Proposal for a poverty-adaptation-mitigation window within the Green Climate Fund

The stakes for alleviating poverty and avoiding unbridled climate change are inextricably linked. Climate change impacts will slow down and may even reverse trends in poverty reduction. The pathways consistent with global warming of no more than 2 °C require strategies for poverty alleviation to make allowance for the constraint of low-carbon development. Existing climate funds have failed to target poverty alleviation as a high-priority strategy for adaptation or as a component of low-carbon development. This article proposes a funding window as part of the Green Climate Fund in order to foster synergies targeting greater satisfaction of basic needs, while making allowance for adaptation and mitigation. This financial mechanism is based on indicators of the satisfaction of basic needs and could respond to the claims of the developing countries, which see alleviating poverty as the first priority in climate negotiations. It defines a country continuum, given that there are poor people everywhere; all developing countries are therefore eligible with a mechanism of this sort. Policy relevance The Intergovernmental Panel on Climate Change (IPCC) calls for substantial emissions reductions and adaptation strategies over the next decades to reduce the high risks of severe impacts of climate change over the 21st century. Industrialized countries and developing countries alike recognize the need to mitigate climate change and to adapt to it. But they face many challenges that lead to an ‘emissions gap’ between an emissions level consistent with the 2 °C increase limit and the voluntary pledges that they have made thus far in the climate negotiations (United Nations Environment Programme. (2014). The Emissions Gap Report 2014. A UNEP synthesis report). In this arena, many developing countries underline that their first domestic priority is the satisfaction of basic needs. In the run-up to the next climate negotiations at the 21st Conference of the Parties (COP 21) in Paris, the proposed poverty-adaptation-mitigation funding window could contribute to alleviate the conflict between development and climate goals in developing countries. In this sense, it could spur developing countries to integrate more ambitious emissions limitations pledges into their Intended Nationally Determined Contributions. This could in turn entice industrialized countries to act similarly. In the end, it could pave the way to an ambitious climate agreement in Paris at COP 21.


Introduction
The year 2015 will see two major international events: negotiations to set new Sustainable Development Goals (SDGs), with the reaffirmed goal of ending extreme poverty, and the 21st International Conference of the Parties (COP 21), on climate change. The coincidence of these two events recalls how poverty and climate change, two major challenges for the coming decades, are intertwined. adaptation as well as mitigation. The fourth IPCC assessment report emphasized the inter-relationship between climate adaptation and mitigation (IPCC, 2007a). Clapp, Briner, and Karousakis (2010) suggested low-emissions development strategies (LEDS), which integrate mitigation and/or climate-resilient policies. These LEDS were incorporated into the 2009 Copenhagen Accord and the 2010 Cancun Agreements (UNFCCC, 2009(UNFCCC, , 2010. Since COP 19 in Warsaw, the scope of international negotiation has evolved in such a way that the Parties at COP 21 will negotiate on the basis of Intended Nationally Determined Contributions . In this context, national research teams from the Deep Decarbonization Pathways Project (DDPP) are working on illustrative pathways for the transition to a low-carbon economy. In their scenarios, teams from developing countries such as India (Mathur, Srivastava, Kumar, Awasthy, & Mohan, 2014), South Africa (Trollip, Winkler, & Merven, 2014), and Indonesia (Siagian, Gumilang Dewi, Hendrawan, Boer, & Gintings, 2014) emphasize the need for poverty alleviation as the highest priority. This objective is translated in each of the national energy scenarios into 100% access to modern energy in the next decades.
Given the service life of infrastructure and facilities, it is essential that all the resources devoted to alleviating poverty should include a dual carbon and climate constraint. In other words, just as the battle against climate change can only be stepped up if it makes allowance for the imperatives of development and alleviating poverty, so development strategies must integrate a decarbonized approach and adaptation to climate-change impacts. It is therefore legitimate that international climate negotiations should provide a concrete response, in particular on funding mechanisms, to enable and extend efforts to alleviate poverty, while integrating the climate constraint in the adaptation and mitigation branches.
This in turn prompts the need for mechanisms to drive policies that simultaneously target poverty alleviation, climate adaptation, and/or mitigation. This article seeks to demonstrate the relevance of a poverty-adaptation-mitigation window (PAM-W) that would be implemented within the Green Climate Fund, and presents its main features. In the first part of the article we assess the way existing funding sources and climate funds have allowed for this dimension, and we highlight the limitations of these approaches. After describing the Green Climate Fund, the second part draws on the above appraisal to propose a specific funding window for poverty, adaptation, and mitigation, in such a way as to target poverty alleviation while making allowance for the climate constraint. Fankhauser and Schmidt-Traub (2010) estimate that for Africa to achieve the MDGs in a climate-resilient manner, it would require 40% more external funding than would be needed simply to achieve the original goals. This would mean about $100 billion per year in 2010 -2020, compared to $72 billion a year to attain the MDGs 2 .

