continuous dialogue with all stakeholders, and a Secretariat is now in place to foster mainstreaming of climate resilience across national development policies and programs.  Impacts. Technical assistance grants managed by the MDBs are now (i) building awareness of climate resilience across government and stakeholder communities; (ii) assessing appropriate measures to enhance resilience in agriculture, energy, and water sectors; and (iii) building the scientific bases for addressing risks from melting glaciers and changing temperature and climate regimes.  Further impacts. Investments initiated and implemented in fiscal 2011/13 through MDB support will (i) vastly improve weather and climate services to minimize flood and drought risk, while improving climate science; (ii) scale up the most effective technologies and policies to enhance sustainable land and water management under new climate threats; and (iii) bolster resilience of hydropower plants for national and international energy security. 4.2 Sustainable Cities Rationale and Approach of the Initiative 127. The ECA Sustainable Cities Initiative (SCI) was formally launched in May 2010 to address sustainable development and climate change challenges in European and Central Asian cities. It does so by enabling knowledge exchanges, through the implementation of diagnostic tools and the development of knowledge products, and by offering financing assistance for targeted investment projects. Cities in Europe and Central Asia face numerous transitional challenges and most are in the process of reinventing themselves. With economies mainly fueled by light and heavy industry before 1989, these cities have since been in the process of adapting and switching to a service-driven market economy. 128. Old industrial spaces are slowly being replaced by new office, retail, and housing buildings, while new industrial spaces are created on the outskirts of cities. The housing stock, often poorly constructed and maintained, is aging fast and is increasingly vulnerable to the effects of climate change, manifesting itself in heat waves, storms, and cold spells. Old concrete panel apartment buildings score badly on energy efficiency. A lack of maintenance and uncoordinated exterior and interior changes performed by individual households cause the buildings to deteriorate rapidly; the resulting energy, heat, and water losses increase residents’ utility bills. Dated infrastructure networks with pervasive losses require extensive overhauls to improve service delivery efficiency; they also need to be expanded to cope with new development patterns (especially suburban construction), as people look to move away from congested neighborhoods. 129. The ECA Sustainable Cities Initiative aims to work with local and national authorities to promote sustainable development practices in urban areas. At a micro level, the SCI starts from the premise that sustainable development projects not only bring benefits to the environment, but also can ensure 44 economic and social benefits. At a global level, the SCI starts from the premise that implementing city- level sustainable development actions can set the stage for worldwide sustainable development. 130. Home to over half of the world’s population and accounting for an overproportional share of global gross domestic product, employment, and innovation, cities are the engines of economic growth. They are also responsible for 60 to 80 percent of global energy demand and for more than 70 percent of GHG emissions. Thus, cities not only drive development, they also cause a large share of externalities that inevitably come with development. They are at the forefront of economic, social, and environmental change, and as such serve as ideal “laboratories� for generating, testing, and spreading new ideas and innovation for addressing some of the world’s most pressing challenges. Ultimately, more sustainable cities will lead to a more sustainable world. 131. To address some of the issues that the cities in ECA face, SCI focuses on the triple bottom line— economic, social, and environmental—and proposes an approach that builds on four distinct, but interrelated pillars: (1) knowledge/awareness raising, (2) diagnostic assessment, (3) policy reform and investment strategies, and (4) financing. Results Achieved 132. The SCI started with a knowledge/awareness-raising activity for clients and Bank staff in May 2010, held in Copenhagen and Stockholm, two of the most innovative and sustainable cities in the world. A variety of sustainability practices in different areas were presented; for example, how Copenhagen and Stockholm promote a policy of inward city development through judicious land management: the redevelopment of brownfields, infill developments, changing zoning and land-use regulations to allow the roofs of buildings to be used for further upward development, and development over urban “dead� zones, such as old railway yards and above railway lines. 133. The workshop exposed the representatives of ECA cities as well as the World Bank team to a range of best practices and sustainable development ideas—and it also gave them a better idea of the preconditions necessary to generate such change. Participants acknowledged the importance of the necessary levers to influence local policy and development patterns, which include a relative independence from national authorities (that is, strong local planning capacities and the authority to devise and enforce local environmental standards), as well as a key role in local land and housing markets. 134. The success of the Copenhagen and Stockholm workshop prompted the SCI team to develop a framework for action that would help guide future similar activities. The prepared Sustainable Cities Brief spells out the SCI approach for action in ECA cities. It indicates that cities should include sustainable development initiatives into their overall city development strategies. Unless these initiatives are part of a comprehensive plan, they risk remaining a solitary attempt, with poor chances of replication. It is also important to pursue policies and investments based on locality-specific means and experience. Cities can, for example, choose to initially focus on policies and investments that offer easy-to-achieve results, and gradually build experience to move on to bolder, and more difficult, complex, and possibly high- uncertainty initiatives. 45 TRACE Pilot in Gaziantep 135. The knowledge/awareness-raising activity in Copenhagen and Stockholm was followed by the implementation of a new and innovative diagnostic tool, the Tool for Rapid Assessment of City Energy (TRACE). Developed by ESMAP, the tool allows a quick assessment of energy- and cost-savings potential at the city level. Gaziantep, Turkey, was chosen as the second global pilot for TRACE analysis—and the first one in ECA. 136. The work on the Gaziantep TRACE pilot was conducted with assistance from ESMAP and Iller Bank in Turkey over a three-month period (January 2011–March 2011). It included preliminary data gathering, a stakeholder workshop in Ankara, and further data gathering in the field and interviews with local stakeholders. The team enjoyed an excellent collaboration with authorities in Gaziantep as well as with the Turkey Country Office team. The TRACE tool was successfully implemented and preliminary results of the assessment were discussed with the municipality at the end of the mission. 137. The TRACE diagnostic analysis suggests that Gaziantep has a significant energy savings potential. One of the municipal activity areas where most savings can be achieved is the water system. A lot of energy is spent on pumping water, and the percentage of water lost in the network is quite high. The public transport system is another sector that could be optimized to save energy. Additional strategic investments in the transport system could also help guide the city’s very fast growth—4.25 percent annually for the past 20 years. Public lighting and municipal buildings are two other areas that could benefit from public intervention (for example, replacing streetlights with more energy-efficient LED bulbs). 138. In addition to areas for improvement, the TRACE analysis also identified a series of local best practices that could serve as examples to other cities in Europe and Central Asia.28 An excellent example is the wastewater system, which requires almost no energy costs. A co-generation plant built on site uses methane gas from sludge to produce heat and electricity. The generated electricity is used to run the wastewater facility; the heat is used to heat the facility and to dry sludge. Similarly, the city’s landfill is now operated by a private company, which uses methane gas from the landfill to generate electricity. The municipality can thus dispose of its waste free of charge—and the private company recuperates its operation costs by selling electricity to the grid. 139. The work carried out under the SCI was reflected during the still ongoing CPS discussions with Turkey. It is envisioned that Sustainable Cities will become one of the three pillars of the Bank’s engagement in the country for the next planning period. Furthermore, it is expected that the collaboration with other cities that have participated in the Copenhagen and Stockholm workshop will deepen. For example, the city of L’viv, Ukraine, is likely to be chosen for a diagnostic analysis of cultural heritage development potential. 140. Sustainable city development is rapidly becoming more than a buzzword. In developed and developing countries alike, local authorities acknowledge that healthy city growth is predicated on sustainable economic, social, and environmental development. Increasingly, European and Central Asian 28 The findings of the Gaziantep TRACE pilot were detailed in a report; some of them were also discussed during a Global Development Learning Network (GDLN) event, held in Ankara in May 2011. 46 cities adopt sustainable development practices not because they are imposed from outside (for example, in the form of preconditions to EU accession), but because this allows them to become more globally competitive in the quest for skills and capital. The SCI can help bridge knowledge gaps, identify areas of potential intervention, and assist the cities in promoting sustainable development practices. It can become a key factor in making the region, and ultimately the world, a more sustainable place. 4.3 Social Dimensions in ECA Adaptation and Climate Resilience: The Social Costs and Opportunities 141. Climate change, combined with a crumbling and inflexible infrastructure, renders ECA countries vulnerable. Over the past 30 years, natural disasters have cost ECA countries about $70 billion in economic losses, a figure anticipated to rise over time. Most of the damage occurred in Armenia, Romania, Poland, the Russian Federation, and Turkey (World Bank 2010; the majority of the economic losses and social impacts were borne by the poor, adding an extra burden to the challenges of poverty, hunger, disease, mortality, forced displacement and conflict, insufficient access to social capital, financial assets, effective governance, and community mobilization structures. A summary of possible social impacts of climate change in Europe and Central Asia is outlined in Box 6. Box 6: Possible Social Impacts of Climate Change in ECA 1. Loss of livelihoods related to stressed agriculture sectors (especially around rain-fed agriculture), water access degradation, increased climate variability, and natural disasters. 2. Increase in forced migration (both rural and regional) triggered by climate variability can create new social challenges for the provision of urban services, remittances, representation, and participation. 3. Increase in conflicts between social groups (and possibly between countries) around scarce resources, in particular water. 4. More frequent natural disasters can have a devastating impact on health, infrastructure, and housing. 5. A rise in morbidity rates due to the likely return of malaria to the Caucasus and Central Asia, and the increase in other weather-related diseases. 6. Climate change adaptation and mitigation strategies can exacerbate inequalities based on gender, youth, and wealth, and undermine the realization of rights to basic social services (housing, access to health and water, participation, and so on), as well as reinforce inequity through non-socially sound mitigation efforts on energy and transport sector reforms and restructuration of industries. 142. Examples of inclusion of social dimensions considerations in interventions in ECA include the PPCR in Tajikistan and the Bank-Netherlands Partnership Program in Armenia, Azerbaijan, and Moldova. 