Adaptation Fund Board and targeting the most vulnerable countries

Legal assistance paper

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Date produced: 04/12/2010

1. In the context of the Adaptation Fund Board being under the authority of the CMP pursuant to Decision 1/CMP.3 and the guidelines for the Adaptation Fund in Annex IV of Decision 1/CMP.4, is it possible to say that there is a legally binding agreement by the CMP that the funding for adaptation projects should be targeted toward the most vulnerable countries? 

2. Does the same agreement implicates a legally or non-legally binding commitment that vulnerable countries should be involved or consulted before any project proposal in their region is formulated?

Summary

The combination of Article 12(8) of the Kyoto Protocol and the various CMP decisions thereunder which create the Adaptation Fund and Adaptation Fund Board give rise to a legally binding obligation to assist particulalry vulnerable countries meet the cost of adaptation to climate change. However, the Parties to the CMP and the Adaptation Fund Board have a reasonably broad discretion as to how this assistance should be provided within the terms of applicable policies and guidance. In other words there is no obligation to ‘target’ it in highly specific ways and locations other than this general obligation to assist particularly vulnerable developing countries. We comment below on which developing countries fall within the term “particularly vulnerable.”

Developing countries have good representation on the Adaptation Fund Board and eligible vulnerable countries have direct access to the Adaptation Fund and are able to submit projects to it for approval. Projects to be financed by the Adaptation Fund Board should be ‘country driven’ and based on the ‘needs, views and priorities’ of eligible countries. The Adaptation Fund has only just begun funding projects and its policies and procedures for appropriate consultation will develop over time. However, it is key to the legally constituted design of the Adaptation Fund that vulnerable countries have a say in determining which projects should be submitted for their region and, to that extent, there is a legally binding commitment to consultation.

Advice

1. The UNFCCC and the Kyoto Protocol themselves, rather than a CMP decision, are the main authorities for the Parties’ legal obligation to provide funding to vulnerable developing countries.

Article 4(4) of the UNFCCC states that developed countries:

“shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects.”

Article 12(8) of the Kyoto Protocol states that the CMP shall ensure that a share of the proceeds from certified CDM projects is provided:

“to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation.”

Although the articles of the UNFCCC and Kyoto Protocol referred to above are legally binding, there is a debate about whether COP/CMP decisions pursuant to such articles are themselves legally binding. Neither the UNFCCC nor the Kyoto Protocol explicitly refer to the establishment of the Adaptation Fund itself. However, it is generally accepted that the authority to establish the Adaptation Fund by CMP decision is implicit in Article 12(8) of the Kyoto Protocol. Provided that the subject matter of any CMP decision falls within this implicit grant of authority and is intended by the Parties to be legally binding, the relevant decision should be regarded as legally binding.

As can be seen from the examples below, various decisions that have been taken in order to create the Adaptation Fund reiterate the language of Article 12(8) of the Kyoto Protocol regarding the need for assistance to particularly vulnerable developing countries before going on to set out guidance for how that assistance will be provided.

In Decision 5/CMP.2, the CMP sets out the principles by which the Adaptation Fund shall be guided, and these include the principle that a share of CDM proceeds should be used to assist particularly vulnerable developing countries.

In Decision 1/CMP.3 the CMP again emphasises the need to assist particularly vulnerable countries and establishes the Adaptation Fund Board. The CMP further decides that the Board’s functions should include the development of strategic priorities, policies and guidelines which the Board should recommend for adoption by the CMP.

In Decision 1/CMP.4, the CMP formally adopts the strategic priorities, policies and guidelines which were drawn up and recommended to it by the Adaptation Fund Board pursuant to decision 1/CMP.3. These are set out in Annex IV to decision 1/CMP.4.

Paragraph 5 of Annex IV states that the Adaptation Fund shall assist developing countries that are…

“particularly vulnerable to the adverse effects of climate change in meeting the costs of adaptation.”

