Mainstreaming Climate Change Adaptation into Official - Stockholm ...

ENVIRONMENTAL POLICY INTEGRATION AND MULTI-LEVEL GOVERNANCE Co-ordinating and synthesising research on environmental policy integration and multi-level governance, 2006-2008 A Co-ordinated Action under the European Union's 6th Research Framework Programme CITIZENS-2004-4.2.2 - Governance for Sustainable Development DG Research

EPIGOV Papers No. 36

Mainstreaming Climate Change Adaptation into Official Development Assistance: A Case of International Policy Integration Åsa Persson (Stockholm Environment Institute Ecologic –Institute for International and European Environmental Policy Berlin, 2008

15 October 2008

EPIGOV Papers

EPIGOV is a research project on the modes of governance employed at global, EU, national and regional/local levels to support the integration of environmental concerns into other policy areas. Relevant policy areas are, for example, transport, agricultural, and energy policy. Running over three years (2006-2009), EPIGOV brings together nineteen research institutions from ten European countries.

EPIGOV aims to co-ordinate and synthesise existing research on environmental policy integration and multi-level governance and to generate new research questions and initiatives. To obtain feedback and disseminate results, EPIGOV will also involve policymakers and non-state stakeholders. http://www.ecologic.de/projekte/epigov/

Citing this EPIGOV Paper: Persson, Åsa (2008): ‘Mainstreaming Climate Change Adaptation into Official Development Assistance: A Case of International Policy Integration’, EPIGOV Papers No. 36, Ecologic – Institute for International and European Environmental Policy: Berlin.

Persson: Mainstreaming Climate Change Adaptation into ODA

Abstract Climate change adaptation in developing countries is becoming an increasingly prioritised international policy objective, and one of the key responses is mainstreaming it into official development assistance (ODA). The aims of this paper are twofold. Firstly, concepts and insights from the EPI literature will help understand the case of climate change adaptation and integration efforts in ODA. More specifically, the aim is to understand some of the challenges that mainstreaming efforts need to overcome by examining the decision-making context of the ODA policy sector and the demands and requirements it poses. In doing so, three particular issues of the EPI theoretical literature will help inform and structure the discussion, namely the implications of new modes of governance for integration efforts, different functional approaches to achieve integration (procedural, organizational, normative), and the issue of relative weighting of policy objectives. Secondly, the aim is to provide a contrasting empirical case to the existing EPI literature, which has so far predominantly focused on national- or EU-level environmental integration within domestic (or EU) policy. After a review of the characteristics of both adaptation as a policy objective and ODA as a policy sector, implications for potential mainstreaming effectiveness under new modes of governance are identified. These implications are then discussed in light of emerging practices within various ODA agencies. One important aspect is that mainstreaming adaptation is not only seen as good practice of climate-proofing ODA, but also as a key option for funding adaptation. Altogether, the lessons for the EPI literature from this case are that integration is not only a institutional and procedural concern, i.e. a question of ‘how to’ achieve integration effectively and efficiently. In the case of climate change adaptation, with international solidarity at stake and responsibilities to be determined, it is also a question of ‘whether’ integration is an appropriate strategy (the weighting issue), ‘who decides’ when and where to mainstream, and ‘who pays’ for ensuring that integration does not result in net loss of resources for development. As a case of EPI, it thus highlights the importance of not only considering the role of governance modes and administrative tools for effective integration, but also normative trade-offs and distributional implications.

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Table of Contents 1. INTRODUCTION ................................................................................. 3 2. CLIMATE CHANGE ADAPTATION AND THE NEED FOR POLICY INTEGRATION .................................................................................... 5 2.1. Defining adaptation: what is to be integrated? ....................... 5 2.2. The potential of integrating adaptation into ODA ................... 6 2.3. Characteristics of adaptation and implications for mainstreaming ..................................................................... 7 3. NEW MODES OF GOVERNANCE IN THE ODA POLICY SECTOR .. 9 3.1. The ODA sector: key trends ..................................................... 9 3.2. Modes of governance in ODA decision-making ................... 10 3.3. Implications of ODA modes of governance for integration efforts.............................................................. 14 4. PRACTICAL APPROACHES TO AND PROBLEMS WITH MAINSTREAMING ............................................................................ 15 4.1. Imposing new procedures for integration ............................. 15 4.2. Organisational structure and incentives ............................... 18 4.3. The normative challenge: who decides in a partnership arrangement? .................................................................... 20 5. THE FINANCIAL MANIFESTATION OF INTEGRATION: WHO FUNDS ADAPTATION AND FROM WHICH BUDGET?................... 22 6. CONCLUDING REMARKS ................................................................ 24 REFERENCES ......................................................................................... 27 7. NOTES............................................................................................... 31

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1. INTRODUCTION To integrate environmental considerations into official development assistance (ODA) for poverty reduction has been a common objective within many bilateral and multilateral donor agencies over the last decades. Efforts to achieve environmental policy integration (EPI) have generally evolved from the application of environmental impact assessment (EIA) to specific ODA projects, to more strategic approaches such as strategic environmental assessment (SEA) of sector-wide ODA programmes and mainstreaming of environment in country strategies and Poverty Reduction Strategy Papers (PRSPs) (Palerm et al., 2007). However, progress with environmental integration has so far been uneven due to various factors such as lack of knowledge of poverty-environment linkages, lack of resources to undertake additional analytical work, ‘mainstreaming fatigue’ as a consequence of many cross-sectoral themes to consider (e.g., gender equity, HIV/AIDS, human rights), lack of interest and commitment within the donor agency and/or the partner country, and perceived trade-offs between environmental and ‘mainstream’ development goals. The need for EPI within ODA as a policy sector has been given new impetus as the consequences of climate change in the developing world and globally have become increasingly clear in recent years. Integration concerns both mitigation of and adaptation to climate change, but this paper focuses on integration of adaptation into ODA activities. Klein (2001) identifies three ways in which adaptation to climate change is relevant to ODA: (i) the risk of climate change to the ODA activity and its deliverables (e.g., water supply, food security); (ii) the vulnerability to climate change of the community or ecosystem that is the beneficiary of the ODA activity; and (iii) the possible effects of the ODA activity and its deliverables on the vulnerability of communities or ecosystems to climate change (see also Sperling, 2003; Huq et al., 2003; Agrawala, 2005; Eriksen et al., 2007; Agrawala and van Aalst, 2008). The recognition of these close linkages by policy-makers was manifested in the 2006 OECD Declaration on Integrating Climate Change Adaptation into Development Co-operation1 adopted by ministers for development co-operation, which recommended integration of adaptation into all stages of the ODA policy and planning cycle. In climate policy discussions, the term ‘mainstreaming’ rather than integration is often used. The difference between these two terms can be debated, but in this paper they are used interchangeably and as synonyms. The aims of this paper are twofold. Firstly, concepts and insights from the EPI literature will help understand the case of climate change adaptation and integration efforts in ODA. More specifically, the aim is to understand the challenges that mainstreaming efforts need to overcome by examining the decision-making context of the ODA policy sector and the demands and requirements it poses. In doing so, three particular strands of the EPI theoretical literature will help inform and structure the discussion, namely the implications of new modes of governance for integration efforts, different functional approaches

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Persson: Mainstreaming Climate Change Adaptation into ODA to achieve integration (procedural, organizational, normative), and the issue of relative weighting of policy objectives. Secondly, the aim is to provide a contrasting empirical case to the existing EPI literature, which has so far predominantly focused on national- or EU-level environmental integration within domestic (or EU) policy (e.g., Lenschow, 2002; Nilsson and Eckerberg, 2007; Jordan and Lenschow, 2008). Importantly, the case of integration of adaptation concerns into ODA as a policy sector involves: • •

an international context, with more than one jurisdiction and electorate (and in some cases also multilateral actors); and states as sovereign actors although potentially subjected to a power asymmetry, which is reinforced by a legacy of aid dependency but addressed through promotion of the country ownership principle.