The limits of current climate funds in addressing poverty
Since they were launched, the existing multilateral climate funds 3 have collected $3 billion for adaptation, a little over twice as much ($6.5 billion) for mitigation excluding REDD 4 (the Clean Technology Fund alone represents $4.6 billion), and $4.6 billion for REDD mechanisms (see Table 1).
Predictably, these funds fall far short of what is needed to keep global warming below the 2 8C limit and provide vulnerable countries with the capacity to adapt, which is why, following the Copenhagen Accord, industrialized countries set a target of raising $100 billion a year up to 2020 in order to support mitigation and adaptation actions in developing countries. Looking beyond these figures, we need to examine more closely how combating poverty has so far been integrated into existing climate funds.
2.1. How much goes to the poor in the share-out of existing funds? 2.1.1. Adaptation There is no single methodology for the resource allocation of existing adaptation funds (Klein & Möhner, 2011). Several vulnerability indicators have nevertheless been proposed in the literature to ensure that adaptation funding targets the countries most exposed to the impacts of climate change (Barr, Fankhauser, & Hamilton, 2010;Buys, Deichmann, Meisner, Ton That, & Wheeler, 2009;Füssel, 2010;Wheeler, 2011). However, the rankings of countries yielded by the various indicators diverge greatly (Persson & Remling, 2014). Nakhooda et al. (2014) use the global adaptation index GAIN 5 to show that the countries receiving the most funding for adaptation 6 are indeed among those most exposed to climate-change impacts. Meanwhile, Stadelmann, Persson, Ratajczak-Juszko, and Michaelowa (2013) and Persson and Remling (2014) show that the Adaptation Fund has targeted a small number of countries with both a low degree of vulnerability and high per capita income.
Some authors are wary of how well aggregate indicators reflect the specific needs of countries, given the diversity of adaptive needs (Klein & Persson, 2008). Some actions are designed to cope with the direct impacts of climate change, whereas others relate to reducing vulnerability arising out of poverty and its associated ills (informal housing, shanty towns, use of non-commercial energy sources, lack of sanitation, etc.). It seems necessary, therefore, to use indicators that are more sectorbased, reflecting the reality on the ground more accurately (Füssel, 2010), or indeed mechanisms specific to each type of vulnerability (Hallegatte, 2011), in order to make combating poverty a strategic priority for adaptation. Nakhooda et al. (2014) show that the bulk of funding for mitigation has gone to countries that either have a high level of GHG emissions or are registering rapid growth in this respect. Ten countries received 74% of funding: Mexico and Morocco each received more than $500 million, with South Africa, India, and Indonesia also receiving significant amounts. The Clean Technology Fund plays a predominant role here, accounting for about 70% of all mitigation funding. Little climate-change mitigation funding has gone to the Least Developed Countries (LDCs), with a total of $203 million being allocated to mitigation (including REDD) in Sub-Saharan Africa (Nakhooda, Caravani, Bird, & Schalatek, 2011). These conclusions are reminiscent of the lopsided geographical distribution of the Clean Development Mechanism (CDM), with projects concentrated in China, India, and Mexico (Dechezleprêtre, Glachant, & Ménière, 2008;Winkelman & Moore, 2011), whereas only 3% of the emissionreduction credits were generated in Africa (Röttgers & Grote, 2014).

