Climate Risk Management in ADB Projects · CLIMATE RISK MANAGEMENT IN ADB PROJECTS ... assessment...

CLIMATE RISK MANAGEMENTIN ADB PROJECTS

Resources Available to Support the Implementation of the Climate Risk Management Framework in ADB Projects

ADB has made available technical and financial resources to support this framework:

• TechnicalresourcesareavailabletosupportclimateriskscreeningandassessmentintheEnvironmentandSafeguardsDivisionoftheRegionaland Sustainable Development Department, which is ADB’s adaptation focal point.

• Financialresourcesintherangeof$4millionweremadeavailablethroughADB’sClimateChangeFundatthebeginningof2014tomeetthecostofcarryingoutclimateriskandvulnerabilityassessmentsinprojectscategorizedasmediumorhighriskduringinitialscreening.

• Tosupportclimatechangeadaptationinvestments,ADBhasestablisheddedicated trust funds in partnership with other development institutions. Forexample,theUrbanClimateChangeResilienceTrustFundwasestablishedwithsupportfromtheUnitedKingdom’sDepartmentforInternationalDevelopment,theRockefellerFoundation,andtheUnitedStatesAgencyforInternationalDevelopment.Thefundisa$150millionmulti-donor trust fund administered by ADB to scale up urban climate resilienceacross25medium-sizedcitiesinAsia.ADBisalsoleveragingfinance from adaptation funds administered by the Global Environment

FacilityandtheClimateInvestmentFunds.IthasmobilizedbilateralsourcessuchasthosefromtheNordicDevelopmentFund,andthegovernmentsofAustralia,Canada,andJapan.ADBremainsengagedtohelpcountriesaccesstheGreenClimateFund,whichisexpectedtocomeonstreamin2015.

• ADBhasdevelopedtools,includingtheonlinetoolAWAREforProjects,forconsistentandsystematicscreeningofclimaterisks.Technicalguidancematerialsareavailabletohelpprojectteamsanddevelopingmembercountriesmanageclimaterisksthroughouttheprojectcycle,includingclimate-proofingguidanceforthetransport,agriculture,andenergysectors.TheseareaccessiblethroughtheADBwebsite

(http://www.adb.org/publications/building-resilience-climate-change -adaptation-technical-resources ).

Formoreinformation,pleasecontact:CinziaLosenno,

ClimateChangeAdaptationFocalPointAsian Development Bank

Tel:(632)6324996E-mail:[email protected]

4. Identification of Adaptation Options

Themostviableadaptationoptionsorclimate-proofingmeasuresareidentifiedinconsultationwiththeexecutingagenciesorprojectsponsors,andareintegratedintheprojectdesign.Thereisnostandardizedapproachtoclimateproofing.Insomecases,climateproofingisessentialtoensuretheprojectisnotnegativelyaffectedbyclimatechange.Inothercases,thelifetimeoftheprojectissuchthatclimateproofingisnotaviableoptionorclimatereadinessisamoreappropriateapproach.Climateproofingmayinvolveadjustingengineeringdesignsuchasincreasingdrainagecapacityofwatersupplysystems,elevatingroadsinareasparticularlyatriskfromflooding,orecosystem-based adaptation measures such as revegetationofunstableslopes.

5. Monitoring and Reporting

Thelevelofriskidentifiedduringprojectconceptdevelopmentandthefindingsofclimateriskandvulnerabilityassessmentcarriedoutduringprojectpreparation are documented in the ADB board documents.Asupplementarydocumentdescribing

the assessment and adaptation measures incorporated intheprojectdesignandassociatedcostscanalsobeattachedtotheADBboarddocuments.ThelevelofriskassignedtotheprojectandthebudgetallocatedtoadaptationmeasuresarerecordedintheADBprojectclassificationsystemformonitoringandreportingpurposes.

© Asian Development BankPublication Stock No. ARM146926-2 November 2014

ADB’s Climate Risk Management Framework

The climate risk management approach of the Asian Development Bank (ADB) aims to reduce risks resulting from climate change to investment projects in Asia and the Pacific. ADB’s framework identifies climate change risks to project performance in the early stages of project development, and incorporates adaptation measures in the design of projects at risk. ADB climate risk management framework comprises the following steps:

(i) context-sensitive climate risk screening at the concept development stage to identify projects that may be at medium or high risk;

(ii) climate change risk and vulnerability assessment during preparation of projects at risk;

(iii) technical and economic evaluation of adaptation options;

(iv) identification of adaptation options in project design; and

(v) monitoring and reporting of the level of risk and climate-proofing measures.