This means that this case can provide insight regarding EPI in a bilateral negotiation context. With regards to adaptation as a policy objective, certain characteristics apply: •

a policy objective (i.e., adaptation) that is more reactive in nature and more time- and place-dependent, and hence less easily quantifiable, than some other environmental objectives (e.g., mitigation of greenhouse gas emissions, increased nature conservation, more efficient freshwater use); and • a policy problem which has global causes, hence implying a globally shared responsibility, but which often requires locally specific solutions and responses. The characteristics of this EPI case raises particular questions relating to integration, such as; who is responsible for the problem (i.e., climate impacts) and hence for ensuring appropriate policy responses? Is indeed integration an appropriate policy response, or should specific and stand-alone adaptation initiatives be promoted? Who should make the actual decisions on whether, when, where and how to integrate adaptation into other sector and economic policy areas, considering also the dominant modes of governance in the ODA sector? Does integration have a predominantly technical and operational meaning in this context, or wider political and distributional implications? It will be argued in this paper that while studies of EPI in Europe have often tended to focus on bureaucratic routines and institutionalisation of integration at the administrative level, the case of mainstreaming of climate change adaptation into ODA is not limited to an administrative or operational concern but calls for attention to the normative weighting of policy objectives and the “ultimate democratic trade-off”2 (Lafferty and Hovden, 2002). The reason is, as will be explained below, that mainstreaming as framed in the current international climate policy debate will potentially have far-reaching and tangible distributional implications. After an analysis of climate change adaptation as a policy objective and the rationale for sector integration (section 2), the ODA sector as a context for integration and mainstreaming will be examined (section 3). In particular, the evolution of modes of governance within ODA will be reviewed and implications

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Persson: Mainstreaming Climate Change Adaptation into ODA for the feasibility of effective integration discussed. It will then be examined how policy integration has been addressed in practice from a procedural, organisational and normative point of view (section 4). Finally, the budgetary and financial implications of mainstreaming as a strategy for supporting adaptation in developing countries will be discussed in light of on-going policy deliberations under the United Nations Framework Convention on Climate Change (UNFCCC) regime.

2. CLIMATE CHANGE ADAPTATION AND THE NEED FOR POLICY INTEGRATION

2.1. Defining adaptation: what is to be integrated? Over the past couple of years, climate change adaptation has gone from a future concern to an immediate need. The 2007 IPPC assessment concluded that climate impacts are already occurring and adaptation efforts have already been documented (IPCC, 2007). Costs of adaptation in developing countries have been estimated to range from tens of billions to over one hundred billion in recent assessments (see e.g. Stern, 2007; UNDP, 2007). In the UNFCCC negotiations, adaptation plays an increasingly larger role, in particular international funding thereof. What, then, is adaptation about, and what exactly is to be integrated into ODA? The IPCC (2007, p. 869) has defined adaptation as “[a]djustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities”. Considering this broad definition, a first distinction can be made between adaptation of natural vs. human systems (IPPC, 2007). The latter is motivated by economic and social rather than environmental concerns. It can thus be questioned whether adaptation is a typical ‘environmental’ or ‘green’ issue and, hence, representative and relevant to consider from an EPI perspective. While lessons regarding cross-sectoral policy integration from the EPI literature are arguably relevant, the issue of trade-offs between objectives such as economic development, environmental protection, and adaptation will be addressed below. Another important distinction with regards to adaptation initiatives is that between privately motivated adaptation, and publicly motivated and policy-driven adaptation (Stern, 2007; Adger et al., 2007). Clearly, in the case of mainstreaming of ODA, the main interest is in stimulating publicly motivated adaptation that provides benefits for a larger group than a single individual or household. A related distinction refers to adaptation that is anticipatory and that which is reactive (IPCC, 2007). While anticipatory adaptation is by definition more preventative of harm, it is difficult to generalise which type would be inherently preferable since they may have very different opportunity costs in different situations. Most likely, a mix of anticipatory and reactive adaptation will become a reality.

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Persson: Mainstreaming Climate Change Adaptation into ODA Finally, a key distinction can be made between taking adaptation measures and building adaptive capacity. Examples of adaptation measures range from constructing seawalls to modifying building codes in coastal zones, from increasing reservoir capacity to adjusting water prices in the water sector, and from research on crop varieties to changing farm practices in the agricultural sector (see UNFCCC, 2006). Adaptation measures have been identified within a wide range of sector policy areas, but with a particular focus on coastal zones, water resources, agriculture, public health, and infrastructure. Clearly, adaptation is a highly cross-sectoral policy objective. The extent to which such ‘hard’ measures can be adopted successfully depends on the adaptive capacity of the community, sector, industry or household. Adaptive capacity has been defined as “the ability of a system to adjust to climate change (including climate variability and extremes) to moderate potential damages, to take advantage of opportunities, or to cope with the consequences” (IPCC, 2007, p. 869). Adaptive capacity is often limited by a lack of resources, poor institutions and inadequate infrastructure, amongst other factors that are typically the focus of ODA (Smith et al., 2003). In concrete terms, four factors for effective adaptation planning (the four ‘I’s) have been identified by the UNDP (2007, pp. 173-184): “information for effective planning; infrastructure for climate-proofing; insurance for social risk management; institutions for disaster risk management”. Initiatives have been taken in various developing countries within all of these categories, but with seemingly least progress so far in the latter ones. From this introduction to adaptation as a policy objective, it is clear that adaptation is the result of a very diverse set of actions, that are in turn stimulated by policy influences originating from many different sectors. In this way, it is a typical candidate issue for a broad-based sectoral integration approach, as opposed to being a separate and stand-alone policy sector. Importantly, it often does not entail any qualitatively ‘new’ kinds of activities, but essentially ‘more of the same’ activities that are currently undertaken to protect livelihoods and investments from climate and weather risks. As often pointed out, adaptation has taken place throughout human history.

2.2. The potential of integrating adaptation into ODA For these reasons, the sector integration imperative has been reiterated and strongly promoted by virtually all actors and organisations involved in promoting adaptation, both in developed and developing countries. For example, the UNDP (2007, p. 172) argues that “[t]he starting point is to build climate change risk assessment into all aspects of policy planning” (my emphasis). It is also recognised that this will require a transformational change in government practices. The rationale for mainstreaming has further been promoted both for domestic policy-making in developing countries (partner countries) and for ODA policy-making and programming (donor countries). As will be discussed below, the boundary between these two types of decision-making processes is

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Persson: Mainstreaming Climate Change Adaptation into ODA becoming (and is desired to become) increasingly blurred. But for ODA decisionmaking by donor countries, which is the main focus of this paper, several highlevel policy statements have been made by the donor community. Apart from the 2006 OECD Declaration referred to above, these include the 2004 EU Action Plan for Climate Change in Development Cooperation and the 2007 EU Global Climate Change Alliance, the 2005 G8 Gleneagles Plan of Action, and the 2006 multi-agency Clean Energy and Development Investment Framework led by the World Bank. ODA can be seen as a microcosm of a government, with activities and objectives in many (or even most) sectors of the economy. In some countries, ODA is indeed not much of a separate sector but in itself an activity that is organized and co-ordinated across sector government departments. The rationale and potential for sectoral integration of climate change adaptation has not just been acknowledged in qualitative terms, but also quantitatively estimated. The OECD estimated that in Nepal, for example, as much as 50-65% of total ODA is directed at activities potentially affected by climate risks (Agrawala, 2005). From the donor perspective, it has been estimated that on average around 33% of bilateral donors’ portfolios are vulnerable to climate change (UNDP, 2007, p. 191). At the same time, more than 60% of all ODA from OECD countries could positively contribute towards adaptation and adaptive capacity (Levina, 2007).