47 Institutional Capacity Building and Awareness Raising in Tajikistan 143. As part of the awareness-raising and capacity-building activities of Phase 1 of the Tajik PPCR, the UNDP, in partnership with the Bank, will implement a series of participatory scenario development29 (PSD) workshops in fiscal 2012. The social component of the PPCR is expected to complement the global and sector-specific analyses of the PPCR study by amplifying the voices of those most vulnerable to climate change. It helps to inform national-level planning on climate adaptation with a view to prioritizing measures that best address the needs of those most vulnerable. It is also specifically designed to help strengthen national capacity to undertake policy research on pro-poor adaptation, and thereby help inform ongoing national policy and planning processes. BNPP’s Integrating the Social Dimensions of Climate Change (SDCC) in ECA’s Adaptation and Mitigation Strategies Project 144. The Integrating the Social Dimensions of Climate Change (SDCC) in ECA’s Adaptation and Mitigation Strategies Project, supported by the Bank-Netherlands Partnership Program (BNPP) and launched in fiscal 2011, creates the building blocks to raise awareness on the social dimensions of climate change among Bank staff, policy makers, and selected local institutions in three country studies: Armenia, Azerbaijan, and Moldova. The initiative contributes to the inclusion of social dimensions of climate change into the mitigation and adaptation strategies of World Bank lending and advisory in ECA countries. 145. The country studies in Armenia, Azerbaijan, and Moldova are designed to identify potential impact, raise awareness, and propose interventions on the social dimensions of climate change across selected sectors. The BNPP will (i) develop preliminary country notes on social dimensions of climate change, based on existing information, to identify key issues and trends; (ii) develop a Climate (social) Vulnerability Index (CVI) at the oblast (province or region) level and prepare the methodology for calculating such an index; and (iii) support strategic discussions on the SDCC through participatory scenarios development in each country. Furthermore, the information provided through the CVI and the country-level analysis will support the dialogue with national stakeholders to mainstream the SDCC in the country programs and will be compiled in a country note on the social dimensions of climate change in each country. 146. The overall objective of the BNPP is to help client countries identify and mainstream social dimensions of climate change into their mitigation and adaptation strategies by operationalizing specific tools in selected countries in ECA. In each country, the work will (i) be integrated into ongoing programs and projects to ensure awareness raising among stakeholders, (ii) propose concrete tools (vulnerability 29 PSD was a distinctive feature of the social component of the World Bank Economics of Adaptation to Climate Change study, and it is traditionally used to “identify the effects of different responses to emerging challenges, to determine how different groups of stakeholders view the range of possible policy and management options available to them, and identify appropriate public policies and investment support necessary to facilitate effective future actions� (Bizikova et al. 2009.). For more information on PSD, see Kuriakose et al. 2009; and Bizikova et al. 2009. 48 index, participatory scenario development, and so on) to encourage mainstreaming of the social dimensions into ongoing activities, and (iii) develop new initiatives as needed. FYR Macedonia: Analytical and Advisory Program on Green Growth 147. The Social Development team is also contributing to the analytical and advisory program for green growth, currently under way in FYR Macedonia (see subsection 4.4). This will include analytical work to investigate the potential distributional impacts of shifting to a green growth model of development in sectors such as transport, energy, and agriculture. The program will include a quantitative analysis of the cost implications for vulnerable social groups of switching to a greener transport, energy, and food production model; an analysis of the livelihood implications for groups such as farmers and micro-bus operators; as well as a qualitative analysis using focus groups of how different social groups would expect such transformations to affect their lives. Box 7: Social Dimensions of Climate Change in Other Bank Regions The Latin America and the Caribbean Region is also concerned with the social implications of climate change, as its negative effects fall disproportionately on the poorer groups of the population, including the indigenous peoples, which belong to the region’s poorest groups. In 2010, the Region conducted a study on social costs of climate change to explore the links between climate change and climate vulnerability, and the broader social implications, meaning both direct and indirect effects of climate change on livelihoods, poverty, income, health, and migration. The research explored options for improving the resilience and adaptability of the indigenous peoples to climate change and climate variability and provided policy options to effectively address them. These policy options and recommendations vary according to subregions and their specific conditions. An interesting and alarming outcome of the study was that indigenous groups oftentimes are in a position to make adjustments to adapt to climate change and variability. This, however, usually does not apply if the range, intensity, and frequency of that change are overwhelming. Social dimensions of climate change are also being considered in the East Asia and Pacific Region. For example, a project in Cambodia is piloting an approach to better engage civil society in adaptation efforts; the Region is also conducting a study to analyze gender-specific impacts of climate change in Samoa, which will then inform the PPCR project in that country. 4.4 Development Policy Lending and Green Growth Studies 148. Development Policy Lending in the ECA Region has so far largely focused on the mitigation co- benefits of energy efficiency in Poland and Turkey, but it has not yet included a systematic approach to adaptation. Regional work planned for Bulgaria, FYR Macedonia, and Romania will address the adaptation needs of these countries through the development of climate change strategies and analytical work to identify cost-effective adaptation needs. In the near future, it will be critical not only to scale up existing efforts, but also to better focus them on adaptation. 49 149. The Macedonia Green Growth and Climate Change Analytic and Advisory Support Program30 (P123048, fiscal 2012) is an “umbrella� program. Its objective is to support the government of FYR Macedonia, through collaborative analytic work and technical assistance, in the following activities:  Assessing the economic costs and benefits of a shift to greener growth and the adoption of climate change actions; and  Preparing key actions based on the National Strategy for Strategic Development (NSSD) for implementation under the green growth approach. 150. The program aims to supplement existing knowledge generated by the country’s NSSD, studies to advance EU accession, and related work, thereby providing building blocks for an overarching green growth and climate change assessment. The work will integrate sustainability and green growth into the mainstream economic growth and competitiveness agenda. The program aims to produce sectoral adaptation models linked to macroeconomic modeling, including transport infrastructure. The program will deal with sectoral and macroeconomic effects in a coherent model framework and will address adaptation and mitigation issues simultaneously, thus taking into account important links such as those stemming from the construction of dams for storage and hydropower and trade-offs with agriculture. The AAA program will help advance the region’s work on adaptation in the transport sector as well as new approaches to link adaptation and mitigation in the growth context. 30 To learn more about the program, visit http://www.worldbank.org/en/news/feature/2013/04/01/achieving- green-growth-in-macedonia 50 5. Accelerating Mainstreaming of Adaptation in ECA 5.1 Opportunities Ahead: A Cross-Sector Perspective 151. As noted throughout this review, contrary to popular perception, the Europe and Central Asia countries are significantly threatened by climate change and, due to socioeconomic factors and the Soviet legacy of chronic environmental mismanagement, already suffer from a serious adaptation deficit even under the current range of climate variability (see Box 8). The next decade offers a window of opportunity for ECA countries to make their development more resilient to climate change and natural disasters, and follow a no-regrets adaptation strategy, especially in those sectors that are particularly climate sensitive: land and water, urban development, energy, transport, tourism, and forestry. While adaptation has not yet been a strategic focus of the ECA region, it has implicitly been part of the ECA development portfolio, and there is recognition that economically sound adaptation and mitigation investments constitute a big opportunity to make development climate resilient. 152. ECA can adopt a more systematic approach to adaptation, and in particular for mainstreaming adaptation considerations into current development efforts, through a multisector approach that focuses on “climate risk management.� This means that reducing the risk of disaster and adapting to climate change need to be managed as one integrated agenda. Reducing risks under the current climate offers co-benefits in the form of increased resilience to anticipated climate change, and thus presents a no-regrets adaptation strategy. Increased climate and disaster risks are already occurring in the ECA region and heighten the need for urgent action. Box 8: Climate Risks and Vulnerabilities in ECA The ECA region is already vulnerable to climate risks, and many countries of the region are presently exposed to the consequences of a changing climate: warmer temperatures, a changing hydrology, and more extremes—droughts, floods, heat waves, windstorms, and forest fires.  In Bulgaria, about 75 percent of forests are classified as high risk in terms of susceptibility to fire. Almost all climate models indicate that due to global warming and other factors this risk is going to increase. In some forest districts, up to 20 percent of forest area was subject to forest fires during the last five years.  Increased temperatures and changing hydrology have already caused substantial forest loss, ecosystem degradation, and health threats in ECA countries. In Russia, the smoke from the catastrophic summer 2010 forest fires was responsible for more than 55,000 deaths in Moscow alone.  Both the number of climate-related natural disasters and the economic losses associated with them have increased in the ECA region, with the vast majority of disasters concentrated in the last two decades. The 2000–2001 drought in Georgia and Tajikistan are estimated to have cost 6 and 5 percent of their respective GDPs. 153. Taking into account increased climate risk and the resulting additional costs of development, there is a need for revisiting priorities, and integrating these factors early on during the planning 51 process. This will require a better understanding of the uncertainties and economic implications of long- term adaptation scenarios to identify strategies and actions that will result in increased resilience and better climate risk management. Such prioritization will immediately lead to a focus on sectors that are already at risk, including land and water, urban, energy, transport, tourism, and forestry. 154. Further mainstreaming of adaptation consideration in the ECA portfolio is critical to ensure that development gains are sustainable in the long term and that development advances are not reversed or unraveled by the impacts of climate change. This will not only require a more systematic and focused approach to adaptation, with better prioritization, but also a scaling up of current efforts. To move in this direction, the ECA Region is planning to conduct a Portfolio Screening for Climate Risk. This portfolio assessment will identify projects where climate change poses risks and opportunities and aim to help ECA countries seek ways to enhance the resiliency of development by introducing adaptation into development projects that reduce the impact—and in some cases reap the benefits—of climate change. These opportunities are most likely to be found in the most recent part of the project portfolio, because it is within these projects that changes or new concepts could be introduced and innovations piloted and tested. By developing an “adaptation filter,� the region will be in a good position to use its knowledge, experience, and partnerships to assist clients in prioritizing needed actions and investment decisions in pursuing a low-carbon, climate-resilient development path. 5.2 Opportunities Ahead in Environment and Natural Resource Management 155. The ECA Region’s environment and natural resource management (ENV/NRM) portfolio supports a holistic development approach focused on livelihood improvement, poverty alleviation, strengthening productive assets, and good governance. Although not designed specifically for climate adaptation, these considerations are implicitly part of the agenda, illustrating that sustainable and sound development is the best form of adaptation. Experience over the last few years could inform new AAA work and lending. Several examples of ECA’s ENV/NRM portfolio projects, as well as future opportunities, are included in Table 2 below. 