Mitigation
These observations reveal the climate-centred side of international negotiations and the resulting funding mechanisms. Mitigation-assessment indicators in flexibility mechanisms hinge on the tonnes of CO 2 equivalent (tCO 2 e) reduction generated. In project mechanisms, tCO 2 e reductions are calculated in relation to a baseline scenario (Gillenwater, 2012). This approach complicates the funding of low-carbon projects by climate funds in the case of development and poverty-reduction projects with a very low level of energy services in the baseline scenario.
In LDCs, for example, the rate of electrification is low. If the current figure was taken as the baseline scenario, it would be difficult to find much scope for cutting emissions as electrification progresses, even if generating the additional electricity entails limited carbon emissions. It would, of course, be possible to adopt a methodology developed under the CDM to make allowance for suppressed demand. The baseline used in this case is the minimum service level for energy, even if it has not yet been reached (UNFCCC, 2014). Even here, however, the emissions abatement achieved by a lowcarbon electrification project is likely to be very slight, when set against the baseline scenario.
So, there is good cause to ask whether the 'tonnes of CO 2 e reduction' indicator is suitable for assessing 'low-carbon development' actions.
This review of existing climate funds suggests that to guarantee funding for adaptation and mitigation actions in the context of poverty, fresh thought is needed about the indicators used to select and assess projects and policies for funding. Otherwise, the scarcity of available resources is likely to leave the poorest populations on the sidelines of climate funding.

Phase-out project-based approaches in favour of more ambitious strategies
In recent years, a vast body of literature has questioned the merits of project-based approaches for funding climate actions. The limitations of a project-based mechanism such as the CDM with regard to its structuring effects are all too apparent. Authors have consequently put the emphasis on sectorbased approaches (Samaniego & Figueres, 2002) or even proposed funding to support the deployment of SD-PAMs (Winkler et al., 2002).
First, having a large number of small projects entails high transaction costs (Ahonen & Hämekoski, 2005;Michaelowa & Jotzo, 2005;Michaelowa, Stronzik, Eckermann, & Hunt, 2003), jeopardizing the overall efficiency of funding. Africa is a particularly sensitive area in this respect, with the average adaptation project costing $4 million, rising to $17 million for mitigation. Of 483 projects funded by one of the existing climate funds, only nine cost more than $50 million (Afful-Koomson, 2014).
Second, a host of small schemes will not trigger the paradigm shift required to put these countries on climate-change-resilient, low-carbon pathways. Regarding adaptation, the project-based approach seems better suited to funding actions addressing the direct impacts of climate change, which would not otherwise be carried out (building a dyke for example). By contrast, for adaptation needs related to development and poverty issues, adaptation strategies can be integrated into development strategies, making it more difficult to evaluate the additional cost that would determine the financial support in the case of a project-based approach.

Make programmes attractive to private investors
One essential issue is to redirect public and private investment to actions compatible with development pathways integrating climate-change constraints (Hourcade, Shukla, & Mathy, 2009), or quite simply to attract those private investors currently deterred by inadequate institutional capacity or serious political instability. To this end, goals must be made more consistent and obtain solid backing at the national level. Guivarch and Mathy (2012) have shown that, in India, institutional shortcomings and cross subsidies for electricity tariffs, set up in the name of the right of access to electricity, constitute a major hindrance to broadening access to power. In this context, tariff reform, combined with a large-scale energy-efficiency drive and support for renewable energies (by feed-in tariffs, for example), would substantially improve the financial situation of the energy sector, make various low-carbon investments profitable, and broaden access to energy. Support for rolling out such policies may make it easier to mobilize the private sector, at least in some countries and regions (Bhagat et al., 2012). The task may be more difficult elsewhere. In Africa, private funding accounted for just $5 million of existing climate funds, which raised a total of $3.5 billion (allocated but not paid) between 2003 and 2013. To remedy this situation, Afful-Koomson (2014) stresses the need to enhance the ability of African countries to set up funding bodies and business models that will secure funding by private investors, with the guarantee of lower risks and adequate rates of return. Having said that, over and above the need to mobilize the private sector, it is also necessary to encourage co-funding drawing on official development assistance, public domestic funds, and climate funds.
Existing climate funds are ill suited to fostering the necessary synergies between poverty reduction, adaptation, and mitigation. In the second part of this article we propose setting up a PAM-W as part of the Green Climate Fund. This would overcome the obstacles discussed above and contribute to building synergies.

Creation of a PAM-W as part of the Green Climate Fund
In the following we shall describe the modalities for making the as yet not fully defined Green Climate Fund operational, then show how a PAM-W could fit into this framework.