2.3. Characteristics of adaptation and implications for mainstreaming Thus, mainstreaming of adaptation is widely considered ‘common-sense’, as offering ‘win-win’ opportunities, and as a cost-effective strategy for the sustainability of ODA. However, there are also some particular characteristics of adaptation as a policy objective that make it problematic to integrate into sector policy-making and that introduce some tricky political and practical dilemmas. First, there is the question of adaptation to what? It has been debated as to whether or not it is meaningful in practice to distinguish between adaptation to climate change and adaptation to climate variability, and hence whether or not adaptation to climate change should be seen as ‘incremental’ or ‘additional’ (Burton and Van Aalst, 2004). Adaptation to climate change implies a ‘burden-ofproof’ responsibility on behalf of the proponent and a need for some criteria for measuring additionality. If the additional adaptation of an investment to climate change (as opposed to climate variability) needs to be assessed and reported for funding purposes, this immediately frames adaptation more in terms of a separate and stand-alone policy issue or policy area. While more actors now reject the additionality approach (e.g., UNDP, 2007), there are currently mixed messages in international policy for adaptation and somewhat of an impasse. The implications this has for adaptation funding for developing countries will be discussed below. Second, it has been argued that it is a futile exercise to strongly distinguish between adaptation efforts and ‘mainstream’ development efforts, for two reasons. First, adaptation to current climate variability (see above) is commonly 7

Persson: Mainstreaming Climate Change Adaptation into ODA seen as a development objective and is funded through ODA already today. Second, building of adaptive capacity, such as increasing literacy to better disseminate climate forecasts or diversification of livelihoods, is essentially what can be considered good development. A recent study that reviewed more than 100 initiatives labeled as adaptation in developing countries found that in practice there is little difference between these adaptation initiatives and good development (McGray et al., 2007). The difference lies more in the definition of the problem and the setting of priorities than in the implementation of solutions. The study presents adaptation as a continuum between climate risk management and development, ranging from more narrowly defined activities aimed specifically at addressing impacts of climate change, to building response capacity and addressing the drivers of vulnerability. This suggests that mainstreaming in practice does not necessarily involve integration of A into B, but doing more or better of B. However, while adaptation on the ground may be very similar, identical and/or synergistic to mainstream development, there may still be trade-offs and goal conflicts. First, and as will be elaborated upon below, there is conflict over which pot of money to use for adaptation and development respectively. The definition of an initiative determines which type of funding it is eligible for. Second, while the fundamental objectives of development and adaptation may be the same and there are no trade-offs in substance, there may be temporal trade-offs, in that some development objectives are perceived as more urgent than longer-term adaptation objectives. Finally, adaptation is not a discrete, delimited and easily measurable ‘issue’ but rather refers to taking a certain ‘perspective’ of adopting longer timescales and increasing awareness of climate risks in policy-making and planning. The question then is how well suited the policymaking system is to integrating and mainstreaming a broad perspective, as opposed to a discrete and measurable issue. There has so far been a lack of useful policy targets for adaptation, since it is time- and place-dependent and diverse in nature (Tellam, 2007; Levina. 2007). This lack means that there is less of a direction, level of aspiration and metric to guide the integration effort, compared with, for example, mitigation of greenhouse gas emissions. The practical implication is that adaptation needs to broken down into sector-specific interpretations and that individual decision-makers must determine what counts as effective adaptation (e.g., the well-being of humans vs. the resilience of ecosystems, the overall reduction of vulnerability vs. the distribution of reduction of vulnerability). In summary, the organizational rationale (cf. Lundqvist, 2004) for integrating adaptation into ODA is widely recognized, and it is commonly perceived to be a ‘common-sense’ and ‘no-regrets’ strategy from an operational perspective. However, the normative rationale is more disputed, to some extent due to perceived trade-offs between adaptation and development in the short-term, but also due to the implications mainstreaming may have for international funding flows. In this way, this case presents a puzzling situation where mainstreaming is simultaneously a low-politics and high-politics issue.

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3. NEW MODES OF GOVERNANCE IN THE ODA POLICY SECTOR 3.1. The ODA sector: key trends Before examining the modes of governance employed in the ODA sector, a brief introduction to some key trends in ODA is worthwhile. In 2006, member countries of the OECD Development Assistance Committee (OECD/DAC) disbursed 104 billion USD in net ODA (see Figure 1) (OECD, 2008). Comparing with 2002 as a base year and using 2002 prices and exchange rates, this meant an increase of 35% (from 58 billion USD to 78 billion USD). However, the net ODA volume was far from reaching the agreed Monterrey target of 0.7% of gross national income (GNI). In 2006, OECD/DAC countries reached only to 0.31%, i.e. less than half of the target. Figure 1. DAC members’ net ODA 1990-2006 and DAC Secretariat simulations of net ODA for 2007-2010

Source: OECD (2008, p. 16, figure 1.1).

This shortfall in meeting the target is reinforced by the fact that, in recent years, much of the ODA gross increase has comprised substantial debt forgiveness grants, particularly to Iraq and Nigeria. If these grants are excluded, together with bilateral humanitarian aid, administration costs, in-donor country refugee costs and imputed student costs, the OECD/DAC secretariat’s estimate is that ODA has actually decreased in real terms from 2002 (see Figure 2). This remaining socalled ‘programmable aid’ (excluding disbursements to Iraq) reached only 40 billion USD, measured in constant 2002 prices. ‘Programmable’ type of aid is where most mainstreaming of climate change adaptation would take place.

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Persson: Mainstreaming Climate Change Adaptation into ODA Figure 2. Net ODA flows by type

Source: OECD (2008, p. 18, figure 1.2).

It should be emphasized that ODA is not the largest flow of funds from OECD/DAC countries to developing countries. While net ODA flows were 104 billion USD in 2006 (in 2006 prices), private flows at market terms (including direct investment and export credits) were nearly twice as large, 195 billion USD (OECD, 2008, p. 138). This means that there is also a possibly large potential for mainstreaming climate change adaptation concerns in decision-making related to private financial flows, depending on their subsequent use in developing countries. Net grants by NGOs has also been an increasing type of financial flow over recent years, reaching 15 billion USD in 2006.