52 Table 2: Climate Adaptation Considerations in ECA’s Environment and Natural Resource Management Portfolio Goal Recent examples Opportunities ahead Enhancing Sustainable management of forests and Strengthen the link between FLEG and the ecological ecosystems to enhance ecological resilience climate change agenda and continue to resilience and and reduce the vulnerability of society to promote efforts to secure and enhance carbon climate change. A special focus is on sinks through sustainable natural landscape and ecosystem governance, the role of communities, forest management and forest fire prevention services afforestation, forest fire prevention, (for example, through a potential follow-up to sustainable agricultural land and forest FLEG). management, expansion of vegetative cover, Analytical work to develop and implement a rangeland rehabilitation, increased access to methodology to estimate greenhouse gas water, carbon sequestration, and economic emissions in forest fires (for example, Bulgaria). rents (for example, Improving Forest Law Enforcement and Governance (FLEG) Promote economic valuation of environmental Program; Russia Forest Fire Response Project; services as a tool for stakeholders to improve Bulgaria’s Green Investment Scheme Project; ecosystem management. Bosnia Forest and Mountain Protected Areas Increase carbon sequestration and carbon Project). storage through improved forest management to prevent or reduce loss through forest fires; increase rehabilitation/afforestation of degraded and underutilized landscapes (REDD+) to increase resilience to changing climatic conditions. Scaling up Sustainable natural resource management Promote longer-term investment programs in watershed practices in micro-catchments. Rehabilitation watershed rehabilitation and water management of forest lands, controlling erosion and management and better prioritize such grazing, and promoting organic farming and investments. investments integrated pest management to benefit Develop and implement a methodology to communities, improve water quality, and account explicitly for climate variability and build resilience to climate change (for change in the design of future watershed example, Turkey Anatolia Watershed management programs. Rehabilitation Project, Albania Natural Resources Development Project). Develop and implement payments for environmental services generated by sustainable management of upper watersheds to reduce erosion and thus downstream damage to water infrastructure such as dams, irrigation networks, drains, and waterways. Expanding the Support the establishment of an integrated Include biodiversity conservation as part of mainstreaming network of protected areas to assure the policy dialogue and investment operations in of biodiversity long-term survival of valuable and threatened client countries; mainstream biodiversity species and habitats. This includes biological considerations into sustainable forest monitoring efforts, involvement of local management, rural development, and communities, and capacity building for sustainable agricultural land management. sustainable protected areas management (for Strengthen public institutions to implement EU example, Croatia EU Natura 2000 Integration Natura 2000 objectives and catalyze regional Project). cooperation to protected areas management while considering climate variability and change. 53 Improving Building resilience, especially among the Explore opportunities to link with the One health poor, through pollution management and Health Agenda, which includes public health outcomes control as well as cleanup efforts to improve risks associated with the environment and water quality and environmental health (for which will require interventions to control these example, Albania Integrated Coastal Zone risks in terms of wildlife reservoirs and soil and Management & Clean-Up Project, Kazakhstan surface water contamination. Nura River Clean-Up Project, Kazakhstan Ust- Kamenogorsk Environmental Remediation Project). Mainstreaming Strengthening the capacity of country Raise awareness and build capacity both within adaptation institutions critical for adaptation, including the World Bank ECA Region and among client into ECA’s institutions responsible for water policy, countries of the importance of mainstreaming ENV/NRM sustainable land management, sustainable adaptation across the ENV/NRM agenda. programs forest management, urban planning, and flood risk management (for example, Albania Natural Resources Development Project, Turkey Anatolia Watershed Rehabilitation Project, Regional AAA Program on Reducing Vulnerability to Climate Change in ECA Agricultural Systems). 5.3 Opportunities Ahead in Agriculture 156. Mainstreaming climate change adaptation in ECA most importantly requires capacity strengthening of national stakeholders as well as dissemination and awareness raising about the importance of climate change and its potential threats. Examples need to be provided on evidence- based successful interventions in support of climate change adaptation, as well as guidance on how the Bank can support climate change adaptation work. It is expected that these efforts will help clients recognize the importance of climate change adaptation, and will help generate support. Work at the country level would include continued analysis of potential impacts and adaptation responses, support for the preparation of national climate change adaptation action plans, and preparation and implementation of climate change adaptation pilot projects. In addition, there is a real need to compare experiences and lessons learned from other operations and analyses. Also, regional exchange visits and study tours for decision makers should be organized. 157. Measures proposed specifically for irrigation and drainage (I&D) will focus, in general, on improving water use efficiency, improving the quality and reliability of drainage and irrigation water supply, and on developing or increasing available storage to deal with increased variability. The following measures, from a nonexhaustive list of activities, can be considered for incorporation into relevant projects:  Restore the functionality of reservoirs for stopping floods and storing available irrigation water; for example, by addressing dam safety and removal of sediments from reservoirs;  Support establishment and capacity strengthening of Water Users Associations and improve their participation in I&D management; 54  Introduce and promote modern efficient irrigation techniques, including drip irrigation and low- pressure manual and pedal pumps;  Modernize I&D and reduce water losses and water wastage, while ensuring adequate drainage; and  Improve the accountability and transparency of I&D service delivery; for example, through the introduction of performance-based I&D management. 5.4 Opportunities Ahead in Transport Making Transport Infrastructure Climate Resilient: The Way Forward 158. Potentially negative effects of climate change are also expected to impact on the transport infrastructure of the ECA region. At present, the World Bank has a window of opportunity to assist client countries through its long-lived investment projects, which often exceed a 20-year life span, by designing strategies to make transport infrastructure more resilient to climate change. Making the Bank’s investment projects in the transport sector climate resilient requires assessing the need to incorporate adaptation measures in projects, whether for new infrastructure or for the maintenance and rehabilitation of existing infrastructure. This can ensure that investments made today are not adversely affected ten years down the line, due to the failure to consider factors such as possible increased flooding or increased precipitation. These projects also represent an opportunity to share new and innovative approaches with our counterparts in the region. 159. The recent decision by the Bank to discuss climate change vulnerabilities and to scale up analytical and advisory activities on adaptation for IDA countries reflects the recognition that more needs to be done. This section reviews work performed to date on making transport infrastructure resilient and also provides an overview of how the Environmentally and Socially Sustainable Development (ECSSD) division proposes to mainstream climate change adaptation into individual sectors and projects. 160. In 2009, ECA Transport prepared a background paper on climate change adaptation in the transport sector as an input for the ECA-wide Adapting to Climate Change in Eastern Europe and Central Asia report, published in 2010.31 The paper focused on the scale of potential impacts of climate change on transport infrastructure and impacts across different subregions, arguing that sea level rise and storm surge, recurrence of high winds and storms, and increased precipitation intensity and warming temperatures are likely to have the largest impacts.32 It identified a number of constraints in trying to develop a response to the climate change challenge, including institutional factors, the need for better decision tools and information, as well as funding and resource constraints to make transport infrastructure resilient. Given that climate change is expected to have a significant impact on transportation infrastructure, operations, and demand, it argued for the need for adaptation measures 31 Fay, Marianne, Richard I. Block, and Jane Ebinger, eds. 2010. Adapting to Climate Change in Eastern Europe and Central Asia. World Bank: Washington, DC. 32 Ziad Nakat. 2009. Climate Change Adaptation in the Transport Sector . Background Paper prepared for Adapting to Climate Change in Eastern Europe and Central Asia . World Bank: Washington, DC. 55 to be incorporated in mainstream activities and reforms and for the World Bank to play a key role in advising public agencies on the matter. 161. In order to mainstream climate change adaptation considerations into Bank transport projects in a medium to long term, ECA Transport’s approach needs to (i) find synergies within existing projects, as exemplified by the FYR Macedonia project (P107840; see subsection 2.4); (ii) factor in resilience considerations at the project preparation phase, where appropriate, as in the case of the Sava Waterway project; and (iii) raise awareness among staff on climate change impacts in the transport sector and the options for addressing them. The objective of the approach is not to develop stand-alone climate-resilient transport projects, unless there is client demand for such projects, but to consider climate proofing during the project cycle. 162. Revising road design standards. For fiscal 2012, ECA Transport is proposing an ESW focusing on revising road design standards in the Commonwealth of Independent States (CIS). Current road design standards, dating from Soviet times, are out of date and inadequate to address climate change impacts. Most of the roads that were built in the pre-transition period have a width of up to ten meters, with a tight radius that avoided high construction costs, and were suitable for maximum axle loads of six to eight tons. Many of these roads now carry a much higher volume of traffic and much larger trucks with European dimensions. For example, the present design standards in Russia are still based on a maximum axle load of 6 tons, but the European designs of many trucks operating in Russia have axle loads of 11 tons to 16 tons on double axles. As a result, the outdated design standards constrain the network capacity. In addition, pavement standards are not based on an equivalent standard axle, which requires factoring in forecast traffic demand over the design life to determine pavement strength. 163. The proposed revision of road design standards presents an opportunity to ensure that future infrastructure is more resilient to anticipated climate change and extreme events. The evidence from a number of countries suggests that climate proofing is likely to be cost-effective, especially for assets with a long life, such as bridges. A recent assessment made by Transit New Zealand (now the New Zealand Transport Agency) found that assets with a life span of less than 25 years did not need significant changes in design, construction, or maintenance standards, with modifications to infrastructure being required only once the impacts of climate change are observed.33 Instead, New Zealand modified its bridge manual to account for climate change as a design factor. 164. There is a clear need for a similar assessment to be conducted in the CIS, with the aim to (i) reassess parameters used for design storm for drainage systems and structures; (ii) investigate the need for river training and increased channel maintenance and bridge scour protection; (iii) review culvert designs that cause limited damage to roads during flooding; (iv) reassess methods for slope stabilization and protection; and (v) improve maintenance regimes. 165. A product of this review would be a new chapter in road design manuals that focuses on climate impacts on roads and bridges through engineering solutions. This study would focus on one country in 33 Meyer, Michael D., Adjo Amekudzi, and John Patrick O’Har . 2009. Transportation Asset Management Systems and Climate Change: An Adaptive Systems Management Approach . 