Flow Chart for Climate Risk Management of Investment Projects

Checklist

Project Concept Phase

No or low risk Medium or high risk

Screening Report

Project Preparation Phase

Project Implementation Phase

Preliminary screening(checklist)

Expert judgmentEnd OR


Detailed screening(Aware™ for projects or other detailed screening tool)

Expert judgmentEnd OR Climate Risk and Vulnerability

Assessement (CRVA)

Evaluation and selection of climate resilience measures to include in project design;

co-financing arrangements

Implementation and monitoring of selected climate resilience measure(s)

CRVA Report

AWARE for ProjectsAWAREforProjectsisanonlinetoolusedbyADBprojectteamstoscreenprojectsforclimaterisks.Thetoolusesdatafrom16generalcirculationmodels, as well as databases on temperature increase, wildfire, permafrost, seaice,wateravailability,precipitationchange,flooding,snowloading,tropicalstorms,andlandslides.Foreachprojectscreened,thetoolgeneratesanoverallclimateriskrankingoflow,medium,orhigh;keyriskareas;andnarrativesonpotentialimpactsandadaptivemeasurestoguidesubsequent activities.

Thisassessmentisusuallyconductedbyexpertswithbackgroundinclimatemodeling,impactassessment,andeconomicsofclimatechangewhoworktogetherwiththeADBsectorspecialists,theexecutingagencies,theprojectsponsors,andotherstakeholderstoformulateadaptationsolutionsfortheproject.

1. Climate Risk Screening

AllADBprojectsarescreenedforclimaterisks.Aninitialscreeningiscarriedoutbytheprojectteamsbyfillinginachecklist.Projectsidentifiedtobeatmediumorhighriskundergoafurtherscreeningthroughdedicatedscreeningtools,suchastheonlinetoolAWAREforProjects.Risksconsideredarethoseresultingfromtemperatureincrease,precipitationchange,windspeedchange,sealevelrise,solarradiationchange,wateravailability,flooding,tropicalstorms,wildfire,permafrost,seaice,snowloading,andlandslide.

2. Climate Risk and Vulnerability Assessment

A detailed climate risk and vulnerability assessment is carriedoutforprojectsclassifiedasmediumorhighriskduringprojectpreparation.Theassessmentaimsto quantify risks and identify adaptation options that canbeintegratedintotheprojectdesign.Theleveloftechnicalrigoroftheassessmentdependsontheprojectcomplexityandavailabilityofclimatedataandinformationfortheprojectarea.Itcanrangefromasimpledeskanalysistoacomplexassessmentbasedoncustomclimateprojectionstoenableamoredetailedassessment.


TheclimateriskmanagementapproachoftheAsianDevelopment Bank (ADB) aims to reduce risks resultingfromclimatechangetoinvestmentprojectsinAsiaandthePacific.ADB’sframeworkidentifiesclimatechangeriskstoprojectperformanceintheearlystagesofprojectdevelopment,andincorporatesadaptationmeasuresinthedesignofprojectsatrisk.ADBclimateriskmanagementframeworkcomprisesthefollowingsteps:

(i) context-sensitiveclimateriskscreeningattheconceptdevelopmentstagetoidentifyprojectsthatmaybeatmediumorhighrisk;

(ii) climatechangeriskandvulnerabilityassessmentduringpreparationofprojectsatrisk;

(iii) technical and economic evaluation of adaptationoptions;

(iv)identificationofadaptationoptionsinprojectdesign;and

(v)monitoringandreportingofthelevelofriskandclimate-proofingmeasures.