3.2. Modes of governance in ODA decision-making To compare the challenge of mainstreaming climate change adaptation into ODA with EPI in domestic policy and in EU policy, the same theoretical framework for modes of governance developed for the EPIGOV project can be used. Von Homeyer (2006) characterizes theories on modes of governance – as preconditions for, parallel trends with, and/or modes for integration – by identifying three categories. First, the shift from government to governance has implications for the decision-making type employed in policy-making. Governance theorists have proposed that there has been a shift from hierarchical, legislative decision-making towards increased network bargaining and learning (Börzel, 2006; Knill and Lenschow, 2005; Treib et al., 2005). This shift is closely linked to the second category, namely which actors are involved in governance. New modes of governance involve a pluralistic set of actors (including interest groups, stakeholders, independent experts) as opposed to the state-centric model. The third category refers to the outputs of new forms of governance, namely which policy instruments are used to steer behaviour in society. The trend is to broaden

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Persson: Mainstreaming Climate Change Adaptation into ODA the repertoire from mainly command-and-control legislation to also involve information and incentive-based instruments, including those of voluntary status. When applying these concepts to the context of ODA, an obvious difference is that there is a transnational relationship present and more than one jurisdiction is involved. This means that we are in fact considering the joint governance of the ODA decision-making process and its outputs. Turning to ODA as a sector policy context, then, there has indeed been a significant shift in governance recently, which the categories outlined above can help examine. This shift was firmly and formally established with the 2005 Paris Declaration on Aid Effectiveness3, adopted by OECD ministers for development cooperation, as well as endorsed by some developing countries (118 countries in total), multilateral banks and donors, and civil society organizations. The Declaration encompasses commitments for both donor and partner countries based on five principles: •

Ownership – “Partner countries exercise effective leadership over their development policies, and strategies and co-ordinate development actions” • Alignment – “Donors base their overall support on partner countries’ national development strategies, institutions and procedures” • Harmonisation – “Donors’ actions are more harmonized, transparent and collectively effective” • Managing for results – “Managing resources and improving decisionmaking for results” • Mutual accountability – “Donors and partners are accountable for development results” Under the alignment principle, the signatories also renewed their commitment to untying aid. Figure 3 illustrates how these principles are envisioned to build upon each other, stipulating that ownership is the highest-order principle. These five principles have been elaborated into more specific commitments for donor and partner countries respectively, and are associated with 12 indicators to be regularly monitored. Furthermore, some quantified targets for 2010 have been set (see Box 2). Figure 3. Illustration of the Paris Declaration principles

Source: OECD (2005, p. 18, figure 1).

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Persson: Mainstreaming Climate Change Adaptation into ODA Box 2. Some quantified targets of the Paris Declaration

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At least 75% of partner countries have operational national development strategies

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Halve the proportion of aid flows to government sector not reported on government’s budget(s) (with at least 85% reported on budget)

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50% of technical co-operation flows are implemented through co-ordinated programmes consistent with national development strategies

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66% of aid flows are provided in the context of programme-based approaches

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Reduce the proportion of countries without transparent and monitorable performance assessment frameworks by one-third.

Source: Paris Declaration on Aid Effectiveness (pp. 9-10).

Discussing these principles, and their concrete consequences, in relation to the three governance categories is helpful for shedding light on how ODA is shaped and implemented, and the extent to which integration efforts can work effectively under new modes of governance. With regards to decision-making type, it can be argued that decision-making on the part of the donors, as a consequence of the principles, should become necessarily less hierarchical and confined to the individual ODA agency. First and foremost, alignment with partner country priorities requires a more inclusive approach with bargaining and possibly mutual learning. It also requires more coordination with the partner country government, at different administrative levels and in different government sectors. The goal of donor harmonization and coordination further diminishes the scope for the individual ODA agency to implement its government’s development co-operation goals single-handedly in a hierarchical and top-down fashion. For mainstreaming effectiveness, this suggests that it can be less controlled by the ODA agency, with a risk that mainstreaming responsibility is diffused. On the other hand, progress on a co-ordinating approach to ODA in general may work to the benefit of cross-sectoral integration of a theme like climate change adaptation. How has decision-making changed along these lines in practice? In a monitoring report to the Paris Declaration (OECD, 2007), it was found that there are signs of progress towards alignment, but that there are also problems of lack of PRSPs and national development plans in some developing countries and that they are not always clear on priorities (OECD, 2007, p. 17). In 2005, only 43 countries had developed PRSPs and only 17% of the surveyed countries met the specified quality threshold (OECD, 2005). The lack of clear prioritization means that donors can still adapt their ODA to a particular country in according to their own preferences. Furthermore, at the same time as old decision-making approaches are being challenged, centralized control of decisions is still exercised through the continued use of conditionalities for loans and grants (ibid.). The new emphasis on results-based management and accountability also ensures that the formulation of desired results can be an effective top-down control mechanism, and that programme and project decisions cannot de facto stray too far from hierarchically set goals, especially if there is some enforcement and sanctioning mechanism. For example, some experimentation with performance-based aid 12

Persson: Mainstreaming Climate Change Adaptation into ODA allocation has taken place (OECD, 2005). Finally, with a general shift of decisionmaking towards the partner country, the question is naturally raised whether new modes of governance have been introduced there or whether traditional forms of government apply, and what this means in terms of premises for effective policy integration. With regards to the actors involved in governance of ODA, the Declaration explicitly aims for a shift towards increased partner country ownership. This, as well as the alignment principle, means that the partner country government should be more present in decision-making and able to assert its sovereignty. In terms of implications for integration, this means that more parties are brought to the table to determine the appropriate extent of integration and where and when to pursue it. The imperative for donor co-ordination also adds to the increasing plurality of actors. Has the ownership led to real shifts of initiative and leadership in practice? The 2007 progress report stated that while ownership is a long-term process, governments in partner countries are more inclined and capable to take leadership in aid co-ordination than just a few years ago (OECD, 2007, p. 16). However, it has also been found that still a high amount of increasingly complex conditionalities apply to ODA, which calls a trend of true ownership into question (OECD, 2005, p. 25). Finally, regarding the use of instruments for ODA, the alignment, ownership and harmonization principles have had some important and tangible consequences. In addition to these normative principles, the high transaction costs of carrying out many minor and un-coordinated technical cooperation projects were seen as an inefficient use of resources. Therefore, increased use of direct budget support and sector-wide approaches (SWAps)4 as instruments has been promoted. These should be more strongly owned by partner countries and donors should contribute on basis of their comparative advantage. According to the 2005 OECD progress report, SWAps and budget support were increasingly used by donors as instruments for disbursing ODA. However, project support remains the most important form of ODA (OECD, 2005, p. 30). Data from 2006 showed that the proportion of aid provided as programme-based approaches reached 43%, thus falling short of the 2010 target of 66% (see Figure 4). However, as noted above, it is also important to consider the quality of programme-based approaches from the perspective of alignment. As stated above, the lack of clear prioritization in PRSPs and the continued use of conditionalities mean that increased use of programme-based approaches does not necessarily indicate higher alignment.

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Persson: Mainstreaming Climate Change Adaptation into ODA Figure 4. Proportion of aid provided as PBAs in 2006

Source: OECD (2007, p. 31, chart 1.11).