56 ECA, to be determined, and its findings would be disseminated at a regional workshop. The estimated cost for this activity is $200,000, to be financed through the Bank in fiscal 2012. 5.5 Opportunities Ahead in Energy 166. In 2011, building on the experience in ECA, the World Bank and ESMAP released Climate Impacts on Energy Systems: Key Issues for Energy Sector Adaptation.34 It provides an overview, along with a framework, for further analysis, of vulnerability indicators for climate impacts on resource endowments such as hydropower, wind, solar, wave, and tidal energy, among others. It offers analytical tools that experts and policy makers can use to construct vulnerability and impact metrics for their energy sectors, along with a review of emerging adaptation practices. Its key messages:  Energy services and resources will be increasingly affected by climate change.  Evidence suggests that adaptation is not an optional add-on but an essential reckoning on par with other business risks.  Integrated risk-based planning is needed to address these impacts and harmonize actions within and across sectors.  Lack of awareness, knowledge, and capacity impedes mainstreaming of climate adaptation into the energy sector. 167. The energy program will continue to showcase adaptation opportunities, first by solidifying the work in Central Asia with other partners and thereafter seeing how the experience in Albania can influence other countries in this linked subregion. 5.6 Opportunities Ahead in Urban and Water 168. As noted in subsection 4.2, ECA launched an ambitious Sustainable Cities Initiative (SCI) in May 2010 which addresses climate adaptation as well as mitigation concerns. Learning events have been carried out and partnerships (for example, with Austria) built and nurtured. A pilot assessment using the TRACE tool was launched in Gaziantep, Turkey, and the green growth AAA work in FYR Macedonia is considering key urban issues. The SCI team will continue to explore client interest and all available vehicles for AAA and investment support. 169. On the water utility side, the ECSSD water and sanitation team has historically supported client country utilities in water stressed subregions (for example, Southeastern Europe and Balkans, Caucasus and southern Central Asia), both for overall improvements in service delivery and to facilitate adaptation to climate change. The main impacts of climate change affecting utilities in the region relate to (i) reduction of resource availability given climate trends, (ii) greater variability in hydrologic parameters as compared with the historical record, (iii) increased competition with agriculture and sometimes energy users, and (iv) consequent reductions in the assimilative capacity of receiving water bodies. To address these issues, the team sees increased attention on helping utilities reduce losses, optimize their water 34 http://www.esmap.org/node/1152 57 distribution networks, improve source water quantity and quality, implement demand management programs, and develop wastewater treatment programs that consider revised hydrologic regimes. Climate considerations provide greater impetus for integrated water resources management efforts from planning to allocation, and cover groundwater as well as surface water. 170. ECSSD will seek to augment current AAA work with trust fund–supported topical assessments on water utilities and adaptation. This could, for example, include a reconnaissance-level screening of utilities in water-stressed subregions to assess their inherent resilience, be they resource or operational in nature. Partnerships with regional water utility associations (in client countries and the EU) can provide needed expertise and leverage scarce intellectual and financial resources. Possible south-south learning exchanges with utilities that are further along in considering such questions (for example, in the Andean region of LAC) will also be considered. 5.7 Opportunities Ahead on Social Dimensions 171. The strategy to combat climate change requires a multifaceted approach that also considers the social dimensions of climate change impacts. The negative impacts of changing climate have the potential to hamper the fight against poverty and to undermine the livelihoods of millions of people. Poor and vulnerable people often lack the financial, technical, and institutional resources necessary to adapt; therefore, there is a need to deploy new methods and strategies that reduce vulnerabilities and build climate resilience. 172. A focus on the social dimensions of climate change improves the operational quality of ventures in both substance and process. This emphasis contributes to better overall results. Social and institutional analysis helps provide a snapshot of vulnerability and an assessment of institutional capacity for responding to climate change. This strategy is particularly important in Eastern Europe and Central Asia, where the effects of climate change are already being felt. In some countries post- Communist legacies have created unique environmental and infrastructural problems, and existing social inequalities could easily be worsened by the consequences of climate change. 173. Overall, although the economic and physical impacts of climate change have been well documented by the World Bank in the region, little analysis of social dimensions (impact, inclusion, equity, governance) has been done. To do so, and to propose more socially responsible services to client countries as well as to coordinate more efficiently on this theme with other MDBs, in fiscal 2012, the Bank will focus both on mainstreaming the social aspects within ongoing and future climate change and green growth initiatives in ECA and on piloting—through trust funds—some targeted interventions on adaptation (vulnerability and adaptive capacity) and mitigation (equity and distributional impact). 174. Currently, the ECSSD Social Development team is focused on analytical and advisory activities related to the social dimensions of climate change and green growth in Armenia, Azerbaijan, FYR Macedonia, Moldova, and Tajikistan. These activities are designed to generate knowledge and ideas on both new lending opportunities and how this agenda could be mainstreamed into existing operations. Ideas being explored include citizen monitoring of weather events and environmental changes, 58 strengthening community-based responses to drought and weather-related disasters, strengthening local governance arrangements and interagency coordination for adaptation, mitigating the distributional and livelihood impacts of green growth, and supporting resettlement programs for people displaced due to natural disasters. Following on from the analytical work, the plan is to (i) pilot some of these operational activities under existing social development operations, such as the Azerbaijan Rural Investment Project; (ii) inform the ongoing implementation of the PPCR in Tajikistan; and (iii) prepare stand-alone operations that could be financed from trust fund sources, such as the Japanese Social Development Fund. 59 6. Lessons on Mainstreaming Outside of WB-ECA 6.1 Transferrable Ideas from Other WB Regions 175. Adaptation—though still lagging behind mitigation efforts—has been steadily gaining attention in the activities of the World Bank across all its Regions. As the overview below shows, as with ECA, many Regions have advanced climate resilience activities, which were not designed specifically for adaptation, but they still produce significant adaptation co-benefits. Many projects are based on the synergies between mitigation and adaptation; thus, they contribute twice. Mainstreaming efforts are ongoing in all regions, though there is no consistent strategy as yet. 176. The following subsections are an overview of adaptation and some other climate change– related activities conducted by other WB Regions. It is not the purpose of the present report, however, to analyze or compare these activities in an exhaustive manner, but rather just to provide short snapshots of those actions and to highlight the growing trend of attention granted to adaptation. It is expected that further examples will emerge from the Bank’s overall assessment of progress with the Strategic Framework for Development and Climate Change. Africa 177. In 2009, the Bank adopted a regional strategy for Africa, entitled “Making Development Climate Resilient,�35 which stresses adaptation and climate risk management as core components of development. It also promotes scaling up financing opportunities through the new climate finance instruments. The other two pillars of the strategy focus on mitigation initiatives and on knowledge and capacity development. 174. The strategy clearly states that adaptation measures need to be mainstreamed in all key sectors, mainly urban, agriculture, sustainable land and water management, NRM (including forestry and fisheries), transport, health, and other social sectors. Such an integrated approach has been adopted in the preparation of the PPCR programs in the three pilot countries selected in the Africa Region, namely Mozambique, Niger, and Zambia, which will receive $50 million in grants and between $50 and $60 million concessional resources each to develop pilot programs for climate resilience to climate variability and change. Enhancing Climate Resilience 175. The Bank is supporting the Niger Basin Authority on a climate risk assessment of its Sustainable Development Action Plan, aiming to integrate climate considerations into water investment plans. In Madagascar, a country chronically exposed to cyclones risk, the Bank has been supporting since 2006 a number of activities aimed at mitigating such risk, including hydrometeorological risk assessment for agriculture, cyclone impact modeling, updating of infrastructure norms and standards, and so on. The Bank is also supporting Ethiopia’s efforts (including through a $480 million Productive Safety Net 35 http://siteresources.worldbank.org/INTAFRICA/Resources/ClimateChange-StrategyReport2010- Full_vNoImages.pdf 60 Program) to improve the country’s ability to assist chronically food-insecure rural households, and is working with the government to integrate into the disaster preparedness and response system the additional drought risk that climate change might bring about. In Malawi, as part of a broader engagement on agriculture, irrigation, and rural development, the Bank is working with the government to develop innovative climate risk management tools, including weather index crop insurance. Integrating Climate Change Adaptation with Disaster Risk Management 176. In eight focus countries (Burkina Faso, Ethiopia, Ghana, Mali, Malawi, Mozambique, Senegal, and Togo), national plans for disaster risk management (DRM) have been drafted and agreed upon with the national governments. The implementation of this plan will reinforce each country’s ability to respond to current climate variability, thereby also improving its readiness to address the higher climatic variability of the future. The Bank is also supporting the establishment of a regional institutional platform for flood management in the eastern Nile countries (Egypt, Ethiopia, and Sudan) through strengthening capacities in flood forecasting, warning, communication systems, and preparedness. Analytical Work and Knowledge Creation 177. A study on Insurance Instruments for Africa Climate Adaptation was initiated with additional support from the Nordic Development Fund. The study is expected to contribute significantly to exploring the potential for scaling up innovative climate insurance instruments in Africa. It will help outline the climate risks faced by various stakeholders. It will also scope the potential for insurance instruments to build resilience to historical climate variability and climate change based on a review of global and African experiences. 178. The Region has conducted several strategic country assessments, which include the Economics of Adaptation to Climate Change studies in Ethiopia, Mozambique and Ghana; the Programmatic Climate Change Study looking at adaptation and mitigation in Nigeria; and the South Africa Low Carbon Country Study. More recently, and in the context of its strategic partnership with the African Union in the area of climate change, the Bank has started a collaborative analytical effort with the United Nations Economic Commission for Africa (UNECA) on Addressing Climate Vulnerability of Africa’s Infrastructure, which is expected to strengthen the analytical base for investments in Africa’s infrastructure under a future uncertain climate. The World Bank may support the government of Tanzania in the development of its national climate change strategy, helping to identify vulnerabilities and priority actions across key economic sectors and clarifying institutional roles in responding to climate change. 179. The Africa Region has recently completed a study—Making Transport Climate Resilient—that focuses on adaptation in the road sector.36 The report brings together key findings from case studies in three countries (Ethiopia, Ghana, and Mozambique) with the objective to prepare guidelines for climate change–responsive planning practices, standards, and operational procedures. The report finds that the engineering solutions needed to make a climate-resilient road can, to a very large extent, be found in 36 COWI. 2010. Making Transport Climate Resilient: Guidelines for Climate Change Responsive Planning Practices, Standards and Operational Procedures. Synthesis Report, November 2010. 