Features of the Green Climate Fund
The Green Climate Fund originated in the Copenhagen Accord in 2009. In the following year, the Cancun Conference endorsed its creation. The fund aims to promote a paradigm shift to lowcarbon, climate-change-resilient development pathways. It is set to become the world's main climate fund (GCF, 2011, §32) and thus one of the prime channels for delivering the $100 billion a year promised by industrialized nations at Copenhagen. These funds would be allocated to developing countries, from 2020 onwards, for adaptation, emissions abatement (including REDD + ), development, technology transfer, and capacity building. By the end of 2014 the fund had collected $14.4 billion, and it should be in a position to fund its first actions during the second half of 2015. Resources should be equally divided between adaptation and mitigation, but the timeframe governed by this rule has yet to be determined. A Private Sector Facility (PSF) has been set up to encourage private participation, but the facility's share in the Green Climate Fund has not been settled 7 . Other thematic funding windows could be established in the future (GCF, 2014a). Achieving a balanced share-out, in geographical terms, is also a priority, with the goal (among others) of not sidelining LDCs. This is a sensitive topic. At the sixth meeting of the Green Climate Fund Board, China and India opposed an initial proposal to place a 5% cap on funds allocated to any one country. The issue of setting a minimum funding rate dedicated to the LDCs was also raised.

Country ownership of actions and modalities of access
To encourage countries to appropriate projects, the fund will only finance actions in countries that do not object to them (GCF, 2014b). The fund also provides for direct access through national, subnational, or regional bodies, in addition to international access through international funding agencies, and through the PSF for local and private financial intermediaries (GCF, 2014c). These two points -the no-objection procedure and direct access -are key to ensuring that developing countries retain control over actions, and that funding bodies do not dictate their own conditions or programmes, as may have happened in the past (Nakhooda et al., 2014). However direct access assumes that national bodies in each country are accredited, which is not currently the case, although their numbers have increased substantially in recent years, including, for example, the Bangladeshi Climate Change Resilience Fund, the Brazilian Amazon Fund, and the Ethiopian Climate Resilient Green Economy Facility.

Measuring performance
A results-management framework has been developed, underpinned by performance-measurement matrices, thanks to which the impact, effectiveness, and efficiency of funding will be assessed. For mitigation, the main impact metric is GHG emissions reduction (in tCO 2 e), which again raises the question of this indicator's relevance for assessing the performance of some low-carbon development projects, as discussed above. As for adaptation, the number of beneficiaries is the main impact metric.

Selecting actions
Six selection criteria have been set, without any indication of their relative weights (GCF, 2014d): the impact potential relative to the sustainable development and climate objectives of the Fund; the paradigm shift potential toward low-carbon and climate-resilient pathways; the financing needs of the beneficiary country; the capacity of the beneficiary country to implement policies; the economic efficiency of the funds delivered; and the financial viability (for revenue-generating activities).
The indicators to be used for each of these criteria have yet to be decided. For mitigation, if the first criterion is assessed on the basis of emissions reductions (in tCO 2 e) compared with a baseline scenario, it will run into the problems discussed above with regard to low-carbon development projects in which a baseline scenario contains few GHG emissions. In the case of adaptation, if the indicator is the number of beneficiaries, that may be consistent with poverty-reduction goals. As for the third criterion, bearing in mind the first part of this article, it would jeopardize the poorest countries to select an aggregate indicator, as it would give a poor reflection of real conditions in the country, in particular the degree of satisfaction of the basic needs of a large share of the population.

Suggested features of the PAM-W
The Green Climate Fund has not provided for a specific facility to simultaneously target the triple issues of poverty, adaptation, and mitigation. The only features are the scope for putting an X% cap on the share of Green Climate Fund resources allocated to any one country (e.g. 5%) or indeed directing X% of resources to the LDCs. In the following, we propose to create a special funding window, within the Green Climate Fund, dedicated to the links between poverty, adaptation, and mitigation (PAM-W), supplementing the funding windows for adaptation and mitigation.

Building synergies between poverty-reduction, adaptation, and mitigation
The proposed mechanism aims to build synergies between poverty-reduction, adaptation, and mitigation in such a way as to pool efforts and ensure that infrastructure and facilities developed under the mechanism are both climate-change resilient and contribute to low-carbon development. This will avoid the need to phase-out facilities before the end of their service life because little or no allowance was made for all the adaptation and emissions constraints. Typical actions potentially affected by such a mechanism would include building homes to reduce the number of people living in slums, and integrating bioclimatic building techniques that are suited to changing climate conditions and that entail low energy consumption and GHG emissions. Examples may be grouped in relation to basic needs, as shown in Table 2.

