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With disaster displacement on the rise, and the link to climate change established, the need to reduce the risk of internal displacement and provide solutions will require finance. A lot more finance. Given the constraints on domestic resources and the demands on stretched ODA budgets, and the absence of dedicated funding, the Global South will need to explore existing funding streams.
In my paper published today, I argue for governments across the Asia-Pacific region to better recognize the looming challenge of displacement in their public policy to enable access to existing development finance, including the global climate funds.
For this to occur, public policy needs to better reflect the complexity of displacement occurring in the context of climate change. The prerequisite for action—recognizing that displacement is primarily a development issue with humanitarian consequences—has been largely established. The issue now is moving from intent to action.
As outlined in an earlier blog, governments across the Asia-Pacific have been challenged in expressing their needs and setting out specific and concrete measures to deal with displacement. Making this shift requires a clear articulation of needs, precise setting of priorities, and the explicit inclusion of measures to reduce displacement risk in development planning, particularly at the sector level. A greater emphasis on concrete measures linked to loss and damage, or the avoidance of it, will help underpin the case for investment, especially when it comes to prevention. It then becomes a question of how to finance implementation.
Working with what we have
While none of the multilateral development banks (MDBs) currently have dedicated instruments or resources to respond to internal displacement in the context of climate change and disasters, existing instruments and sources of funding can be much better utilized.
Figure 1. Indicative representation of MDB engagement in disaster risk management with displacement entry points
Source: Asian Development Bank (adapted)
Investment projects can readily integrate displacement-related activities within sector investments where the primary focus is on infrastructure or service delivery. Budget support, through policy-based or results-based lending that links finance with the implementation of sector or national policies, can include displacement-related policy measures, as can contingent financing, providing incentives for policy reforms ahead of a drawdown, as well as the resources to respond ex-post. That said, utilizing these instruments requires governments to primarily draw on finite country allocations, a challenge given the many competing development priorities faced.
The role of finance from global climate funds
This is where dedicated climate finance can play a greater role. Over the last few decades, governments have established a number of global funds, known as the climate financial intermediary funds (FIFs). Putting aside very real issues of accessibility, size, and effectiveness, the FIFs provide dedicated resources to advance the climate agenda that can leverage domestic and other sources of co-finance, including from MDBs, to address the drivers of displacement.
As it stands now, the Asia-Pacific’s utilization of the FIFs for displacement appears mixed.[1] A review of FIF funding for adaptation projects in the region revealed that:
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The Green Climate Fund (GCF), the world’s largest climate fund, had financed 10 projects (or 14 percent of 71 projects reviewed) since 2015 with explicit displacement responsive measures, such as building cyclones shelters and access roads in Bangladesh or strengthening storm and flood protection for coastal communities in Viet Nam.
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Since 2010, the Adaptation Fund has financed three projects (or 7 percent of the 45 projects reviewed) with explicit displacement responsive measures, such as financing community evacuation centers and housing for IDPs in Lao PDR and relocation planning for hazard-exposed coastal communities in Samoa.
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Under the Climate Investment Funds (CIF) Strategic Climate Fund’s Pilot Program for Climate Resilience in Asia-Pacific, only two projects were found to have explicitly addressed displacement considerations. In Tonga, support was provided to policy reforms, the relocation of a vulnerable hospital, and new evacuation roads, and in Cambodia where the project aimed to reduce flood-related displacement and enhance community preparedness.
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The Global Environment Facility (GEF) has two climate change adaptation trust funds, the Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF). A review of projects in the Asia-Pacific only identified one project in Sri Lanka that explicitly considered resettlement in the context of post-conflict recovery. While the project is not relevant to climate and disaster displacement, it does provide an example of GEF funds being used to support the wider displacement agenda.
In terms of encouraging the use of climate funds to address the drivers of displacement, only the GEF’s programming strategy on adaptation to climate change explicitly highlights the linkages between climate change and migration, and identifies displacement as a priority for support under the SCCF. While displacement is not identified as an issue in the Adaptation Fund or CIF medium-term strategy 2023-2027 or revised results framework, respectively, there are entry points in the context of reducing vulnerability, strengthening resilience, and enhancing adaptive capacity. Surprisingly, displacement does not feature in the GCF Strategic Plan 2024-2027.
With displacement becoming an increasingly pressing issue, there is a solid basis for recipient governments and the funds’ shareholders to establish this link more strongly in the funds’ future policy documents.
Creating demand, driving the agenda
From a public policy perspective, addressing the causes of displacement requires a recognition that low levels of development increase the risk of displacement, and that displacement increases the risk of and entrenches poverty and reduces development opportunities. Together with a climate lens, this is a strong narrative for investing in prevention by integrating displacement considerations to reduce risk within sector approaches.
By explicitly recognizing the risk of displacement and identifying measures, including through established approaches vis-à-vis adaptation and risk reduction, in key policy instruments (such as national development plans, nationally determined contributions, national adaptation plans, and disaster risk reduction strategies), developing countries can clearly outline their financing requirements and thus create demand for further funding. As illustrated above, climate finance through the global climate funds is already being deployed to reduce the drivers of displacement risk. It’s now about increasing the volume and quality of investments to fully leverage the opportunity these funds offer.
[1] As of 5 March 2024.
Disclaimer
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
Image credit for social media/web: USAID / Richard Nyberg