61 existing manuals,37 assuming that the rainfall and hydrology charts are accurately updated. It argues that new climate-resilient roads are more costly to build, so investment budgets have to be increased or the amount of new roads to be constructed will have to be reduced. The key element for ensuring resilience after the initial construction is sufficient maintenance. The general implication is that only in exceptional cases would it be economically beneficial to reconstruct or strengthen existing roads and structures before they are damaged or their normal life has expired. 180. The report recommends the following actions for the next five years: (i) research on the accuracy of design parameters in predicting sedimentation and runoff and identifying flood prone coastal areas in order to adjust design storm parameters; (ii) revision of design manuals so that climate change solutions are considered comprehensively; and (iii) an assessment of whether drainage systems in specific areas can be enlarged or changed. The report provides an extensive assessment of the kinds of impacts and responses required to ensure road infrastructure resilience, and these are likely to be similar for the ECA region. Latin America and the Caribbean 181. Most of the activities in adaptation action in the Latin America and the Caribbean Region are connected to water: agriculture, water resources management, water and glaciers, wetlands, water and hydro, extreme events, coastal zones. These activities comprise both analytical work and adaptation- related investments. A growing field is disaster risk reduction, which represents a blend of climate resilience and adaptation measures, an example of which is the PPCR regional pilot for the Caribbean, comprising Dominica, Grenada, Haiti, Jamaica, Saint Lucia, and Saint Vincent and the Grenadines. 182. The Region is also concerned with the social implications of climate change. In 2010, it conducted a study on social costs of climate change that explored the links between climate change and climate vulnerability on one hand and livelihoods, poverty, income, health, and migration on the other hand. The results of the study also confirmed the importance of the water sector, as it emerged that, without appropriate adaptation measures, up to 70 percent of the population in LAC may be at risk of severe water scarcity by 2020. 183. As in other regions, there are synergies between adaptation and mitigation, such as in a project in the Caribbean whose objective is to reduce dependency on fossil fuels by introducing renewables. The true reason behind phasing out fossil fuels is not, however, to reduce the GHG emissions of a region that does not produce a lot of emissions anyway, but to adapt to the insecurity of volatile prices of fossil fuels on the market. There are several projects introducing renewable energy, and all of them also contribute to adaptation efforts in the region. Another example is an urban transport project in Mexico City, a mitigation project that also produces adaptation co-benefits. 37 This includes hydraulic-related problems such as scour and sedimentation, problem soils, and subgrade problems, as well as slope stability and surface drainage solutions. 62 Middle East and North Africa 184. Almost 60 percent (in US$ value) of all currently active projects in the Middle East and North Africa (MENA) Region are connected to climate change and produce either mitigation or adaptation benefits, and there is a growing ratio of projects directly designed to address climate change. Around two-thirds of all disbursements now go to mitigation efforts, with only a negligible amount funding projects with both mitigation and adaptation benefits. It is expected, however, that the last group of projects will grow significantly, as the synergies between mitigation and adaptation are further explored. 185. The most important sectors for climate change action in MENA are water, urban development, agriculture, energy, and transport. The initiatives in these sectors address concentrated solar power, climate-resilient and energy-efficient infrastructure, and food security and disaster risk management. Adaptation in MENA is largely understood as development with climate change benefits, and the proportion of related projects has been rising steadily over the past fiscal years. The largest adaptation funding borrowers are currently Egypt, Tunisia, and Yemen. The project portfolio in these countries includes improved irrigation and drainage, coastal zone management, urban development, and wastewater treatment. 186. The region’s approach to addressing climate change promotes the exploitation of opportunities that climate change brings about, especially in the energy sector, by making better use of renewable energy, largely available in the region; in the water sector, by exploring ways to reuse wastewater or to design alternative methods of water collection; in food and nutrition, by introducing improved agriculture techniques and more efficient water management to secure sufficient food; in coastal zones management, by promoting alternative livelihoods, by diversifying local economy and tourism, by hard constructions and mangrove forest conservation; in disaster risk management, through rainwater retention and wetland conservation; and in the urban sector, by “greening� the cities. South Asia 187. As in other WB Regions, South Asia is integrating climate change into development efforts and is considering it in connection with wider poverty reduction approaches. Besides mitigation, adaptation activities, largely overlapping with development, are gaining more attention, as climate change impacts are expected to increase and be further amplified by growing populations. Key areas receiving critical attention of adaptation action currently include water resource management, coastal infrastructure and protection, agriculture production and food security, and reduction of environmental degradation. In addition, South Asia is extremely prone to natural disasters, with over 900 events reported since 1970, and about $45 billion in damages due to natural disasters between 1990 and 2008. As such, disaster risk reduction and improved disaster preparedness are also core issues for the region. 188. In 2009, SAR produced a region-wide survey report, South Asia: Shared Views on Development and Climate Change,38 building on the climate change priorities defined by the World Bank’s Strategic 38 http://go.worldbank.org/DEOKW48F50 63 Framework for Development and Climate Change. Another major piece of analytical work was the synthesis report Climate Risks and Adaptation in Asian Coastal Megacities,39 finalized in fiscal 2011, which analyzed climate change impacts on the cities of Bangkok, Ho Chi Minh, and Manila. The report identified extreme weather events, especially floods, as the largest concern for all three cities, together with land subsidence. Policy recommendations emanating from the analysis focus on sound urban management, which should be integrated into urban planning, and on city-specific measures responding to their particular conditions. 189. Among the pilots now under implementation in the region are the PPCR programs in Nepal and Bangladesh. The PPCR in Nepal consists of three major components: (1) building climate resilience in watersheds in mountain eco-regions (implemented by ADB), addressing also the glacial lake outburst floods; (2) building resilience to climate-related risks (implemented by the World Bank); and (3) building climate-resilient communities through private sector participation. The innovative part of the last component, which will be implemented by the International Finance Corporation (IFC), is that it looks at climate resilience through the prism of food security. The same component also includes an analytical part, which focuses on resilient individual housing. 190. The PPCR in Bangladesh focuses mainly on mainstreaming climate change adaptation in development planning and management by establishing a climate change adaptation information and knowledge management network and institutional architecture. The main activities of the program include generation, dissemination, and application of information and knowledge products that are also meant to influence policy makers 191. Other concrete adaptation projects include the Community Based Adaptation to Climate Change in Bhutan, Andhra Pradesh Drought Adaptation Initiative in India, and the Karnataka Watershed Development Project, also in India and focusing on resilience of local communities. East Asia and Pacific 192. The specific impacts of climate change on East Asia and Pacific countries differ significantly across the region, as the geographic area features arid deserts, mountains with glacial systems, islands, as well as large cities. As in other regions, climate change translates into increasing water scarcity, rising incidence and intensity of extreme events (floods, droughts, heat waves, torrential rains), and health concerns. According to the WDR, the largest portion of the estimated $75–100 billion per year necessary for adaptation around the world in the period 2010–2050 will be borne by the East Asia and Pacific region, followed by Latin American and the Caribbean and Sub-Saharan Africa. The region promotes no- regrets adaptation that would be beneficial for countries regardless of climate change, and adaptation is strongly intertwined with poverty reduction and economic growth initiatives. The main sectors for action are water, infrastructure, and coastal zones—both in islands and in the deltas. 193. Reflecting the adaptation process as defined by the UNFCCC, EAP currently implements projects in all phases. Besides analytical work, there are also pilot projects, whereas the region’s longest-lasting 39 http://go.worldbank.org/P8IU2IW370 64 adaptation project—the Kiribati Adaptation Project, addressing coastal zones, infrastructure, and water—is currently in its third phase. Among the newer adaptation projects are two PPCR projects, one each in Cambodia and Samoa. 194. The East Asia and Pacific Region also provides a good example from the road sector: the Timor- Leste Road Climate Resilience Project—currently under implementation—aims to reduce the impact of the forecasted increase in the volume and intensity of rainfall on road infrastructure in mountainous areas.40 The project was prepared with inputs from a technical assistance project from another donor, which included developing a prioritized road network investment program as well as conducting a climate change assessment. If road infrastructure projects financed by the Bank are to be made climate resilient, then there is likely to be a need for additional analytical work at the preparation phase that can feed into the prioritized road network investment program, and inform the program as well as the nature of individual interventions. Where climate change adaptation considerations are warranted, the focus is likely to be on drainage systems and structures, increased channel maintenance, culvert design, and new alignments. 195. Social dimensions of climate change are also being considered. For example, a project in Cambodia is piloting an approach to better engage civil society in adaptation efforts, and the Region is also conducting a study to analyze gender-specific impacts of climate change in Samoa, which will subsequently inform the PPCR project in that country. 196. The region is also trying to mainstream adaptation into activities in other sectors. As yet, there is no region-wide strategy for mainstreaming, though there are several projects that are specifically designed to integrate climate resilience into agriculture (China) and existing Bank investments (Philippines). EAP’s project portfolio proves that adaptation is not a stand-alone issue, but rather an integral part of all development efforts, which can often also be combined with mitigation efforts, the two most recent examples of which are DPLs in Indonesia and Vietnam. 197. A vast part of the population in East Asia and Pacific countries live in low-lying islands or along coastal zones—areas both largely vulnerable to sea level rise and sinking of delta land. Climate change is also expected to exacerbate the already pressing issue of water availability in the region. Some of the most pressing challenges for the region are, however, extreme weather events: floods, droughts, heat waves, and torrential rains. A large part of adaptation action in the EAP Region is therefore focused on disaster preparedness and risk sharing. 40 The project will (i) increase the longitudinal and transverse drainage to accommodate the forecast future rainfall volumes and intensities; (ii) provide new or increased capacity culverts; (iii) construct new or reinforce existing slope stabilization structures; (iv) use bioengineering techniques to improve slope stability and decrease runoff; and (v) repair the pavement surfaces where they have been damaged. 