CBA12 Day 3: How can we drive investment to locally-driven adaptation?

Article, 22 May 2018
Event, June 2018

Day 3 of CBA12 will focus on investing in locally-driven adaptation. In this Q&A, IIED’s Nanki Kaur discusses the challenges and opportunities around this new field of investment and tells us more about the day’s sessions when practitioners working with local communities will pitch real-life proposals to investors.

Enhancing resilience through adaptation: Community Managed Disaster Risk Reduction committee members undertake flood prevention work  in Ethiopia (Photo: USAID, Creative Commons via Flickr)

What are the main challenges for investors who are considering putting their money into locally-driven adaptation?

NK: Local communities are not getting the money they need to adapt to the impacts of climate change. IIED estimates only 1 in 10 dollars of the $60bn in public and private climate finance is reaching people on the ground.

For investors, it’s an issue of clarity around how their money will be spent, the level of risk and what the returns of their investments will be. Take for example investments in infrastructure, such as irrigation systems. Investors need to know the adaptation benefits of investing in these assets. If invested in, will these systems be able to withstand exposure to extreme weather events – floods, droughts, heatwaves, storms – that are increasing because of climate change? Will they still be able to supply water to local communities and businesses despite these climate shocks?

Local-level adaptation is a relatively new field of investment and there’s limited information for investors on what their options are. CBA12’s three workstreams are all built around narratives exploring different opportunities. Some are based on giving marginalised people voice and power, some on governance and managing finance and others that use appropriate technology – existing and new – to enable adaptation.

Across these different areas, investors need to know where the opportunities are for them. What are the challenges, where are the risks? They also need more information on results and potential returns. This is crucial, particularly for private investors.

Another major challenge is achieving scale. Instead of investing in one irrigation system, how can they efficiently invest in 20? The landscape of local adaptation projects is currently very fragmented. There are many small projects demonstrating great practice, but they remain disconnected and without opportunities to scale up and have meaningful impact. To attract investors, opportunities need to be bundled together – this drives down costs, reduces risk and improves returns. Designing and financing investments to enable aggregation needs input from those who invest in local adaptation (households, SMEs and public and private companies) and those who enable investment in local adaptation (government, civil society organisations and financial institutions). Looking at how this works in practice is just one of the things we’re going to be tackling on Day 3 at CBA12.

Who will participate?

NK: Participants will fall under two broad groups: those from the investment community, and practitioners who implement local adaptation. Investors will be both public (government agencies and development partners) and private (investors representing risk and social impact investment). Those from practice will include representatives from households, local governments and community-based organisations.

It will be an exciting opportunity for these groups to meet – to listen to each other’s needs, understand each other’s challenges, exchange ideas on opportunities, share knowledge and develop and refine solutions together.

How will Day 3 work in practice – and how will outcomes be taken forward?

NK: Practitioners will develop investment pitches – such as a business plan to invest in technological or institutional solutions to local adaptation – and put these to investors in a ‘dragon's den’ where people with investment experience will assess the merits (i.e. investment worthiness) of the pitches. Practitioners participating in CBA12’s three workstreams will be given guidance on Day 1 on how to prepare their pitches.

Investors will provide feedback on how to hone their business plans to better articulate the type of adaptation intervention, its results and approaches to aggregation.

And there’ll be a session where we are looking at the practical detail of funding these investments, so matching these pitches to the right finance sources. Some will require public finance, some will be better suited to private sources. For others, a mixture of both would be a better fit.

For example, climate finance can be used to integrate climate risk management into rural infrastructure, development and risk finance can be used to scale-up or aggregate investment in climate resilient infrastructure and private investment can be used to sustain investment in climate resilient infrastructure.

The ‘dragon’s den’ isn’t theoretical – practitioners will put forward real pitches for investments in projects that would work in their communities and investors will put tangible funding options on the table. And we’re not expecting this to be a one-off dialogue but the start of conversations between investors and practitioners that will continue beyond the event.

Sessions throughout Day 3 are going to be fully interactive, packed full of opportunities for hands-on learning and for sharing ideas. Together we’ll be developing practical solutions for getting communities the money they need to finance locally-driven climate adaptation. Join us in Lilongwe!


Find out more

CBA12 takes place in Lilongwe, Malawi from 11-14 June 2018.

Contact

If you have any questions about the event or registration, email us at cbaconference@iied.org

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