Criteria reflecting the satisfaction of basic needs for allocation and assessment
Under the PAM-W, allocation would target countries that fall far short of satisfying basic needs. To this end, we propose to select sector-based, national criteria, specific to each need. This responds in part to the objections raised by Füssel (2010) and Klein and Möhner (2011) regarding the limitations inherent in defining a single aggregate vulnerability indicator. Several separate indicators may be more suitable, making it possible to define a set of diverse situations more accurately.
In order to avoid allocating a large share of funding to a few highly populated countries (e.g. a quarter of the population of India -400 million people -have no access to electricity, but, at the same time, some countries in Sub-Saharan Africa have only very limited access to modern energy sources, but have a smaller overall population), the fund allocation criterion should weight the degree of failure to satisfy a basic need for each sector and the overall population.
The goal of the PAM-W, and consequently of its ex post assessment criterion, is to maximize the number of people for whom a basic need will be satisfied, subject to the conditions of PAM-W eligibility, in other words making allowance for adaptation and/or low-carbon development concerns. Resorting to such criteria meets the claim of developing countries that priority should be given to reducing poverty. These criteria have further value in that they are complementary (Stadelmann et al., 2013) to assessing the equity with which resources are allocated and also assessing the efficiency of an action in the sense that it effectively reduces the symptoms of poverty.

Levels of aid
The levels of aid provided by funding will be determined by a sector-based approach to each type of basic need, in order to establish international benchmarks. The first step would be to determine the costs of satisfying the basic needs for each sector, such as the per capita costs of access to electricity, improved sanitation, waste management, and so on. The Camdessus report (Camdessus, 2003) estimated that providing 19 million people living in rural areas of Africa with access to drinking water and a sewage network would cost $1.4 billion a year from 2003 to 2010. If this estimate was selected for all countries, then for each additional person gaining access to these services, a country would receive at most $74, wholly or in part. Similarly, according to the International Energy Agency (IEA, 2011, p. 3), 'to provide universal modern energy access by 2030 annual average investment needs to average $48 billion per year, more than five times the level of 2009'. The same report asserts that electrification alone would require an investment of between $550 and $740 per person, depending on the B The overall amount allocated to the funding window would definitely determine how much of the cost of each project could be funded. B For projects including mitigation, the level of aid should be sufficient, over and above other funding and aid, to cover any excess cost arising out of the use of carbon-free or low-carbon technology. B For projects including adaptation, the PAM-W would cover all or part of funding, depending on whether climate change is the main reason for the action, or one among several. B The aid ratios for the adaptation branch and the mitigation branch will be added up.
By adopting this approach, the mitigation branch would no longer need to debate baseline scenarios and would limit transaction costs. The negotiations to set the ratios are nevertheless likely to be difficult. They should be carried out in consultation with developing countries and will entail adapting all the ratios to reflect the specific conditions in each country.

Payments based on results
Scope for the PAM-W being partly supported by results-based payments should be investigated, in particular with a view to direct access to funding by a national entity 8 . The aim of this approach is to make payment of all or part of funding conditional on achieving targets. For this purpose, a framework for assessing and monitoring results will need to be deployed, underpinning an array of appropriate performance indicators (GCF, 2011, §58). This type of aid has already been envisaged for REDD activities under the Green Climate Fund. It has already been experimented by the World Bank, but on a limited project scale, and by the Energy + partnership. Similar proposals have been made for the Green Climate Fund (Michaelowa & Hoch, 2013;Müller, 2013). Instruments of this sort are an additional incentive for achieving goals (Eichler & Levine, 2009;Mumssen, Johannes, & Kumar, 2010).
As in the Green Climate Fund modalities aiming at enhancing the ownership of actions, the PAM-W would have no mandate to discuss a country's specific strategy for carrying out actions and helping to improve the standard of living of its population, this being a matter of national sovereignty. Only results would be observed. The revenue contributed by the PAM-W and covered by an ex post guarantee could be used to leverage project funding.