65 6.2 EU Countries Adapt to Climate Change Climate Change Initiatives by the European Union 198. The European Commission (EC) is one of the leading regional institutions addressing both climate mitigation and adaptation.41 In June 2007, the EC launched a “Green Paper� on adaptation that generated considerable attention. The paper made a very strong case that climate will seriously impact a number of sectors in Europe, and it sought comment (through e-mail and in public meetings) on several possible policy thrusts. There was some expectation that the EC would respond in late 2008 with a White Paper, laying out significant policy recommendations and financial incentives. However, the emerging science and complexities on possible responses delayed the White Paper release until April 2009, with the paper containing a few hard recommendations, instead of being more of a road map for action. 199. The White Paper outlined a response in two periods. From calendar year 2009 through 2012, the EC focus is set on: (i) developing the knowledge base by establishing a clearing house of methodologies and approaches; (ii) reviewing where EU directives and policies need refocusing or amendments; (iii) outlining new sources of funding; and (iv) assisting countries outside the EU with adaptation planning. In a second phase, starting in calendar year 2013, the EC will move forward with new policies as well as concrete funding and technical assistance. Even before 2013, the EC’s adjustments in policies and funding are apparent. In June 2011, for example, the EC indicated that in the coming budgets, 30 percent of direct payments to farmers would be conditioned on environment- and climate-friendly agriculture. In addition, the EC’s base funding for environment under the LIFE+ initiative will now emphasize climate adaptation and mitigation benefits. The Directorate General (DG) for Research and Innovation supports the DG for Climate Action (DG CLIMA) with expanding attention on both adaptation and mitigation. 200. ECSSD began coordinating its adaptation work with the EC immediately following the 2007 release of the Green Paper, first with the DG Environment and thereafter with the DG CLIMA. Senior management visits to Brussels are complemented by regular technical staff visits (including with EC staff in the field), and climate is a topic under the ECA-EU Partnership and Learning Series managed out of our Brussels office. Case Studies on Adaptation in Germany 201. Climate is changing all over the world, and the moderate seasonal climate that Germany used to have is no exception. Over the past decades, many parts of Germany have been experiencing climate variability: longer periods without rain, torrential rains, and devastating storms. In 2008, the German government adopted the German Strategy to Adapt to Climate Change,42 put together after extensive consultations involving almost all federal ministries. The main objective of the strategy was to create a 41 The European Commission’s efforts on climate adaptation are managed by DG CLIMA and outlined at http://ec.europa.eu/clima/policies/adaptation/index_en.htm 42 http://www.bmu.de/fileadmin/bmu-import/files/english/pdf/application/pdf/das_gesamt_en_bf.pdf 66 framework for adaptation measures that would reduce the risks for the population and the economy emanating from climate change. As part of the initiative, a database of adaptation actions and practices was launched to help practitioners exchange knowledge and share experience. 202. The main responsibility to implement concrete adaptation measures lies with the federal states, the Länder. A short research of ongoing adaptation initiatives at the Länder level showed that the state of North Rhine-Westphalia is among the most active ones. Two concrete projects were selected for the purposes of the present report as examples of both city- and state-level adaptation. (a) Flood Control Measures on the Rhine River in the City of Cologne 203. Cologne, the fourth largest German city, was hit by several extreme flood events in the past two decades. The sustained damages and economic losses contributed to the creation of the political will necessary to implement costly adaptation measures that would prevent similar events in the future. The most suitable solution for a city located halfway down the Rhine River—and thus affected by other river systems upstream—was flood risk management consisting of these main elements: creation of retention areas near the most densely populated parts of the city; construction of bridges; enhancement of existing floodwalls and construction of new floodwalls; and introduction of an early warning system, using light signals of different colors to indicate the water levels. 204. The construction of the flood walls in the city’s favorite recreation areas required that the aesthetic aspect of these hard structures be also taken into account. Flood protection walls in these areas need to be at least two meters high to be effective in case of a 100-year flood; therefore, the city decided to build mobile walls—ten kilometers in length, and consisting of some 4,000 pillars and 40,000 stop logs. The walls are erected mechanically, in order to avoid failures of an automated system. The whole exercise takes around 12 hours. The city had a chance to “practice� in spring 2011, when Cologne experienced a 50-year flood, with the water level rising circa 90 centimeters. 205. The strategy depends on weather forecast data, and it also needed to incorporate a “ferry service� to evacuate people from affected areas; a register of flood-sensitive objects, such as hospitals and schools; and awareness-raising activities to prepare the population for emergency events. (b) Adaptation Measures on Other Rivers in North Rhine-Westphalia 206. The town of Arnsberg is located in the German state of North Rhine-Westphalia, in the Ruhr River Valley. It has a population of 80,000 people and is mostly rural. Around 60 percent of the town’s area is covered by forests. The town belongs to the most active German—and possibly even European— communities implementing adaptation in the water sector. 207. Recently, the town has been experiencing more frequent floods, torrential rains, and storms. These extreme events, attributed to climate change, together with the low mountain range location of the town make it very vulnerable. The town responded with flood control measures, coupled with the 67 improvement of the ecological condition of the waters, which is also in line with the EU Water Framework Directive43 of 2000. 208. The paramount objective of the overall project, which started some ten years ago and is supposed to complete all activities before the end of 2012, is the protection of the population living in the adjacent areas. The major part of the implemented measures consists of rehabilitation of the natural state of the waters, or “renaturalization,� which is an environmentally highly acceptable measure, as its integrative approach is to stabilize the whole ecosystem, taking into account also the anthropogenic aspects. The measures, divided into several stages, were implemented in two major locations: the Ruhr and four small creeks. The activities on the Ruhr were implemented on a 7.5-kilometer leg of the river, and the remaining activities stretched over some 4 kilometers on four creeks. The overall cost of the project is circa EUR 15 million. 209. Measures on the Ruhr. The adaptation measures on the Ruhr were implemented in nine stages over a period of six years. All of them were based on very similar technical proceedings. A component of all phases of the project was the broadening of the riverbed. The actual size of the treated riverbed depended on the conditions on site, such as whether there were nearby roads or sidewalks, drainage system, or whether the adjacent areas were at the disposal of the town. To secure these constructions, and to prevent damage during floods, covered rock fills were also established. Additional “hard� measures, which were part of the project, included the construction of walls and dams on 13 different sites. The excavated material from all sites was reused. In one case, for example, it was used to enlarge a noise protection embankment on a highway close to a residential area. 210. Measures on small creeks. The adaptation measures on the small creeks differed from those on the Ruhr because of the following: first, they carry much less water, and second, there was no data about the flow, width, and so on available about them. In the last 150 years, these creeks have been adjusted unsystematically several times, and measurements were often taken by visual judgment, which resulted in some difficulties that further affected other aspects of the creeks. The first phase of the project on the creeks therefore consisted of collecting relevant data. 211. The implementation plan on three of the four creeks started with clearing space close to the residential areas to allow the water to spread and slow down, or “lose energy.� Also, anything the water was carrying, such as wood or gravel, would stay in this area. It was possible to acquire an area of around one hectare for each creek, and to move the widened riverbed there. The fourth creek is located in a relatively steep area, and therefore the measure needed to be adjusted accordingly, but, as in the other three cases, it also included a widening of the riverbed. Another component was the reconstruction of bridges and replacement of canalization. The “hard� measures also included the freeing of silted or blocked passages, removal of sedimentation in the streambeds, removal of trees close to drainage, and enlargement of two existing and construction of new railroad bridges. 212. The Human Aspect. It was the aim of the authorities to involve the population in all phases of the project to establish acceptance of the measures. Part of the land where the measures were 43 http://ec.europa.eu/environment/water/water-framework/index_en.html 68 implemented was private property; therefore, local owner approval was crucial. The accomplishment of the project, which is considered by the town of utmost importance, is the renewed sense among the population that the nature, including the rivers and the forests, needs to be handled in a responsible way. Through implementation of the above-mentioned measures, the area has again become more attractive for the population, and is being used also for recreation. 6.3 Progress and Collaboration in the UN Family and the GEF 213. Climate change is not an isolated issue, but rather it is one that affects practically all areas of human life and activity. It is also a challenge that has to be addressed collectively by the whole world community. As an organization that promotes development, economic growth, and alleviation of poverty, the World Bank Group needs to consider the implications of climate change in all of its operations. As Lord Nicholas Stern, former chief economist at the Bank and the author of the 2006 Stern Review stated during his July 2011 lecture at the World Bank, one cannot handle development without considering climate change and vice versa, for they are closely interconnected. 214. It is therefore also in the interest of the World Bank to build strong partnerships with other stakeholders in both development and climate change communities, in both public and private sectors. The Bank works closely with entities within the UN family44, and promotes a coherent strategic approach to climate change. The Bank has also launched or joined numerous programmatic initiatives involving other UN partners, examples of which are described below. The non-exhaustive list below focuses on activities in the ECA region. C40 215. In June 2010, the World Bank launched a partnership with the mayors of 40 major cities in the world, among them the European and Central Asian cities of Athens, Berlin, Istanbul, London, Madrid, Moscow, Paris, Rome, and Warsaw. Other ECA cities affiliated with the initiative include Amsterdam, Barcelona, Basel, Copenhagen, Heidelberg, Milan, Rotterdam, and Stockholm. “Cities are at the front line of the struggle to adapt to climate change and reduce disaster risk. When the world’s largest cities pledge to work together on energy efficiency, clean energy, and adaptation and mitigation strategies— this can be a powerful force for change,�45 declared President Zoellick at the launch of the partnership, during the Sao Paolo summit of C40. UN Secretary-General Ban Ki-moon praised the World Bank C40 Initiative in his address46 to the U.S. Conference of Mayors in Baltimore, Maryland, in June 2011, where he called upon U.S. cities to do their part in combating climate change. 44 A comprehensive source of information, mainly on analytical work by the UNFCCC, is the compendium Assessing Climate Change Impacts and Vulnerability, Making Informed Adaptation Decisions ; the UNDP also provides various resources, available at http://www.undp.org/climatechange/pillar_adaptation.shtml, as does UNEP, at http://www.unep.org/climatechange/adaptation/. 