3.3. Implications of ODA modes of governance for integration efforts What do these shifts towards new modes of governance – which are yet to be fully realized – mean for the pursuit of and potential effectiveness of mainstreaming? Similar to particular characteristics of climate change adaptation as a mainstreaming theme, some key characteristics of the ODA as a context or object for integration can be identified. First, and perhaps most importantly, there is thus an active aspiration that partner countries should shape the use of ODA, and hence be responsible for mainstreaming of themes like climate change adaptation. Still, it was apparent that ownership and alignment have not yet been fully realized, meaning that there may be a rather complex set of actors with potentially ambiguous roles that should make potential trade-offs when prioritizing between development goals and climate change adaptation. Increased ownership likely involves more of a negotiation approach to mainstreaming in practice, as opposed to a more unitary planning approach which could be adopted in a domestic policy-making context. Second, it is clear that increasing weight is given to PRSPs and national development strategies, and they are also in practice becoming more common and of gradually higher quality. Due to their role and status in ODA, they thus appear to be the most important venue for integration efforts (see also Kramer, 2007). Furthermore, as ODA is becoming increasingly disbursed through less specified programme and budget support, as opposed to predefined projects, the ODA agency will have less control over whether mainstreaming achievements at the programme level are also being implemented at the project level and on the ground. Altogether, this means that mainstreaming capacity increasingly needs to lie with the partner country government. An analytical problem is that it may be difficult at the programme level and the level of a national development strategy, to analyse what are the main climate risk and where and in which sectors adaptation should be supported and prioritized.

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Persson: Mainstreaming Climate Change Adaptation into ODA Finally, the principle of results-based management is being increasingly emphasized. It means that expected impact and results should be defined at the planning stage. As noted above, adaptation does not readily lend itself for targetsetting, due to time- and place dependency, and may thus be subject of a negative bias. Another potential implication of increased results-based management, is that within an ODA agency (or partner country government) the incentives for individual staff will be related to the results they are expected to achieve. Unless climate change adaptation is clearly stated as a result, there may be disincentives for staff to engage in mainstreaming activities (Tearfund, 2006). Considering these shifts in governance together suggests that ODA is gradually moving from being a rather technical, project-based policy sector, towards being a policy sector more characterized by strategic-level decisions. Challenges facing mainstreaming in light of the partnership principle and the more strategic-level and broader aid instruments are that national sovereignty and international negotiation could become more prominent. While ODA could previously be dealt with in a more technical and less value-laden arena, political priorities associated with development objectives are now dealt with in a more explicit way.

4. PRACTICAL APPROACHES TO AND PROBLEMS WITH MAINSTREAMING In the section above, the sector context in which integration, or mainstreaming, is to take place was described. The rest of the paper will examine how, given the challenges related to climate change adaptation as a policy objective (see section 2 above), it can be mainstreamed in this sector context which is undergoing a major governance shift. When identifying practical approaches and tools for integration, they can be studied within three major functional dimensions; procedural, organizational, and normative (Persson, 2008). Below, each of these will be systematically analysed, with reference to some of the key challenges outlined above, followed by a section on the financial implications of the mainstreaming dilemmas.

4.1. Imposing new procedures for integration The most immediate step often taken in policy integration is to introduce new or modify existing decision-making procedures, not least in terms of the information feeding into the decision. For EPI, common procedural tools include ex ante environmental assessments of programmes and projects (e.g., strategic environmental assessment, SEA; environmental impact assessment, EIA), “green budgeting”, checklists, sector environmental reporting systems, internal or external audit functions, as well as improved consultation with and participation of environmental experts and stakeholders (EEA, 2005; Persson, 2007). Provided they are actually used, these tools create opportunities for integration and mainstreaming, but they do not guarantee that substance will follow from procedure (Lenschow, 2002). Importantly, they are sometimes intended to

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Persson: Mainstreaming Climate Change Adaptation into ODA operate within a more or less given organisational structure, knowledge context, and set of political priorities. There are several examples of the procedural approach and associated tools developed for mainstreaming adaptation into ODA. An initial step by several agencies has been to undertake portfolio screenings to determine what share and what kind of ODA activities are exposed to the risk of climate change, in other words, climate-proofing their ODA. In a review of such efforts, Klein et al. (2007) find that the quality of screening to date is varied, but also that they have served different purposes: from searching for linkages in a more qualitative way to identifying risks in more quantitative ways and proposing future activities. A further step is the identification of ‘entry points’ for mainstreaming in donor and partner country policy and project cycles (e.g., PRSP consultations, country strategies, sector programmes, project design) and general and sector-specific checklists for specific adaptation issues and options, to provide concrete guidance (Eriksen et al., 2007; Gigli and Agrawala, 2007). These guidance and tools generally propose a methodology for analysing the climate risk posed to a programme or project, identifying adaptation options and assessing the options according to certain criteria (e.g., cost-benefit analysis and multi-criteria analysis). Specific examples of such guidance and tools include the Danida’s action programme for climate-proofing Danish development cooperation, USAID’s sixstep adaptation guidance manual, ADB’s risk-based approach to adaptation and climate-proofing, UNDP’s adaptation policy framework, the CRiSTAL software tool for community-based risk screening, the World Bank web-based ADAPT planning tool, and UK DfID’s ORCHID process. A process for cross-fertilisation and exchange between such tools is being organised under the auspices of the Development Assistance Committee of the OECD. Given that ODA is moving towards a more programmatic approach, it is clear that guidance efforts should focus on how to integrate climate change adaptation concerns at higher strategic decision-making levels, such as the partner countryled PRSPs or the donors’ country assistance strategies. Since planned ODA activities at such levels are necessarily more broad and less concretely specified, however, it can be difficult to make generic recommendations on adaptation options. It may thus be equally important to develop procedures and guidance for effective follow-up of strategic documents, i.e. that climate change adaptation objectives that were successfully integrated also are translated in concrete and effective activities at the project level. National Adaptation Programmes of Action (NAPAs) are a country-driven opportunity under the UNFCCC to provide input into the ODA process. In the NAPAs, the least-developed countries identify and prioritise immediate adaptation needs and can thus inform mainstreaming efforts, especially when a more programmatic approach to mainstreaming is preferred. However, the quality of NAPAs has so far been variable and implementation is uncertain (Jallow and Downing, 2007).

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Persson: Mainstreaming Climate Change Adaptation into ODA How effective has mainstreaming of climate change adaptation been so far at the strategic levels? So far, both donors and national governments have responded to adaptation mainly through project-based institutional structures operating outside planning systems for budgets and poverty reduction strategies, according to the UNDP (2007, p. 196). A recent assessment of PRSPs (and related NAPAs in some cases) in 19 countries by Kramer (2007) showed that little progress had been made in terms of integrated climate change adaptation considerations. Seven did not mention climate change at all. In only two countries had the integration efforts led to concrete adaptation projects being identified (Bangladesh and Malawi). Kramer argued that there was no evidence that NAPAs are effectively facilitating mainstreaming adaptation into PRSPs today, due to problems of lack of funding of NAPAs, absence of an institutional framework to implement them, and the perception that they represent an informal analytic project. Another review of the integration of analysis of vulnerability to environmental stresses and natural hazards, including climate change-related ones, found mixed success (Miller et al., 2008). While vulnerability is explicitly acknowledged and linked to poverty, there is no elaborated discussion of causes and drivers of vulnerability, vulnerability across different groups in society was not disaggregated and targeting of policies not discussed, and the attention to vulnerability was not translated into specific vulnerability reduction measures. In general, there is thus a gap between acknowledgement of the challenge and action. Gupta and van den Grijp (2008) reviewed PRSPs and the EU Commission’s Country Strategy Papers (CSPs) guiding aid for four countries and found that climate change, including both mitigation and adaptation, was not explicitly addressed in any. Palerm et al. (2007) reinforce the critique of lack of environmental integration achievements in ODA managed by the European Commission, but also point towards new promising procedures. While the integration of NAPAs into PRSPs and national strategies is seen as a crucial step and task for the UNFCCC to support (Kramer, 2007), it is clear that progress so far has been limited with the procedural approach (see also Gigli and Agrawala, 2007). A range of contextual problems have been identified as preventing the effective application of various procedural tools: a lack of awareness of climate change among development practitioners, limited resources for the implementation of tools, limited relevance of available climate information on the temporal and spatial scales of development activities, and the uncertainty of climate information (Agrawala and Van Aalst, 2005; Tearfund, 2006). Importantly, there is also a lack of more specific guidance on which adaptation options are relevant for specific development activities as opposed to general guidance (ibid.). An underlying problem for determining the success of new procedures for mainstreaming and whether or not substance follows from procedure are the inherent conceptual and methodological difficulties involved in measuring success. Difficulties relate to measuring (i) the activity of mainstreaming (i.e., capturing the improvement of an integrated policy or project compared to a baseline or 17