Paragraph 8 of Annex IV states that

“in developing projects and programmes, special attention shall be given by eligible Parties to the particular needs of the most vulnerable communities.”

On the basis of the above, Article 12(8), and the various decisions creating and operationalising the Adaptation Fund, impose a legally binding obligation to use a proportion of CDM project funds to assist particularly vulnerable countries in meeting the costs of adaptation and this obligation is subject to various guidelines and policies regarding how that should be achieved. The obligation is not, however, expressed in absolute terms. It does not say how much assistance should be provided and in what proportions to specific countries. The language of the question uses the word “target”. At a very broad level this is similar to “assist”, but the obligation provides Parties with a considerable degree of discretion in its fulfilment and it should not be taken to imply any highly specific and narrow association of specific funds with specific countries.

Particularly vulnerable developing countries

The obligation to assist particularly vulnerable developing countries gives rise to the question of which developing countries fall within the term. The issue of how to achieve an appropriate definition has been the subject of considerable debate and there is precedent language within the UNFCCC which the language of Annex IV of decision 1/CMP.4 and other decisions echo.

Paragraph 10 of Annex IV defines developing countries that are particularly vulnerable to the adverse effects of climate change as…

“including low-lying and other small countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems.”

Very similar language is used in Decision 28/CMP.1 which contains initial guidance on the operation of the Adaptation Fund.

Annex IV uses the term “including” in the list of examples given which means that other examples may be relevant. It is suggested that the Parties intended themselves and the Adaptation Fund Board to take a pragmatic view of what constitutes a particularly vulnerable developing country rather than define the term too tightly. This reinforces the sense that the Parties have a considerable degree of discretion regarding how the legally binding obligation to assist particularly vulnerable countries should be fulfilled.

2. The UNFCCC and Kyoto Protocol refer in broad terms to co-operation, co-ordination and consultation among the Parties to achieve their goals, but don’t specifically refer to these aspects in connection with the Adaptation Fund. However, various decisions associated with the formation of the Adaptation Fund and the Adaptation Fund Board are relevant.

Echoing similar language in Decision 5/CMP.2, Decision 1/CMP/3 states that…

“the Adaptation Fund shall finance concrete adaptation projects and programmes that are country driven and are based on the needs, views and priorities of eligible Parties.”, and that

“eligible Parties shall be able to submit their project proposal directly to the Adaptation Fund Board and that implementing of executing entities chosen by governments that are able to implement …projects …may also approach the Adaptation Fund Board directly.”

Annex IV of Decision 1/CMP.4 reiterates the ability to submit projects directly to the Adaptation Fund Board and also states that the Adaptation Fund….

“shall ….finance concrete adaptation projects and programmes that are country driven and are based on the needs, views and priorities of eligible Parties,” and

“take into account, inter alia, national sustainable development strategies, poverty reduction strategies, national communications and national adaptation programmes of action and other relevant instruments, where they exist.”

The above provision for direct access to the Adaptation Fund by eligible countries is unique to the Adaptation Fund. Its governance is also unique in having an equitable and balanced composition in which developing countries have a small majority. The Adaptation Fund has only recently come into existence and only just begun to provide funding to projects. It is still developing its practice and this will become clearer over time. However, given that eligible vulnerable countries can approach the Adaptation Fund directly, are well represented on its Board, and the Fund’s guidelines and supporting CMP decisions state that financing of projects should be country driven and based on the needs, views and priorities of eligible Parties, it is clear that a degree of consultation is a key part of how it is required to function.

The question asks whether there is a commitment that vulnerable countries should be involved or consulted before any project in their region is formulated. The exact detail regarding what level of consultation is required (both between eligible country and Fund and also within any eligible country itself) will be developed over time, but it is key to the legally constituted design of the Adaptation Fund that vulnerable countries have a say in determining which projects should be submitted for their region and, to that extent, there is a legally binding commitment to consultation.