Climate Risk and Vulnerability Assessment for Central Mekong Delta Region Connectivity Project

Theprojectconsistsoftwobridgesandaninterconnectingroadthatformpartofastrategictransportationlinkconnectingtheprovinces of southern Viet Nam and Ho Chi Minh City. Given the estimatedhighexposureoftheMekongDeltatoprojectedfutureflooding,aclimateriskandvulnerability assessment was conductedfortheproject.Thestudy found that the embankments oftheconnectingroadwere

vulnerabletotheimpactsofprojectedincreasesinthefrequencyandintensityofupstreamflooding.Projectedimpactsincluded(i)erosionofroadembankmentsandscouringofroadfoundations,(ii)waterloggingofroadfoundationsleadingtoroadsubsidence, (iii) reduced stability of infrastructure, and(iv) increased maintenance effort. As a result, a phased approach toclimatechangeadaptationwasadopted.Duringthefirstphase,theprojectdesignwasadjustedbyaddinga0.3-meterclimatechangefactoronroadembankmentstoallowforexpectedhigherfloods.Forthesecondphase,adaptationwillbeconsideredaspartoffurthermaintenanceandroadupgradesandexpansion.(Availableathttp://www.adb.org/publications/central-mekong-delta-region-connectivity-project-rapid-climate-change-threat-vulnerability-assessment )

3. Technical and Economic Evaluationof Adaptation Options

Based on the climate risk and vulnerabilities assessed, adaptation options are identified and evaluated on the basis of their technical feasibility and economic viability.Technicalfeasibilityevaluateswhetherproposedengineeringandnonengineeringmeasurescanbeimplementedwithavailableskills;equipment;andotherlocalfactorssuchasgeography,governance,andcapacity.Theeconomicanalysisinvolvesestimatingandcomparingthecostandbenefitsoftheprojectbasedontwodifferentscenarios:(i)theprojectunderclimatechangewithoutadaptationmeasures,and(ii)theprojectunderclimatechangewithadaptationmeasures. It aims to identify which adaptation option yieldsthehighestnetbenefit.Recognizingthatinvestingin adaptation measures may be costly and that future benefits may be uncertain, the economic analysis can alsopointtothebesttimingforinvestinginadaptation.

Flowchart for Assessing Climate Risk of Projects


Checklist


Preliminary screening(Rapid Environmental Assessment)



Screening Report

CRVA Report

Evaluation of adaptation options;

Integration of climate risk reduction measures in project design

Climate Risk and Vulnerability Assessment




Detailed screening(AWARE for Projects or other tool)

X

AWARE for ProjectsAWAREforProjectsisanonlinetoolusedbyADBprojectteamstoscreenprojectsforclimaterisks.Thetoolusesdatafrom16generalcirculationmodels, as well as databases on temperature increase, wildfire, permafrost, seaice,wateravailability,precipitationchange,flooding,snowloading,tropicalstorms,andlandslides.Foreachprojectscreened,thetoolgeneratesanoverallclimateriskrankingoflow,medium,orhigh;keyriskareas;andnarrativesonpotentialimpactsandadaptivemeasurestoguidesubsequent activities.

Thisassessmentisusuallyconductedbyexpertswithbackgroundinclimatemodeling,impactassessment,andeconomicsofclimatechangewhoworktogetherwiththeADBsectorspecialists,theexecutingagencies,theprojectsponsors,andotherstakeholderstoformulateadaptationsolutionsfortheproject.

1. Climate Risk Screening

AllADBprojectsarescreenedforclimaterisks.Aninitialscreeningiscarriedoutbytheprojectteamsbyfillinginachecklist.Projectsidentifiedtobeatmediumorhighriskundergoafurtherscreeningthroughdedicatedscreeningtools,suchastheonlinetoolAWAREforProjects.Risksconsideredarethoseresultingfromtemperatureincrease,precipitationchange,windspeedchange,sealevelrise,solarradiationchange,wateravailability,flooding,tropicalstorms,wildfire,permafrost,seaice,snowloading,andlandslide.

2. Climate Risk and Vulnerability Assessment

A detailed climate risk and vulnerability assessment is carriedoutforprojectsclassifiedasmediumorhighriskduringprojectpreparation.Theassessmentaimsto quantify risks and identify adaptation options that canbeintegratedintotheprojectdesign.Theleveloftechnicalrigoroftheassessmentdependsontheprojectcomplexityandavailabilityofclimatedataandinformationfortheprojectarea.Itcanrangefromasimpledeskanalysistoacomplexassessmentbasedoncustomclimateprojectionstoenableamoredetailedassessment.