Persson: Mainstreaming Climate Change Adaptation into ODA counterfactual case), and (ii) the outcome (i.e., measuring the complex and multidimensional phenomena of adaptation and adaptive capacity). The priority of addressing the latter challenge has led to initiatives for defining more policyrelevant national targets for adaptation and adaptive capacity (Tellam, 2007), as well as proposals for indicators of adaptive capacity, results-oriented adaptation actions, and process-oriented adaptation actions (Levina, 2007). To sum up, procedural approaches to mainstreaming climate change adaptation in ODA have recently been implemented or are currently being developed within several ODA agencies. Not least does this apply to climate-proofing of specific projects. At the more strategic and programmatic level, however, less progress has been made. This appears to be partly a question of lacking funds and capacity to develop good NAPAs and partly a question of ensuring that NAPA results are effectively integrated in the PRSP. Importantly, these issues need to be addressed within the context of the shift towards increased partner country ownership and towards more aid being disbursed as sector programmes or budget support. There may also be a need to develop follow-up routines to ensure that concrete projects and ultimate impact of a national development strategy do address adaptation (if prioritized), i.e. that an implementation deficit of mainstreaming achievements is avoided throughout the programming cycle and project implementation chain.

4.2. Organisational structure and incentives Some of the problems related to introducing or modifying procedures suggest that the organisational structure and context is equally, or even more, important to address. A wide range of organisational changes have been proposed in the EPI literature to enhance mainstreaming and integration (such as staff training and awareness programmes, changes of mandates, networking initiatives, creation of new departments). The purpose of organisational changes is not only to ensure that the right expertise and competence is in the right place, but also to induce ownership and internalisation of the environmental issues at hand and to encourage more profound and permanent changes in the routine decisionmaking processes. In the field of mainstreaming adaptation there appears to be less emphasis on organisational than on procedural changes, although general expertise on climate change and on mitigation and adaptation is currently being expanded in some agencies. An initial step of awareness-raising and training has been taken by a large majority of bilateral agencies, as well as the multilateral agencies, in the form of information material, seminars and short training courses on adaptation, but not always with a clear link to mainstream development and ODA (Gigli and Agrawala, 2007). More recently, some more major organisational restructuring has taken place within, for example, the governments of the UK, Australia and Mexico, where cross-governmental climate change departments or committees have been set up.

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Persson: Mainstreaming Climate Change Adaptation into ODA Sectoral compartmentalisation, as a key barrier for policy integration efforts, also applies to the mainstreaming of adaptation into ODA. Climate specialists have so far had limited influence on operational decisions taken by country departments with a ‘mainstream’ development focus (Gigli and Agrawala, 2007). For example, in Norwegian NORAD, Laugen and Lunde (1996) describe how the problem of unclear and overlapping responsibilities for environmental integration generally arose since the environmental expertise was located in the programme department, while the formal line of command with through the bilateral department. The policy signals about the environment thus had very unclear status, and accountability for mainstreaming was diffuse. In the absence of real transfers of responsibility and formal mandates for adaptation to climate change to ODA country departments (and to ministries of finance and planning in partner countries), there is thus a risk of limited progress and unresolved conflicts as outcomes from sector competition, and hence dilution of the adaptation objective. To avoid dilution and a lack of clear accountability for adaptation, it has been proposed that a politically powerful multi-stakeholder committee attached to a high-ranking office of government is required, as a control and audit function (Tearfund, 2006). Considering that changes in organisational structure are rare, an oft-cited problem in the context of ODA is ‘mainstreaming fatigue’, which arises due to the number of perspectives and issues to be mainstreamed (e.g., adaptation, gender, human rights) and the limited resources of the project or programme and for the preparation phase (Gibson et al., 2005). The general proliferation of ODA policy goals has meant that aid officials have been given a task that is normally not given to an implementing agency, but to policy formulators, according to Laugen and Lunde (1996, p. 84). An obvious solution would be to create a separate budget line for adaptation, to be allocated to country budget envelopes. According to the UNDP, the cost of climate-proofing all ODA is around 4.5 billion USD, i.e. representing about 4% of current ODA flows (UNDP, 2007, p. 191). While this would increase incentives for identifying and designing relevant programmes and projects, it runs counter to the very idea of adaptation as something integral to existing sector activities rather than as ‘something else’. Other suggested ways of tackling mainstreaming fatigue and creating positive staff incentives with regards to adaptation include the development of career development incentives related to climate-change training programmes, making the economic case for adaptation benefits more clearly, and the application of mainstreaming tools within risk assessment and management techniques that are already in use and embedded in the organisation (Tearfund, 2006). Especially in light of the principle of results-based management in the Paris Declaration, relevant targets and evaluation indicators are needed for climate change adaptation to avoid the risk of bias against the unmeasurable.

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4.3. The normative challenge: who decides in a partnership arrangement? As pointed out by Jordan (2002), while context-sensitive procedural and organisational changes can provide the necessary infrastructure for policy integration, there is a need for clearly communicated political will to fuel the system. By a normative approach we thus mean high-level (parliamentary and cabinet) commitments to the issue to be integrated, which in turn can be formalised and elaborated in strategies and policy frameworks and materially manifested in net additions of resources. In several studies of EPI in Europe it has been found that a strong normative commitment to the issue to be integrated, whether driven by ideology, public opinion or media attention, is a necessary condition for and operates in a dialectical fashion with procedural and organisational tools (Jordan and Lenschow, 2008). Many donor governments and agencies have recently adopted climate change mitigation and adaptation objectives in their ODA policies and there has also been high-level policy endorsement at the international level (e.g., the aforementioned 2006 OECD Declaration, the 2004 EU Action Plan for Climate Change in Development Cooperation, the 2005 G8 Gleneagles Plan of Action, and the 2006 multi-agency Clean Energy and Development Investment Framework led by the World Bank). Examples at the national donor policy level are fewer, however. Agencies in the UK, Denmark and Sweden have so far been identified as more advanced in this regard (Gigli and Agrawala, 2007). In the OECD donor survey on mainstreaming (ibid.), about half of the respondents included climate change topics in their regular, high-level policy dialogues with partner countries. As for the interdependence between high-level policy endorsement and lower-level awareness and championing of the adaptation perspective, it remains to be seen whether these relatively recent commitments and endorsements will have a lasting effect upon tool use and awareness or whether there will be a risk of implementation deficit. Regardless of whether it should be seen as a problem or an inevitability, policy frameworks developed at the high level rarely address or give clear guidance for concrete trade-offs and prioritisations that need to be made at the project design and implementation level. According to Majone (1989), uncomfortable explicit decisions are often deliberately pushed down in the government hierarchy. In the context of ODA, Laugen and Lunde (1996, p. 85) found that, as a consequence of insufficient high-level policy guidelines, the Norwegian agency NORAD was “left in a policy vacuum that the organization was neither mandated or staffed to fill”. While normative commitment can cause an increased use of tools (reflected in frequency and quality of use), such tools can simultaneously lead to the institutionalisation of an issue in a volatile and ephemeral political landscape. Furthermore, Agrawala and van Aalst (2005) indeed find that within ODA agencies there has been an underlying perception of real trade-offs between adaptation and other development priorities in some cases. The question of potential trade-offs between climate change adaptation and ‘mainstream’ development objectives is even more important if the context is 20