Modalities of support and country ownership of actions
The PAM-W will be able to fund, without distinction, a subsidy on the total value of infrastructure investments, a subsidy on usage costs (e.g. funding of a feed-in tariff scheme such as the one proposed by Michaelowa & Hoch, 2013), or other types of aid. Similarly, countries must be free to decide how actions should be funded: out of their own assets, through private domestic or foreign investment, or from development aid. In view of the huge amount of funding required to cope with the challenges of adaptation and mitigation in developing countries, and the likelihood of only limited financial resources being available under the Green Climate Fund, the modalities of support for these countries must limit as far as possible any windfall effects. As investigated by Khan and Schinn (2013) or Michaelowa and Hoch (2013), specific financial-support modalities will be applied as a function of each country's national income (based on the typology used by the World Bank; see Table 3). Additional conditions may be set to demonstrate that a country is seriously committed to the paradigm shift that the Green Climate Fund must entail, and/or regarding the need for co-funding, in particular from private sources, for lower and upper middle-income countries. For low-income countries, cofunding by public development aid, or conventional public or private funding, will be needed. Moreover, setting such conditions will favour country ownership of actions, as well as increase the scope for direct access to PAM-W funding.

Conclusion
Existing climate funds have difficulty providing a suitable response to the specific demands of the poorest populations with regard to climate-change adaptation and mitigation. To fill the gap, this article proposes setting up a specific funding window for poverty, adaptation, and mitigation (PAM-W) as part of the Green Climate Fund.
One of the key features of the PAM-W is that it bases the criteria for selecting and assessing actions to be funded on the satisfaction of sectoral basic needs and their change after completion of the actions. By setting a level of aid proportionate to the number of beneficiaries, the mechanism avoids the need to discuss baseline scenarios, thus limiting transaction costs. The talks to decide the level of aid and funding modalities will certainly be very difficult. Defining 'access to basic needs' and monitoring results may also raise methodological issues, but it is important that they do not dramatically raise transaction costs. An assessment of the overall level of financial requirements for the PAM-W to be consistent with the Sustainable Development Goals is also needed. Additional research on these topics will be driven.
The principle of the right to development is central to this proposition, in that it targets the satisfaction of populations' basic needs. It defines a country continuum, given that there are poor people everywhere. All developing countries are therefore eligible with a mechanism of this sort, subject to funding modalities dependent on their income level.
Finally, the PAM-W responds, at least in part, to the demands of developing countries, for whom eradicating poverty is the prime objective. As such, it could contribute to overcoming some of the obstacles holding up talks in international climate negotiations. In the run-up to the next round of negotiations at COP 21 in Paris, the PAM-W could spur developing countries to integrate more ambitious emissions limitations pledges into their Intended Nationally Determined Contributions. This could, in turn, entice industrialized countries to act similarly. In the end, it could pave the way to an ambitious climate agreement.

Disclosure statement
No potential conflict of interest was reported by the authors.
Notes 1. It is worth noting that, among the G77 + China Group, the Small Island Developing States and the LDCs did not and still do not share this position as they are the countries most exposed to climate-change impacts: they strongly advocate a 1.5 8C maximum temperature increase (IIED, 2014). 2. The usual estimates of the cost of achieving the MDGs (Ban et al., 2008;Bourguignon et al., 2008;Jones et al., 2003;UN Millennium project, 2005) do not include the additional cost of adaptation and the need to cope with a hostile climate. 3. In this part we disregard the Green Climate Fund, currently being operationalized and slated ultimately to become the main climate fund. It will be addressed in the second part. 4. REDD stands for Reducing Emissions from Deforestation and Forest Degradation 5. The Notre Dame Global Adaptation Index (GAIN) comprises a vulnerability index for water, food, health, housing, ecosystem, and infrastructure regarding exposure to climate risks, and a readiness index describing the capacity of a country to make use of financial resources for adaptation. See http://index.gain.org. 6. By order of funding: Bangladesh, Niger, Mozambique, Zambia, Cambodia, Nepal, Tajikistan, Samoa, Bolivia, and Yemen. 7. The financial weight, or even the existence, of the Private Sector Facility is open to controversy, some developing countries seeing it as a way for industrialized countries to dodge their funding commitments. 8. The GCF mentions the option of results-based funding (GCF, 2011, §59;GCF, 2014e).