As Climate Change begins to disrupt agricultural systems, coastal areas, and areas prone to drought and flooding in the global south and increasingly in developed countries, economic development falters. While we have seen many development projects , rarely do they consider who is most affected by climate change .In Guatemala City for example, there is a project targeting the community surrounding a landfill that gains a meagre income on the waste to build a distributed solar generation project that cuts energy costs by 90%.
Unfortunately development projects in the Global South, often funded by multilateral public financing flows, don’t fund projects like this. Instead some of the financing is geared towards fossil fuel development, especially in developing countries, without access to electrification, locking them into carbon intensity. The increasing renewable energy financing often is utility scale and tends to favour localities with existing energy infrastructure .
What is also challenging is the amount of risk that these communities present to investors, with debt and equity representing a majority of climate financing, as opposed to grants. This often means that the cost of debt is burdening the global south. The cost of debt to build solar in India as opposed to the U.S can be as three times as high without a guarantor in the west, yet these areas have a big need for financing. Some have touted the possibility of a carbon mitigation scheme as a source of founding for these projects .
Others have talked about a "fly"tax or other ways to move money from polluters to renewables . While these ideas might not have public support it's clear that current financing structures are working against the transition to a clean energy future on the development end, especially in communities at the highest risk for climate disaster .
At the other end we have talk of a Loss and Damage Fund, to ensure countries and communities recover from the effects of climate change. One of the biggest issues that has come up is fragmentation, or the propensity for the fund to be disconnected to multilateral finance flows . However, as stated traditional financing contains structural barriers that penalise least developed countries from achieving a just transition and even electrification itself .
What we need is Development Financing, Loss and Damage Reduction (mitigation, adaptation) and Loss and Damage response (Recovery, Reconstruction, Rehabilitation) that are working together to allow communities -including their environments - to survive and thrive.
Traditional financing says that we can prevent and prepare for disaster and then recover from it but It is a mistake to say things happen before and after a natural disaster. In fact all these things are happening at once and the conditions of a community both economically and environmentally influence the conditions of what that disaster will mean for the community. A low income coastal community will face much harsher 'disaster' than a similarly situated community with an excess of funds to rebuild and repair . In addition a community with little ability to withstand a flood likely needs more than to get back to the status quo . It needs targeted development to ensure it is stronger moving forward.
By not seeing these funds as interconnected entities, we run the risk of destroying our climate and the people in it while we try to save it.
A decrease in income for fishermen near a river for example shows a steady but consistent loss in resources and health of the rivers that begin to strain the economics of a community . These families might move to large urban centers, as their communities become unable to support their livelihoods.
As agricultural communities globally suffer and move to cities this impending domestic climate refugee crisis should also be a target for loss and damage financing. This number is expected to reach 216 million by 2050 according to a report from groundswell . This is why we need to track and target the shifts in economic development in climate-affected areas. We need to ensure that industry and climate change don’t push people into unsafe development and ignore failing crops, empty waterways, and increased natural disasters.
Ambassador Diann Black-Layne (Antigua and Barbuda ) has touted the importance of micro-climate financing in communities in climate change financing in an award winning paper. How can we consider people in the protection of natural areas, restoration of them, and transition into a renewable energy economy? Bangladesh , a leader in micro-finance, is a great example. Loans to improve housing resilience to floods , diversification of crops to protect against salt and water changes , and pond rehabilitation for aquaculture are just some of the examples of projects taken up there . Almost 40% of micro finance projects in Bangladesh are linked to climate adaptation .
Although this recommendation was not taken up by the UN it shows a more layered, complex approach at tackling climate change that takes into account the structural reasons preventing full activation of these funds in an accessible, equitable manner. Something like the long awaited Santiago Network could ensure not only technical assistance to developing countries suffering from climate loss but also ensure that the rebuilding process is based on principles of economic theory that are regenerative and sustainable. The Rocky Mountain Institute polled 100 representatives from 45 developing countries, 98% of which expressed a need for technical assistance in applying for funds.
We need to be listening to Small Island Developing States and least Developed Countries and creating a robust climate financing program that targets all stages of economic development and contains adequate technical assistance to see the funds realized- our climate depends on it .