Persson: Mainstreaming Climate Change Adaptation into ODA broadened from internal ODA agency decision-making to the wider development community and the partner countries. It was noted above that while trade-offs in terms of substance between adaptation and development may not be significant, there may be temporal trade-offs. However, a strong critique of the proposed synergy between adaptation and development has been voiced by, for example, Chandler (2007) who argues that the Western ‘adaptation agenda’ actively reinforces marginalisation of poor people in Africa. He is concerned that poverty is increasingly understood as ‘vulnerability to climate change’, as opposed to in terms of economic and social development, and that adaptation actions have so far focused on bottom-up building of resilience of communities; “[r]ather than development being safeguarded by the modernisation and transformation of African society, underdevelopment is subsidised through the provision of social support for subsistence farming and nomadic pastoralism… The lesson of Africa is that development provides a better way of dealing with climate uncertainties than does concern with the individual lifestyles and survival strategies of the poor”.

The vague definitions Chandler uses for adaptation and development respectively, as well as the anecdotal use of evidence, makes it difficult to assess whether the trade-off he pinpoints is true or false. However, the key question from an EPI governance point of view is rather who should make this trade-off, or weighting of policy objectives – whether it exists or not? Who should determine whether ‘principled priority’ (Lafferty and Hovden, 2003) should be given to adaptation objectives over more short-term development objectives? As stated above, it can be inferred from the ownership principle that partner countries should do any weighting related to mainstreaming. While the literature reports on some successful examples, such as Bangladesh, two types of problems appear to hinder effective normative leadership from partner countries on mainstreaming of adaptation. First, the experience with NAPA preparation suggests that the interest from partner country governments is not always there (Jallow and Downing, 2007). However, interest and commitment is closely linked to knowledge about and capacity to deal with climate change impacts. Part of the purpose of NAPAs and related funding schemes is to build up such knowledge and capacity. A second, and more serious, problem with environmental integration in general according to Laugen and Lunde (1996) is that especially the poorest countries sometimes perceive it as ‘green conditionality’. They argue that “they are generally too impoverished and too dependent on aid to voice strong criticisms of what they may see as the misconceived priorities of donors. It is notoriously difficult to establish how perceptions differ between donors and recipients, because of the asymmetrical distribution of power between the two parties. Poor governments generally have to accept donor priorities, and adjust their preferences to (green) donor policy signals” (p. 83).

This critique suggests that state sovereignty and ownership are not exercised effectively by the poorest partner countries when agreeing on the use of ODA resources, and that there may indeed be a democratic trade-off when pursuing 21

Persson: Mainstreaming Climate Change Adaptation into ODA integration, as discussed by Lafferty and Hovden (2003). In addition, a negative side effect of well-resourced environmental integration by donors under lacking partner country ownership is that it can result in meagre incentives for the partner country to generate domestic resources for environmental investments (Laugen and Lunde, 1996, p. 83). In the absence of systematic empirical evidence of partner country prioritisation and normative leadership on mainstreaming efforts, a final point to be made on the issue of ownership and power asymmetry relates to dissonance with domestic commitment to mainstreaming within donor countries and the need for reciprocity to build credibility in international relations and global governance of the climate change issue. For EU development assistance in particular, Yamin (2005, p. 359) argues that “[the EU] has tended to argue that developing countries should mainstream climate consideration into development planning, whilst failing to reflect on its own early experience of integrating climate change into EU sectoral policies”. For example, the planned EU White Paper on adaptation has been repeatedly delayed. Biermann (2007, p. 331) states that a belief in reciprocity of interaction between partners is necessary to produce credibility in the Earth system governance endeavour. Arguably, this reciprocity does not only refer to interactions in terms of funding and financial flows (see below), but also in terms of demonstrating adaptation actions and revised policymaking.

5. THE FINANCIAL MANIFESTATION OF INTEGRATION: WHO FUNDS ADAPTATION AND FROM WHICH BUDGET? As indicated by the discussion so far, mainstreaming of climate change adaptation has found itself in a rather confusing situation of being simultaneously conceived as a low-politics and high-politics issue. Whilst EPI in the ODA sector has to a large extent been addressed as a technical and operational concern for ODA agencies, the emerging framing of climate change as an international solidarity issue – coupled with ownership as an increasingly important principle for ODA governance – has meant that integration of adaptation is increasingly debated as a strategic and social equity concern. The commentary by Desmond Tutu in the latest UNDP Human Development Report illustrates this framing: “Adaptation is becoming a euphemism for social injustice on a global scale… Put bluntly, the world’s poor are being harmed through a problem that is not of their making… We are drifting into a world of ‘adaptation apartheid’… In the long-run, the problems of the poor will arrive a the doorstep of the wealthy, as the climate crisis gives way to despair, anger and collective security threats… That is why I call on the leaders of the rich world to bring adaptation to climate change to the heart of the international poverty agenda – and to do it now, before it is too late” (UNDP, 2007, p. 166).

In this context of principles of solidarity, responsibility, liability and compensation, mainstreaming comes to involve redistributional implications. Arguably, in contrast with domestic EPI in sector policy-making, mainstreaming of adaptation is seen more as a ‘zero-sum’ game where gains and losses can be made, as

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Persson: Mainstreaming Climate Change Adaptation into ODA opposed to a commonsensical strategy. This is expressed in the current international debates on funding modalities, which are needed to translate the principles of solidarity and responsibility into adaptation actions being taken on the ground. Mainstreaming adaptation in ODA is currently held as one of the main options for both a funding and disbursement mode (see Kartha et al., 2006; Levina, 2007). Other sources of funding include ‘new and additional’ (non-ODA) funds from Annex I countries, levy on civil aviation, and a levy on maritime bunker fuels. Other options for disbursement of funds include a globally centralized fund (such as the Adaptation Fund currently being implemented), locally-focused and locally autonomous funds, and an insurance mechanism. A range of adaptation cost estimates have been issued recently. The World Bank (2006) concludes that the incremental costs to adapt to projected impacts of climate change in developing countries are likely to be of the order of USD 10–40 billion per year, whilst Oxfam (2007) estimates this number to be over USD 50 billion per year. The UNFCCC (2007) reckons that by 2030 the annual costs of adaptation in developing countries will amount to USD 28–67 billion. The UNDP (2007) has the most pessimistic estimate to date: it suggests that aid financing requirements for adaptation could amount to USD 86 billion per year by 2015. By April 2007, the existing funding mechanisms under the UNFCCC together with the Strategic Priority on Adaptation scheme run by the Global Environment Facility had disbursed in total 26 million USD5. Whilst the total pledged funds (by April 2007) are significantly larger, at 279 million USD, it is clear that the projected funding gap may be in two or more orders of magnitude. Comparing with current net ODA flows (see Figure 1), it is further clear that adaptation costs could represent somewhere between 10-86%, hence a significant proportion. Compared with ‘programmable aid’ only (estimated at 40 billion USD, see above) adaptation costs may even exceed current ODA. Given this estimated need for adaptation funding and current gap, the question is whether mainstreaming through ODA is a good option, or whether separate funding and disbursement instruments should be used. There are at least three important concerns at stake here. First, there is concern that scarce funds for adaptation to climate change in developing countries could be diverted into more general development activities, which would offer little opportunity to evaluate, at least quantitatively, their benefits with respect to climate change (Yamin, 2005). Second, there is the opposing concern that an increased focus on climate risks would divert money from ODA that is meant to address challenges seen as being more urgent than climate change, including water and food supply, sanitation, education and health care (Michaelowa and Michaelowa, 2007). These concerns underline the importance of financial transparency in mainstreaming so as to avoid a third concern, namely that developed countries could view mainstreaming as an opportunity to absolve them from the UNFCCC requirement to provide developing countries with ‘new and additional’ financial resources for adaptation. These concerns are particularly justified given that OECD/DAC donor countries are falling short on delivering on their target to provide ODA at 0.7% of GNI (see above).

