Economic impacts of climate change are likely to be much higher in Africa than in other world regions. They could be significant in the short-term, with estimates that the costs could be equivalent to 1.5 - 3% of GDP each year by 2030 in Africa. Despite Africa’s vulnerability to climate change and climate variability, there is a distinct lack of economic assessments and implications of the costs of adaptation and mitigation to climate change impacts.

This gap requires (i) investigating and building evidence of the costs of adaptation and mitigation, and producing a range of estimates for adaptation and mitigation costs in Africa, and (ii) capacity building efforts aimed at building a deep and talented cadre of African researchers that are able to assess the risks posed by climate change and their economic implications, assess and integrate climate adaptation issues into long-term strategic development planning and to build, strengthen and enhance the knowledge base and research capacity of African institutions.

All these activities are crucial to African policymakers, practitioners, and the international climate change community to establish a collective target for financing adaptation in Africa, and for improving the understanding of adaptation and mitigation investment requirements across Africa.

The fact that Africa has contributed the least to historic greenhouse gas (GHG) emissions is well documented, and yet the negative impacts of climate change in Africa will be severe. The Intergovernmental Panel for Climate Change (IPCC) predicts that by 2020, some regions in Africa could see crop yields from rain-fed agriculture decline by as much as 50%, and some 75-250 million people could be affected by water shortage. Africa will therefore need substantial resources for adaptation to climate change. The World Bank has conservatively estimated the costs for adaptation to climate change in Africa will amount to close to $18 billion (at 2005 prices). In addition, the costs of putting Africa on a low-carbon growth path could reach $22-30 billion per year by 2015 and $52-68 billion per year by 2030. African countries are unlikely to be able to generate these resources from domestic sources, and nor should they have to, given their very low (in some cases: near zero) responsibility for causing climate change and their low own financial and technological capabilities.

Financing climate mitigation and adaptation in developing countries represents a major challenge in the outcome of a post-2012 international climate agreement. The effective mobilization of financial resources is regarded by many as a key area of intervention in order to stabilize the climate for which significant reduction in emissions will be required. Large-scale investments in energy and other key infrastructures will be essential to meet both development and climate objectives in Africa.

In late 2010, the 16thConference of the Parties (COP-16) to the United Nations Framework Convention on Climate Change (UNFCCC) convened in Cancun, Mexico. The Cancun climate talks concluded with a package, dubbed the ‘Cancun Agreements’ consisting of a set of decisions anchoring national mitigation pledges and taking some important steps to strengthen finance, transparency in emissions reporting by all countries and other elements of the multilateral climate framework.

The Cancun Agreements build directly on the Copenhagen Accord, hence importing the essential components of the Accord into the UNFCCC and therefore giving it legitimacy and the possibility to implement some of the elements in the Accord. One element of the agreements is that it formalized the finance goals set in Copenhagen to mobilize fast-start and long-term climate finance. As such, a collective commitment was made by developed countries ‘to provide new and additional resources through international institutions, approaching $30 billion in fast start finance for the period 2010-2012.’ Funding for adaptation will be prioritized for the most vulnerable developing countries, which includes LDCs, Small Island Developing States (SIDS) and countries in Africa.

The decision was also taken in Cancún to establish a ‘Green Climate Fund’ which will manage a portion of the long-term finance. The funds may come from a variety of sources, including public, multilateral development banks (MDB), carbon markets and private capital. The need for scaled up finance, and disbursed through diverse routes was also identified by the UN High-Level Advisory Group on Climate Change Financing (AFG).

Courtesy, AU.