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Climate finance in Asia: Assessing the state of climate finance in one of the world's most climate vulnerable regions - Afghanistan

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Overview

Asia is particularly vulnerable to climate hazards including extreme temperatures, flooding, droughts, cyclones, and sea level rise. The most vulnerable communities need financial support to help adapt to the climate crisis – they cannot do so alone. Developed countries have pledged $100 bn in climate finance to developing countries every year until 2025.

This promise has not been met. Asian countries have outlined the support they require and delivering on these needs is integral to bringing climate justice to those most vulnerable to – yet least responsible for – the climate crisis. We find that the climate finance provided to Asia is woefully inadequate to support the necessary adaptation actions and vulnerable communities are suffering as a result.

SUMMARY

The climate crisis continues on a shocking trajectory, with record annual global emissions leading to increasing rates of global warming. The world has already seen anthropogenic warming of +1.2°C and warnings have come time and again of the dangers of allowing temperatures to rise further.

While keeping the world to just +1.5°C warming on average is the current ambition of the Paris Agreement, this belies the stark regional differences inherent in such a scenario. Different regions of the world will warm at different rates, be impacted in different ways, and will react differently to the new realities they face.

The complexities of the climate crisis are no better exemplified than in Asia.
As a diverse region with hot-humid, tropical, and sub-tropical climatic profiles, Asia experiences many weather-related phenomena, from cyclones and monsoonal rains to heatwaves and droughts. Reducing the risk of such events has been an important ambition for governments and development actors alike. However, the challenges of doing so are being compounded as the atmosphere and oceans continue to warm.

The Intergovernmental Panel on Climate Change (IPCC) has laid out in its latest Assessment Report the stressors and associated risks from the climate crisis to Asia (see box 1). Here, high exposure to climate impacts is coupled with a socio-economic context that results in large numbers of communities being highly vulnerable to climate change. Half of the world’s population lives in the region and many are on the frontline of the crisis. In the 18 countries in Asia incorporated in this study,1 half the total population lives below the $5.50 a day poverty line. Impoverished people are far more vulnerable to climate shocks and less prepared to deal with and adapt to the new situations they face. Other marginalized communities are also highly vulnerable, with gender and age being key demographic factors governing an individual’s climate vulnerability.

The effect of extreme exposure and vulnerability can be seen in recent examples of climate-related events such as the devastating 2022 Pakistan floods. Caused by extreme monsoonal rains which have been altered by a warming climate and compounded by heavy glacial melt related to extreme heatwaves earlier in the season, the floods and their impacts mean many people are pushed into poverty or have had their poverty entrenched.

The ND-GAIN index provides a valuable indication of a country’s vulnerability to and readiness for climate change. Afghanistan scores the lowest of any of the countries in the region, followed by Bangladesh, Myanmar, Cambodia, and Pakistan, in that order. All these countries are Least Developed Countries (LDCs) – the poorest in the world, with the exception of Pakistan.

Of the 18 countries this report analyses, 8 are LDCs, 6 are Lower-Middle Income Countries (LMICs), and 4 are Upper-Middle Income Countries (UMICs). The 18 Asian countries analyzed are collectively responsible for 42% of current global emissions, dropping to just 15% when Chinese emissions are excluded. Countries such as Afghanistan, Bangladesh, Bhutan, Cambodia, Laos, Myanmar, Nepal, and Timor-Leste (all LDCs) have contributed negligible amounts of greenhouse gas (GHG) emissions to the atmosphere. And yet, they are among the most affected by the climate crisis today.

This injustice must be corrected by the delivery of climate finance to where it is needed most – in particular to enable adaptation to the coming impacts. It is estimated that the annual cost of adaptation globally will be between $280-500 billion by 2050. In contrast, if developing countries are not supported to adapt, the cost of the losses and damages increased from the climate crisis could reach $1-1.8 trillion by the same year. Continued inaction and delay only makes these expenses rise.

Support to developing nations was promised in the form of $100 bn per year in climate finance from 2020 onwards. It is now clear this promise was broken – only $83 bn was committed in 2020. Despite the promise of delivering the $100 bn over a delayed timescale (ie, by 2023), this again highlights that climate pledges are so often not backed up by appropriate stock.

As international talks turn from outlining ambitions and pledges to delivery and implementation, it is important to assess the quantity and quality of climate finance being delivered to Asia – the purpose of this study.

In official reports to the United Nations, many of the nations in question have outlined the financial support they require to deliver appropriate mitigation (emissions reduction) and adaptation actions by 2030 – their “costed needs”. To fully deliver these needs, the countries collectively require $1.3 trillion per year, every year up to and including 2030 (dropping to $371 billion per year when China is factored out). It is important to note that costed needs are expected to come from various public and private sources, from both domestic and international providers.

While private and domestic public finance has a huge role to play in filling the costed needs gap, international public sources represent the majority of finance to which LDCs have access. Currently, this finance falls woefully short of what is required. Over the eight-year period 2013-2020, an average of just $14 bn per year was committed in climate finance to the 18 Asian countries.

However, much of this finance is provided in the form of loans and other debt instruments. Bilateral providers committed only 18% of their climate finance to the region through grants ($1.2 bn per year on average), the remaining 82% were offered through concessional loans and other debt instruments ($5.4 bn per year ave.). In contrast, multilateral providers (eg, the World Bank, Asian Development Bank, Green Climate Fund, etc.) committed just 5% of their climate finance in the form of grants ($0.4 bn per year ave.), and the remaining 95% through loans and other debt instruments ($6.7 bn per year ave.). Furthermore, multilaterals delivered 67% of these debt instruments using non-concessional terms ($4.5 bn per year on average), ie, lending at close to market rates.

The use of such financial instruments risks plunging countries already struggling with debt burdens into further financial difficulty. This is counterproductive to the originally intended purpose of climate finance. The objective of enhancing climate resilience and the adaptive capacities of developing countries is undermined when those countries find themselves redirecting money to service debt burdens – money which could otherwise be used in delivering public services, such as in schools and hospitals. Deterioration of these services places nations in ever more climatevulnerable situations.

To give a fairer picture of the net value of this climate finance to developing countries, it is possible to calculate the grant equivalent value of the flows received. This measure shows that just 43% ($6.1 bn) of the originally calculated $14 bn annual average can be considered as grant equivalent finance.

A further key aspect of the $100 bn pledge was to deliver a ‘balanced’ amount of mitigation and adaptation financing. Disappointingly, the amount of adaptation financing committed to Asia has made up just one third of the total climate finance, compared to two thirds of mitigation financing between 2013-2020 – representing a clear imbalance. While this picture is improving somewhat – with 43% of 2020 commitments targeting adaptation objectives, the need for scaled-up, grant-based adaptation finance is glaringly apparent.

If this under funding of climate finance pledges and the outlined needs of developing countries continues, rich countries risk devaluing international climate agreements and the vital ambitions therein that aim to mitigate the worst impacts of the climate crisis.

https://bigger.ga/climate-finance-in-asia-assessing-the-state-of-climate-finance-in-one-of-the-worlds-most-climate-vulnerable-regions-afghanistan/

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