TheclimateriskmanagementapproachoftheAsianDevelopment Bank (ADB) aims to reduce risks resultingfromclimatechangetoinvestmentprojectsinAsiaandthePacific.ADB’sframeworkidentifiesclimatechangeriskstoprojectperformanceintheearlystagesofprojectdevelopment,andincorporatesadaptationmeasuresinthedesignofprojectsatrisk.ADBclimateriskmanagementframeworkcomprisesthefollowingsteps:

(i) context-sensitiveclimateriskscreeningattheconceptdevelopmentstagetoidentifyprojectsthatmaybeatmediumorhighrisk;

(ii) climatechangeriskandvulnerabilityassessmentduringpreparationofprojectsatrisk;

(iii) technical and economic evaluation of adaptationoptions;

(iv)identificationofadaptationoptionsinprojectdesign;and

(v)monitoringandreportingofthelevelofriskandclimate-proofingmeasures.

Climate Risk and Vulnerability Assessment for Central Mekong Delta Region Connectivity Project

Theprojectconsistsoftwobridgesandaninterconnectingroadthatformpartofastrategictransportationlinkconnectingtheprovinces of southern Viet Nam and Ho Chi Minh City. Given the estimatedhighexposureoftheMekongDeltatoprojectedfutureflooding,aclimateriskandvulnerability assessment was conductedfortheproject.Thestudy found that the embankments oftheconnectingroadwere

vulnerabletotheimpactsofprojectedincreasesinthefrequencyandintensityofupstreamflooding.Projectedimpactsincluded(i)erosionofroadembankmentsandscouringofroadfoundations,(ii)waterloggingofroadfoundationsleadingtoroadsubsidence, (iii) reduced stability of infrastructure, and(iv) increased maintenance effort. As a result, a phased approach toclimatechangeadaptationwasadopted.Duringthefirstphase,theprojectdesignwasadjustedbyaddinga0.3-meterclimatechangefactoronroadembankmentstoallowforexpectedhigherfloods.Forthesecondphase,adaptationwillbeconsideredaspartoffurthermaintenanceandroadupgradesandexpansion.(Availableathttp://www.adb.org/publications/central-mekong-delta-region-connectivity-project-rapid-climate-change-threat-vulnerability-assessment )

3. Technical and Economic Evaluationof Adaptation Options

Based on the climate risk and vulnerabilities assessed, adaptation options are identified and evaluated on the basis of their technical feasibility and economic viability.Technicalfeasibilityevaluateswhetherproposedengineeringandnonengineeringmeasurescanbeimplementedwithavailableskills;equipment;andotherlocalfactorssuchasgeography,governance,andcapacity.Theeconomicanalysisinvolvesestimatingandcomparingthecostandbenefitsoftheprojectbasedontwodifferentscenarios:(i)theprojectunderclimatechangewithoutadaptationmeasures,and(ii)theprojectunderclimatechangewithadaptationmeasures.Itaimstoidentifywhichadaptationoptionyieldsthehighestnetbenefit.Italso aims to estimate the incremental cost of adaptation asthecostofprojectactivitiesaimedataddressingspecificclimatevulnerabilities.Recognizingthatinvestingin adaptation measures may be costly and that future benefits may be uncertain, the economic analysis can also pointtothebesttimingforinvestinginadaptation.

Flowchart for Assessing Climate Risk of Projects


Checklist


Preliminary screening(Rapid Environmental Assessment)



Screening Report

CRVA Report

Evaluation of adaptation options;

Integration of climate risk reduction measures in project design

Climate Risk and Vulnerability Assessment




Detailed screening(AWARE for Projects or other tool)

Final project risk ratings

High Risk

Breakdown of risk topic ratings A) Temperature increase

B) Wildfire

C) Permafrost

D) Sea ice

E) Precipitationi ncrease

F) Flood

G) Snow loading

H) Landslide

I) Precipitation decrease

J) Watera vailability

K) Wind speed increase

L) Onshore Category 1 storms

M) Offshore Category 1 storms

N) Wind speed decrease

O) Seal evel rise

P) Solar radiation change

















the assessment and adaptation measures incorporated intheprojectdesignandassociatedcostscanalsobeattachedtotheADBboarddocuments.Thelevelofriskassignedtotheprojectandthebudgetallocatedtothe incremental cost of adaptation are recorded in the ADBprojectclassificationsystemformonitoringandreportingpurposes.


















the assessment and adaptation measures incorporated intheprojectdesignandassociatedcostscanalsobeattachedtotheADBboarddocuments.ThelevelofriskassignedtotheprojectandthebudgetallocatedtoadaptationmeasuresarerecordedintheADBprojectclassificationsystemformonitoringandreportingpurposes.


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