Financing Climate Change Adaptation in Transboundary Basins

vii Financing Climate Change Adaptation in Transboundary Basins Climate change multiplies the complexities and intensity of water-related development challenges that countries have been addressing for decades through national efforts and transboundary cooperation. As pressure on water resources increases with climate change, current systems to manage these resources will no longer suf- fice. Populations have to relymore on water infrastruc- ture and water management to meet their needs and provide security against the increasing occurrence of extreme and variable hydrological events, such as droughts and floods. Given hydrological interlinkages that connect territories, transboundary river and lake basins offer a logical geographic scope for countries to advance common development goals and address water-related challenges. As countries scale up resource mobilization to access the financing needed to address the impacts of climate change, their capacity to prepare well-designed, bank- able projects that will attract the limited public and pri- vate resources available is critical. The rapidly evolving landscape of climate finance can be difficult to navi- gate for individual countries and river basin organiza- tions. Cooperative basin approaches can leverage human and financial resources and provide numerous co-benefits. Transboundary cooperation is an effective way to man- age shared resources to promote resilience to climate change and sustainable development. By ensuring basinwide stakeholder participation, interinstitutional and intergovernmental coordination, and efficient use of limited financial resources, transboundary basin approaches can advance economic, environmental, and social goals while avoiding maladaptation that may otherwise occur due to unilateral adaptationmea- sures. Cooperation to develop, finance, and implement projects in transboundary river basins that main- streams climate considerations into sustainable devel- opment planning goes beyond “adaptation” toward achieving more holistic and sustainable solutions. Yet countries and river basin organizations (RBOs) pursuing basin-level adaptation approaches often face difficulties in accessing financial resources for the implementation of cross-border and multinational development strategies. Basin countries can complement their national capacity and financial resources with experience and resources drawn from the global climate regime, private finance, and overseas development assistance. The United Nations Framework Convention on Climate Change (UNFCCC), its associated implementation network, and the vast array of development agencies and inter- national financial institutions supporting sustainable development offer technical and financial resources to support developed countries and developing coun- tries in their efforts to reduce poverty, achieve sustainable socioeconomic development, and address the oncoming impacts of climate change. Additionally, private sector attention to climate implications and private finance for climate-related projects is increas- ing, especially for larger infrastructure projects. While the availability of financing for both mitigation and adaptation is growing globally, access to funds and effective implementation poses challenges, particu- larly for regional approaches. Understanding and managing the special risks and com- plexities of transboundary river basin projects are critical to preparing bankable project proposals that will attract public and private financing partners. Transboundary approaches bring additional risks to a project, such as the involvement of multiple countries, legal responsi- bility and mandate for implementation, and the chal- lenges of sharing up-stream or down-stream benefits and commitments. The transboundary context at the same time offers some risk-mitigation tools not avail- able in single-country projects, especially when RBOs are in place; including existing cooperation agree- ments, risk sharing, and additional resource leveraging potential. Executive Summary