45 http://go.worldbank.org/FUCQPSDOV0 46 http://www.un.org/apps/sg/sgstats.asp?nid=5359 69 Global Facility for Disaster Reduction and Recovery 216. The Global Facility for Disaster Reduction and Recovery (GFDRR) brings together the World Bank, donors, as well as the UN International Strategy for Disaster Reduction (UNISDR), UNDP, and the International Federation of the Red Cross and Red Crescent Societies. The GFDRR works through World Bank operations in order to ensure that its initiatives are leveraging larger investments for maximum impact at both regional and country levels. 217. The following are examples of GFDRR’s support to World Bank operations related to climate change adaptation in ECA:  Southeastern Europe. In early 2008, the GFDRR provided grants totaling $665,000 to the World Bank’s Europe and Central Asia Region to address disaster risk management (DRM) and climate change adaptation issues in Southeastern Europe. A year and a half later, this initial investment had mobilized nearly $60 million in World Bank funding for DRM projects in Albania, Croatia, and Moldova, and EUR 7 million in funding for DRM projects from bilateral and other multilateral donors.  Building climate resilience in Central Asia. Analytic and advisory activities in support of the Kyrgyz Republic, Tajikistan, and Turkmenistan are setting the foundation for investments in climate resilience and reducing weather-related disasters in Central Asia. 218. Furthermore, the GFDRR created country adaptation profiles for the 31 most vulnerable countries, the Kyrgyz Republic47 being one of them. The objective of these profiles is to provide up-to- date information on ongoing adaptation projects and further adaptation needs to development practitioners. Europa Reinsurance Facility Ltd. 219. Europa Reinsurance Facility (Europa Re), a catastrophe risk reinsurance company owned by countries of Southeastern Europe and the Caucasus, was brought into existence with the financial and technical support of the World Bank and the Swiss Secretariat for Economic Affairs. The facility will provide affordable reinsurance products against weather-related extreme events to homeowners, farmers, enterprises, and government organizations in Southeastern Europe and the Caucasus. 220. Since its launch in 2008, Albania joined the Facility as its first shareholder in 2010, and the World Bank’s Board of Directors approved loans of $5 million to both FYR Macedonia and Serbia to finance the countries’ membership contributions to the facility. Bosnia and Herzegovina and Montenegro are progressing toward membership as well. 221. As part of Europa Re, the Global Environmental Facility’s South East Europe and Caucasus Regional Catastrophe Risk Insurance Facility Project (SEEC CRIF) provides funding for the design of affordable natural catastrophe and climate change risk insurance products to farmers, small and medium enterprises, homeowners, and governments with a view to reducing their financial exposure to 47 World Bank Climate Change Portal. Kyrgyz Republic Dashboard 70 climate change. Funding from the Special Climate Change Fund (SCCF) will enable participating countries to expand upon the existing baseline project by supporting additional activities that will not only assess climate change in the context of catastrophes and weather risk, but also develop insurance products to help those at risk to adapt and become more resilient to climate change. SCCF funds will also help develop insurance products that will encourage the public to further reduce the risk of climate change by offering lower product prices for those who have undertaken adaptation activities. The project may receive $5.5 million from the SCCF if it is approved by the SCCF council. World Health Organization 222. With the growing magnitude of climate change effects, we are now becoming more aware of the impacts they have on human health: cardiovascular and respiratory diseases, increased incidence and spread of vector- and waterborne diseases. The World Health Organization (WHO) is addressing the health issues in several ECA countries in its project Protecting Health from Climate Change: A Seven- Country Initiative in the Eastern Part of the WHO European Region. Seven countries in the ECA region— Albania, Kazakhstan, the Kyrgyz Republic, FYR Macedonia, Russia, Tajikistan, and Uzbekistan—were selected based on four criteria: (1) observed climate-related exposures; (2) severity of projected health effects; (3) existing collaborative mechanisms between WHO and the government; and (4) eligibility for official development assistance.48 223. The overall objective of the project is to assess the current and anticipated health impacts of climate change and to design a national adaptation health strategy. It is assumed that institutional capacity building will be necessary in most of the participating countries, whereas awareness raising and education campaigns among the public will also be part of the implementation phase. Concrete outcomes in individual countries may differ slightly, according to their climatic zones and other specific conditions on the ground. For example, the activities in Kazakhstan and Russia will also focus on how to improve prevention of water- and vector-borne diseases, as these countries have been observing an increase in these types of diseases due to climate change. In Tajikistan, which is experiencing serious water scarcity, the project activities there will also focus on improving water security for health care institutions. 6.4 New Directions in Climate Finance 224. Recent rounds of climate change negotiations recognized the necessity of scaling up funding for countries to effectively deal with climate change, both with mitigation and adaptation. A study by ESMAP—Economics of Adaptation49—suggests that the cost of adaptation between 2010 and 2050 will range between $75 and $100 billion per year. Over the past couple of years, several new sources of 48 http://www.euro.who.int/ 49 http://siteresources.worldbank.org/EXTCC/Resources/EACC-june2010.pdf 71 funding for climate-related activities emerged. Climate Finance Options50—an initiative by the World Bank and UNDP—offers a good overview of currently available sources of funding. 225. The Climate Finance Options website features a database of available funds, searchable by area (adaptation, mitigation, capacity building, or technology), sector, and financing mechanism, which enables interested stakeholders to identify sources of funding that best fit their funding needs. The database lists 30 different funds that provide financing for adaptation projects. These sources range from the World Bank’s Carbon Funds and Facilities through IFC’s Risk Sharing Facility to very specific funds, such as the BNDES Amazon Fund. Countries in the ECA region make use of several of these sources of adaptation funding, detailed in the following paragraphs. Climate Investment Funds 226. The multidonor Climate Investment Funds (CIFs), administered by the World Bank, were launched in fall 2008 to demonstrate new approaches to scaling up climate action. There are two major funds: the Clean Technology Fund (CTF), which focuses on large-scale emissions reduction or mitigation, and the Strategic Climate Fund (SCF), which has elements of both adaptation and mitigation. While the bulk of the $6.5 billion in total pledges were put toward the CTF, a critical $972 million was pledged to the Pilot Program for Climate Resilience (PPCR), a component of the SCF, with nine national and two regional adaptation pilots eventually selected for support. Tajikistan, identified in the ECA survey report as the region’s most vulnerable country to climate change, was selected for the PPCR in January 2009. 227. The other major SCF that addresses some adaptation needs is the Forest Investment Program (FIP), though no ECA country has been selected for inclusion since the FIP largely focuses on tropical ecosystems. The remaining CTF is the Scaling Up Renewable Energy Program in Low Income Countries (SREP), which is largely for mitigation, albeit with some adaptation co-benefits. No ECA country has been included as a pilot in the SREP, though Armenia is on a reserve list of countries pending further consideration. 228. At the end of fiscal 2011, all CIF funds were allocated and the possibility of additional funding uncertain, especially since the CIF as a mechanism is meant to end in several years so as not to compromise any implementation mechanism more directly linked to the international climate treaties. It is also unclear if donor countries will make new pledges to the CIFs to meet their nearer term commitments to help developing countries. Should additional funds arise, ECA countries in Central Asia, the South Caucasus, and Southeastern Europe would likely show interest. ECA would be alerted to any possibilities through the World Bank Climate Change Management Group. Adaptation Fund 229. Established under the Kyoto Protocol and operational since 2010, the Adaptation Fund (AF)51 is financed by 2 percent of the certified emissions reductions under the CDM and other sources of funding. 50 http://www.climatefinanceoptions.org. The website Climate Funds Update (www.climatefundsupdate.org), also provides statistics of pledges, funded projects, and so on. 72 As of April 30, 2011, the funds held in trust and available for project funding amounted to $183.2 million.52 The most innovative feature of the fund is the direct access to funding that it offers to developing countries through their own national implementing entities (NIEs), without an intermediary multilateral organization. However, the process of accrediting an NIE is rather lengthy and complicated, especially for countries with weaker institutional capacities. Valid concerns regarding the accreditation process also include the uncertain future and viability of the Adaptation Fund after the expiration of the Kyoto Protocol in 2012. 230. As of July 2011, no ECA country completed or even applied for the accreditation of an NIE, but several countries—Albania, Cyprus, Georgia, the Kyrgyz Republic, Montenegro, Tajikistan, Turkmenistan, Uzbekistan—nominated their designated authority, which may be the first step for either starting the accreditation process of an NIE or applying for project funding through a multilateral implementing entity (MIE). Two ECA countries are making use of the other, conventional funding option that the AF offers, and that is through a MIE.53 Turkmenistan is the first ECA country awarded funding for an adaptation program from the AF. Funds in the amount of $2,929,500 for the program “Addressing climate change risks to farming systems in Turkmenistan at national and community level� will be channeled through the UNDP, which is one of the MIEs accredited with the AF. The objective of the program is to design strategies for improved water management to deal with water scarcity. The UNDP also submitted a project for Georgia, “Developing climate-resilient flood and flash flood management practices to protect communities of Georgia.� Concept for the project, requesting AF funding in the amount of $5,316,500, was approved by the AF Board in December 2010. 51 For more information about the fund, the application process, and the accreditation process, visit http://www.adaptation-fund.org 52 http://www.adaptation-fund.org/sites/default/files/AFB.EFC_.5.8%20AF%20Trustee%20Report_1.pdf 53 The IBRD is one of the duly accredited MIEs for channeling funds from the AF to eligible countries, developing countries that are Parties to the Kyoto Protocol. For more information, see http://www.adaptation- fund.org/entity/1343-world-bank-international-bank-reconstruction-and-development 73 7. Summary of Key Findings Key Lessons to Date 231. While the regional summary report gave helpful views on how vulnerability varies across the region, fine-tuning the analyses through the national and subnational pilots allowed much more substantive dialogue with country counterparts. We learned that:  Three of the initial five pilot projects—addressing agriculture, energy, and income/poverty questions—have been delivered and have clearly advanced staff and client capabilities. Analytical approaches demonstrated in the agriculture and energy work are being replicated in other ECA countries and are increasingly linked to investment planning. The approach to addressing income and poverty issues has positively shaped both economic planning and social development thinking in ECA and other Regions.54  Both completed and active pilots demonstrate practical approaches for assessing subnational variability to climate impacts, and also yield tailored adaptation approaches. The agriculture pilots, for example, suggest that crop yields in all four initial pilot countries (Albania, Moldova, FYR Macedonia, and Uzbekistan) will generally be reduced over the coming decades, but impacts and needed response varies significantly by agro-ecological zones. Higher demands for irrigation in some agro-ecological zones may constrain other water uses, for example, hydropower and ecological needs. The pilot on income and poverty in Tajikistan similarly showed how creative population surveys can map out areas of differing climate vulnerability and institutional resilience, which is helpful information for targeting assistance.  