Where does the methodology come from and how do you use it?
The calculation for climate co-benefits is based on the joint Multilateral Development Bank methodologies for tracking climate finance in adaptation and mitigation (published in the annual Joint Report on Multilateral Development Banks' Climate Finance). The methodologies are refined regularly. For instance, a new methodology for climate mitigation finance is being reviewed with the aim to commence tracking in 2021.
Throughout the project preparation cycle, regional climate teams and we in the Climate Change Group’s Advisory and Operations team work together with project teams and sector experts, and other supporting units across the Bank, to ensure that climate considerations are reflected in project design. Once the project is finalized and goes to the Board of Directors for approval, we provide a final assessment of co-benefits.
Our rigorous internal consultation and review process ensures that the methodologies are applied consistently. And we publish a list of all projects that have been tagged with co-benefits annually (see for instance our FY19 data).
Are adaptation and mitigation co-benefits measured differently?
For mitigation activities, a one-ton reduction of CO2 emissions has the same impact regardless of where the activities are located, and it is possible to define lists of typical activities that support a path to low-carbon development.
On the other hand, adaptation activities are project- and location-specific – the adaptation needs of one project may be different from another project depending on their location and vulnerability to climate change. Unlike mitigation activities, it is not possible to produce a standalone “list of adaptation activities” that can be used under all circumstances. So when we prepare to assign adaptation co-benefits, we ask the following three questions and look for the evidence in the project design:
- How a changing climate will affect the project - not just climatic events that have always occurred, but also climate events that are expected in the future;
- Whether the project intends to address these climate vulnerabilities; and,
- Which measures or considerations the project will incorporate in its design to address the vulnerabilities.
You might think that mitigation co-benefits are assigned more easily based on this explanation. But the list of mitigation activities goes through rigorous technical review to make sure that we capture activities that contribute to long-term emissions reduction and enable a low carbon development trajectory for countries.
Despite their different approaches, both methodologies track and report climate finance in a granular manner. In other words, the climate finance reported covers only elements or proportions of projects that directly contribute to or promote adaptation and/or mitigation.
What else should we measure?
Climate co-benefits is an important metric. It tells us how much finance supported climate action – including projects that mitigate climate change, such as solar development, or projects that promote adaptation, such as rehabilitation of drought-affected farmland. And there is no doubt that setting a climate finance target drove us even harder to consider climate change across a range of development interventions, with the result that we have successfully mainstreamed climate action throughout our projects.
But co-benefits do not tell the whole story of these efforts. New metrics strive to go beyond measuring climate inputs to measuring the climate impacts and outcomes of our projects. For example, all IDA projects with at least 20% climate co-benefits must now include at least one climate-related indicator to help us gauge the climate impact of our investments and give us the confidence that what we are investing in is resulting in climate action on the ground. We are also piloting a new Resilience Rating System to rate how well a project plans for climate risk and builds the resilience of people. These new metrics strive to go beyond climate co-benefits and move towards an approach that better articulates the total value proposition of the Bank’s climate action. The development and consolidation of these next generation metrics is an important objective for the Climate Change Group in the coming months.