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Persson: Mainstreaming Climate Change Adaptation into ODA As a first step to address this tricky issue, Persson and Klein (forthcoming) have proposed to more consistently distinguish between different levels of mainstreaming as a way of defining more precisely what kind of choices mainstreaming involves. As suggested by Figure 5, it is primarily mainstreaming at the macro-level, i.e. where the total ODA budget is set, that (significant) redistributional effects may result. At the micro-level, i.e. where projects are designed according to given priorities, on the other hand, mainstreaming can be seen as more of a technical concern and even as a ‘no-regrets’ strategy (given that additional analytic work and resulting incorporation of adaptation measures are not entailed with excessive costs).

ODA policy implementation levels

Figure 5. Different levels and interpretations of mainstreaming

Macro-level mainstreaming

Implications of climate change adaptation for the total quantity of ODA efforts? Modifications of: - Donor ODA budget -General donor ODA priorities

Meso-level mainstreaming Implications of national adaptation needs for the choice of ODA efforts in a country? Modifications of: - Country strategy - Sector programmes - (Budget support)

Micro-level mainstreaming Implications of local adaptation needs for the design of ODA efforts? Modification of: - Project design

Degree of specification of adaptation objectives Source: Persson and Klein (forthcoming) (after Kartha et al., 2006).

When considering macro-level mainstreaming, the key issue is whether ‘new and additional’ funds over and above the ODA target of 0.7% of GNI will require the ‘additionality’ principle to be applied, as a way of ensuring that such funds go to adaptation activities and nothing else. Practical and conceptual problems with this principle were noted above. Many ODA agencies are currently in the process of determining which modalities they will use to fund adaptation. For example, the European Commission and the UK have both earmarked funds for adaptation. The Commission will administer its own funds whilst the UK will use World Bank concessionary loans, thus not the UNFCCC-governed Adaptation Fund.

6. CONCLUDING REMARKS In summary, the aim of this paper was to apply concepts from the EPI and new modes of governance literatures in order to understand the nature of and challenges to integration of climate change adaptation in ODA. Crucially, the ODA sector context means that integration becomes a transnational concern, in which the states involved may have different interests. So far, the successes and

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Persson: Mainstreaming Climate Change Adaptation into ODA failures of EPI has mainly been examined in a domestic or EU policy-making context, and less so in a context with (partly) ambiguous roles, sometimes aid dependency relationships, and power asymmetries. Regarding the practice of mainstreaming of adaptation among ODA agencies and their partner countries was found to be of mixed success, it is a field of rapid development that merits further and continuous systematic research over the next few years. Awaiting more empirical data, a range of conceptual issues were discussed in this paper. It was argued that the nature of adaptation as a policy objective poses some particular problems for integration efforts. First, it has been debated whether it refers only to adaptation at a certain level, i.e. additional to normal climate variability. Second, it was clear that, whilst having different motives, the substance of adaptation measures and adaptive capacity and ‘mainstream’ development activities is similar. Third, there is today a lack of meaningful, policyrelevant and quantified targets with which impacts on adaptation (as a consequence of un-/successful mainstreaming) can be measured. Taken together, these characteristics suggest that the objects to be integrated are less clear and delineated than in other cases of EPI. Paradoxically, while these characteristics motivate an integrative approach rather than the development of a specific policy sector, they can also introduce analytical and organizational challenges, especially when there are conflicting interests at stake. Turning to the sector subject to EPI in this case, namely ODA, it was concluded that when partner country ownership is not completely fulfilled (and it can be actively undermined through the use of conditionalities), integration in practice involves some form of negotiation. Arguably, a situation of transnational negotiation may make explicit potential trade-offs between the issue to be integrated and the sector policy objectives – and any redistributional consequences that may follow – in a more poignant way than with EPI in the domestic arena. Beside the ownership principle, it was also stated that the new mode of governance of more programme-based aid instruments and more results-based management will present analytical and organizational challenges to mainstreaming, yet also opportunities. Another key difference between this case and EPI in domestic and EU policymaking is that redistributional effects of mainstreaming are, if not more present, more visible. However, it was also argued that depicting mainstreaming as a ‘zero-sum game’ is misguided, since it involves different choices and different trade-offs when undertaken at different levels. A way forward would be to more consistently distinguish between mainstreaming when understood at a microlevel, in ODA operational decision-making, and when understood at a macrolevel, when principles underlying ODA and other international transfers of resources are considered. Importantly, mainstreaming at the macro-level can be seen as a more controversial issue and active choice, while mainstreaming at the micro-level can be seen as a ‘no-regrets’ strategy.

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Persson: Mainstreaming Climate Change Adaptation into ODA Altogether, the lessons for the EPI literature from this case are that integration is not only a institutional and procedural concern, i.e. a question of ‘how to’ achieve integration effectively and efficiently. In the case of climate change adaptation, with international solidarity at stake and responsibilities to be determined, it is also a question of ‘whether’ integration is an appropriate strategy (the weighting issue), ‘who decides’ when and where to mainstream, and ‘who pays’ for ensuring that integration does not result in net loss of resources for development. While modes of governance offer a useful theoretical lens on EPI in the European context, this case highlights that attention to power relationships and normative judgments that integration can involve is also required.

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7. NOTES 1

Declaration on Integrating Climate Change Adaptation into Development Co-operation, Adopted by Development and Environment Ministers of OECD Member Countries on 4 April 2006. See http://www.oecd.org/dataoecd/44/29/36426943.pdf.

2

By this, the authors mean that “the ultimate trade-off for EPI is between existing democratic norms and procedures on the one hand, and the goals and operational necessities of sustainable development on the other” (Lafferty and Hovden, 2003, p. 15). 3

Paris Declaration on Aid Effectiveness, http://www.oecd.org/dataoecd/11/41/34428351.pdf.

2

March

2005.

See

4

A SWAp is an approach to providing support that has the following characteristics: a clear sector policy, with targets defined in qualitative and quantitative terms; a formalised process of donor coordination, with agreed roles and rules; a medium-term expenditure programme, matching sources and uses of funds; a results-based monitoring system for all major inputs, outputs, and outcomes; and, to the extent possible, common implementation systems (e.g. for reporting, disbursing and financial management) (OECD, 2005, p. 30). 5

Under the UNFCCC, two funds have so far been operated, the Least Developed Countries Fund and the Special Climate Change Fund. The Adaptation Fund is also in process of becoming operational.

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