While parts of Europe and Central Asia will likely be impacted most severely by higher temperatures and more extremes in hydrology, overall improvement in sector-specific efficiencies is the most logical first line of adaptation response. The pilot on energy in Albania, for example, showed that despite a projected 20 percent decrease in overall river runoff for this hydropower- dependent country, improvements in energy generation and distribution can effectively eliminate the vast majority of water supply shortfalls. Recommendations to improve the effectiveness of agricultural extension services or to introduce more heat-tolerant seed stocks are logical steps to take to bolster the agriculture sector, given recent climate trends, irrespective of climate model results.  Several ECA sector projects designed before the Region raised climate as an issue have likely benefits for climate resilience and the pilots have shown how these can be further enhanced. World Bank support for flood management in Poland and Croatia, for example, has probable long- term resilience benefits even if longer-term climate modeling was not factored in the design. 54 The two remaining initial pilots are in the water sector; while they are delayed, they hold similar promise for staff and client benefits. 74 Irrigation rehabilitation and agriculture sector projects in the portfolio are responding to past drought problems, even if longer-term crop yield projections were not carried out. Subsequent projects in these sectors will benefit from the incremental improvement in knowledge and response from the agriculture and water pilots.  Cross-sector concerns arise from sectoral adaptation planning, and they will need to be addressed in stages. Both the energy and agriculture pilots, for example, were able to consider questions of availability and use of water with competing demands. Sound technical and policy recommendations could be made in those cases without necessarily requiring expensive, comprehensive water modeling work. On the other hand, both water sector pilots (for the Sava and Amu Darya) have been slow to produce results in part because full transboundary river basin studies are not in place. Nevertheless for the Sava, the preparatory phases have yielded valuable information on recent climate variability, which will help guide the next phase of river basin planning, shaping investments in inland waterways transport and irrigated agriculture. A basin management organization is in place for the Sava, which should also speed acceptance of results.  Reasonable consideration of subnational, sectoral, and cross-sectoral adaptation implications takes additional time and budget, and would benefit from more standardized approaches. At around one year, the pilot on energy in Albania took the shortest time from design-to-delivery. The timeline on the agriculture pilots is expected to shrink from the nearly three years of the first round to two years in the next round. The pilots on water are taking over three years because of shortages of staff time to guide the work and delays in coordinating work streams in a transboundary context. Despite these constraints, the pilots have been helpful in arraying techniques that vary in sophistication, cost, timeliness, and applicability.  The next phase of pilots addressing sustainable cities, the social implications of climate change, and adaptation in transport hold promise for greater partner engagement and investments in these important topics. Each of these topics received new attention with respect to climate adaptation in fiscal 2011, with modest trust fund support either in hand or pending. The concept of sustainable cities is an interesting amalgam of the climate, competitiveness, and growth pillars, and one where the cross-sector benefits (and challenges) are most apparent.  Integrated country-focused adaptation planning and investments as demonstrated by ECA under the Pilot Program for Climate Resilience (PPCR) in Tajikistan, one of 11 global integrated adaptation programs under the Climate Investment Funds, will likely shape the next wave of climate financing. It is a likely model for future development bank engagement under any new climate financing schemes. ECA championed financial assistance among implementing partners in support of the successful application by the government for $52 million of investments and technical assistance. While the PPCR emerged following the launch of the ECA pilot program, experience under the pilots meant that Bank staff knowledge and expertise on adaptation was already well advanced. 75  The increasing AAA work on green growth complements both climate mitigation and adaptation actions. The Macedonia Green Growth and Climate Change AAA program (resourced at over $2.4 million) will build upon adaptation pilots in agriculture and water, while examining emissions reduction options, and national development considerations in a more environmentally friendly path. Smaller green growth AAA for Turkey and Bulgaria also build on the region’s increasing knowledge of adaptation tools.  Good partnerships and consultation between Bank staff and country counterparts have been instrumental for success, even if the extent of engagement varied. Nearly all pilots have benefited from national input, which included some combination of workshops, informal consultations, and contracts to firms or individual experts. These engagements have been extremely helpful for building understanding and acceptance. It was recognized that, in some cases (for example, where deadlines were tight and/or local expertise lacking), international consultants did a relatively higher percentage of the work, though this did not hinder acceptance of findings.  The ECA pilot program on adaptation focused largely on the first two stages of the adaption process defined by the UN Framework Convention on Climate Change: assessment and planning. Only in the case of the Tajikistan PPCR were the next two stages (implementation and monitoring/evaluation) also formally included. Nevertheless, there is considerable interest in investment and M&E follow-up on the agriculture and water pilots. New thrusts on green growth and sustainable cities are inherently linked to investments and M&E. Next Steps  ECA will share the results of this exercise across the region. A variety of tools, ranging from seminars to e-learning, will be used, and a brochure for wider external audiences will be prepared. Given the central role of trust funds, key donor countries and institutions will be included. This dissemination effort will hopefully help spur new work in fields not yet covered by adaptation pilots—for example, health.  ECA’s gain in knowledge and expertise can be augmented by growing experience in other Bank regions, as well as in other UN organizations and the European Union. The Region will continue to host learning events that are open to other Regions as well as contribute to shared SDN learning events. Our experience in the pilots will be shared with other Regions as the Bank prepares its update of the Strategic Framework on Development and Climate Change in the coming months. It is also expected that joint events with the European Commission will be held to inform policy makers and regulatory officials considering the next round of EU climate package requirements. Sharing the Region’s knowledge and partnering with other United Nations family institutions should also be helpful with respect to informing policy options under global climate treaties. 76 Glossary55 Adaptation: Adjustment in natural or human systems, in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities. Various types of adaptation can be distinguished, including anticipatory and reactive, autonomous and planned, public and private. Adaptation Fund: The Adaptation Fund was established to finance concrete adaptation projects and programs in developing countries that are Parties to the Kyoto Protocol. The fund is financed with a share of proceeds from the Clean Development Mechanism (CDM) and receives funds from other sources. Adaptive capacity: The ability of a system to adjust to climate change (including climate variability and extremes) in order to take advantage of opportunities, moderate potential damages, or cope with the consequences. Afforestation: Planting a new forest on land that has either never or not recently been forested. Anthropogenic: Directly caused by human actions. For example, burning fossil fuels to supply energy leads to anthropogenic GHG emissions, whereas natural decay of vegetation leads to non-anthropogenic emissions. Biodiversity: Biodiversity is the variety of all forms of life, including genes, populations, species, and ecosystems. Clean Development Mechanism (CDM): A mechanism under the Kyoto Protocol through which developed countries may finance GHG emission reduction or removal projects in developing countries, and thereby receive credits for doing so which they may apply toward meeting mandatory limits on their own emissions. The CDM allows GHG emission reduction projects to take place in countries that are signatories but have no emission targets under the Kyoto Protocol. Early warning system: A mechanism to generate and disseminate timely and meaningful warning information to enable individuals, communities, and organizations threatened by a hazard to prepare and to act appropriately and in sufficient time to reduce the possibility of harm or loss. Forest degradation: The reduction in forest biomass through unsustainable harvest or land-use practices, including logging, fire, and other anthropogenic disturbances. Greenhouse gas (GHG): Any of the atmospheric gases that cause climate change by trapping heat from the sun in the Earth’s atmosphere, producing the greenhouse effect. The most common greenhouse gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), ozone (O3), and water vapor (H2O). Intergovernmental Panel on Climate Change (IPCC): Established in 1988 by the World Meteorological Organization and the United Nations Environment Program, the IPCC surveys worldwide scientific and 55 Source of definitions for this glossary: WDR 2010. 77 technical literature and publishes assessment reports that are widely recognized as the most credible existing sources of information on climate change. The IPCC also prepares methodologies and responds to specific requests from the subsidiary bodies of the United Nations Framework Convention on Climate Change (UNFCCC). The IPCC is independent of the UNFCCC. Kyoto Protocol: An agreement under the United Nations Framework Convention on Climate Change (UNFCCC) that was adopted in 1997 in Kyoto, Japan, by the parties to the UNFCCC. It contains legally binding commitments to reduce greenhouse gas emissions by developed countries. Mitigation: A human intervention to reduce the emissions or enhance the sinks of greenhouse gases. No-regrets project: In the climate change context, a project that would generate net social and/or economic benefits irrespective of whether the project affects the climate or whether the climate affects the project. Reforestation: Planting of forests on lands that were previously forested but that have been converted to another use. Reinsurance: The transfer of a portion of primary insurance risks to a secondary tier of insurers (reinsurers); essentially “insurance for insurers.� Resilience: The ability of a social or ecological system to absorb disturbances while retaining the same basic structure and ways of functioning, the capacity for self-organization, and the capacity to adapt to stress and change. Risk assessment: A standardized methodology consisting of risk identification, risk quantification, risk reduction, and risk mitigation. Sequestration: In the climate context, the process of removing carbon from the atmosphere and storing it in reservoirs such as new forests, soil carbon, or underground storage. Biological sequestration: The removal of CO2 from the atmosphere and storing it in organic matter through land-use change, afforestation, reforestation, carbon storage in landfills, and practices that enhance soil carbon in agriculture. Uncertainty: An expression of the degree to which a value (such as the future state of the climate system) is unknown. Uncertainty can result from lack of information or from disagreement about what is known or even knowable. It may have many types of sources, from quantifiable errors in the data to uncertain projections of human behavior. Uncertainty can therefore be represented by quantitative measures, for example, a range of values calculated by various models, or by qualitative statements, for example, reflecting expert judgment. However, in economics, uncertainty refers to Knightian uncertainty, which is immeasurable. This is in contrast to risk, wherein the occurrence of certain events is associated with a knowable probability distribution. United Nations Framework Convention on Climate Change (UNFCCC): A convention adopted in May 1992 with the ultimate objective of the “stabilization of greenhouse gas concentrations in the 78 atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.� Vulnerability (also climate vulnerability): The degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. Vulnerability is a function of the character, magnitude, and rate of climate change and variability to which a system is exposed, as well as the system’s sensitivity and adaptive capacity. Win-win-(win): In the WDR, this refers to measures that are beneficial for adaptation and mitigation (and development). 79