Submission from the Alliance of Small Island States

Third Review of the Adaptation Fund (1/CMP.12)

  1. The Alliance of Small Island States (AOSIS) continues to look to the Adaptation Fund (AF) as a model adaptation fund with a unique track record of supporting concrete initiatives. AOSIS believes that the Third Review is an opportunity to present progress since Decision 2/CMP.10 on the Second Review of the AF. The Third Review should continue to highlight the Fund’s unique attributes, including inter alia the application of the country ownership principle, experiences under the direct access modality, the delivery of concrete results on the ground, its focus on the most vulnerable and its track record of transparency and equity of access to resources. These are all key features that will support the implementation of the COP 22 decision that the AF “should serve the Paris Agreement”.
  1. The Third Review of the AF should include a review of the experience of small island developing states in utilizing the Fund, given the unique feature of the number of national implementing entities (NIEs) from small island developing states (SIDS) that are accredited and implementing projects.
  1. AOSIS has structured its submission according to the four focus areas listed in the terms of reference for the third review of the Adaptation Fund (AF):

(a) The provision of sustainable, predictable and adequate financial resources and the mobilization of financial resources to fund concrete adaptation projects and programmes that are country-driven and based on the needs, views and priorities of eligible developing country Parties

  1. AOSIS reiterates that the adequacy of resources for the operation of the AF can be achieved through scaling‐up the resources of the AF and adjusting the level of resources mobilized to conform with regular estimates by the Board of the needs according to projects already in the pipeline or expected (based on country allocations, indications by applicant countries, trends and experience in the previous years’ operation). The Review should (1) capture steps that the AF has taken to promote country ownership and to respond to developing country adaptation priorities; (2) quantify the existing and projected demand for AF projects and programmes, including unmet needs; (3) analysetrends of flows from a variety of sources to the AF; (4) examine implementation of the Board’s fundraising strategy and resource mobilization strategy; and (5) outline specific recommendations on how to promote financial sustainability, predictability and adequacy of the Fund’s resources.

(b) Lessons learned from the application of the access modalities of the AF

  1. As a pioneer of the direct access modality, the AF continues to build experience and lessons learned at every stage of the funding cycle. The Review should analyze these experiences and lessons learned with a view to continued sharing of good practices, for example with the unidentified sub-project approach, innovative financing mechanisms for adaptation, the pilot for regional programmes, as well as the direct access modality, among others.
  1. The Review should examine the country cap allocation system for lessons learned, considering whether the country cap system has helped the AF achieve its goals inter alia to promote equity of access and NIE access.
  1. The Third Review should assess the AF’s progress with improving its coherence of procedures across readiness, accreditation, project approval processes, implementation and monitoring and evaluation. AOSIS maintains that the AF experience can contribute to lessons learned on the harmonization and rationalization of procedures and requirements across multilateral funds, in particular for NIEs.
  1. The AF direct access modality can provide lessons learned for capacity‐building of National Implementing Entities; in particular for capacity‐ constrained countries such as small island developing states (SIDS) and least developed countries (LDCs). AOSIS considers it important that the Third Review conduct specific case studies of SIDS and LDCs to assess their respective experiences with readiness, accreditation, project approval processes, and implementation.

(c) Programming and project coherence and complementarity between the Adaptation Fund and other institutions funding adaptation projects and programmes, in particular institutions under the Convention and the operating entities of the Financial Mechanism and its specialized funds

  1. At the time of the Second Review of the AF, the Fund was then the only fund solely dedicated to concrete adaptation, with an emphasis on the most vulnerable. The climate finance landscape has since evolved especially with the operationalization of the GCF and it is expected to develop even further under the Paris Agreement. AOSIS presents that maintaining diversity in the climate finance architecture provides important options to both contributing and beneficiary countries, and that these options are particularly important when it comes to implementing concrete adaptation. The AF remains a unique means of ensuring that 100% of its financing will support concrete adaptation actions for vulnerable populations.
  1. AOSIS supports efforts to improve coherence of procedures and streamline accreditation, direct access requirements, project approval procedures (including simplified approval procedures) for SIDS and LDCs, and replenishment processes across the UNFCCC. Recognizing the confluence of the reviews of the Standing Committee on Finance, the Financial Mechanism and the Adaptation Fund, the AF Third Review should analyse the various procedures across the UNFCCC, and, as appropriate, drawing on the aforementioned reviews and lessons learned, contribute to recommendations that would facilitate a common understanding of the AF’s contributions and comparative advantage in delivering concrete adaptation.
  1. Furthermore, in order to ensure complementarity across the adaptation related funds/institutions, the Review should examine how the AF has contributed to innovative adaptation finance/activities as compared to other funds/institutions. AOSIS remains interested in reflecting upon benefits of incorporating the AF into the Financial Mechanism of the Convention and designating it as an Operating Entity of the Financial Mechanism of the Convention, versus a standalone fund.

(d) The institutional arrangements for the Adaptation Fund, in particular the arrangements with the interim secretariat and the interim trustee

  1. The Review should keep under consideration the current institutional arrangements, assessing for the impacts upon the growth and efficiency of the AF. The Third Review should present options for permanent institutional arrangements for the secretariat and trustee, including via an open and competitive bidding process, as was requested in the Second Review of the AF in Decision 2/CMP.10.

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