Public investments are becoming climate resilient
Title: Public investment and climate change adaptation
in Latin America (IPACC)
Commissioned by: German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) as part of the International Climate Initiative (IKI)
Country: Peru, with project sections in Colombia and Brazil
Lead executing agency: Peru: Peruvian Ministry of Economy and Finance (MEF); Brazil: Ministry of Planning, Budget and Management (MPOG); Colombia: National Planning Department (DNP)
Overall term: 2015 to 2019
Many of the investments carried out in developing countries are susceptible to risks associated with climate change. Extreme weather events or even gradual climatic changes, such as the melting of glaciers that feed hydropower plants, have the potential to interfere with a country’s overall economic development. Peru, Colombia and Brazil are among the countries which are particularly affected by climate change. Their governments are therefore seeking to make the integration of climate change adaptation measures binding within public investment projects.
Peru has accomplished pioneering work in this context. The project Public Investment and Climate Change Adaptation, financed by the International Climate Initiative (IKI) of the German Federal Environment Ministry (BMUB), has contributed to integrating climate change as a cross-cutting issue within the planning processes for public projects. To achieve this, GIZ cooperated with Peru’s Ministry of Economy and Finance as well as its Ministry of Environment. The project, which originally ran from 2011 to 2015, will now continue until 2019 in Peru and has also been expanded to Colombia and Brazil.
Political decision-makers and specialised staff from economic, finance and planning ministries in Brazil, Colombia and Peru take account of climate risks and consider options for adapting to climate change when planning public investments. This contributes to minimising climate-related economic, social and environmental damage.
One of the achievements of the predecessor project, Public Investment and Climate Change Adaptation, was the formulation of national guidelines for public-sector investments. In addition, the project developed a cost-benefit analysis for evaluating the financial benefits of investments in climate change adaptability. On the basis of climate risk analyses in two pilot regions, adaptation measures were identified and the costs associated with these were subsequently assessed in comparison to the expected financial damages. The insights gained were then incorporated into the guidelines for public investments in Peru.
By the end of 2015, around 40 per cent of public investment projects in Peru had taken account of the new guidelines for climate risk management. In order to achieve sustainable change within public investments, the predecessor project closely cooperated with the National Public Investment System (SNIP). The current project is drawing on the results achieved by its predecessor.
Now that the general guidelines for climate risk management within public investments have taken effect in Peru, the project partners are currently developing specific guidelines for the tourism sector. Additional guidelines are also planned for the energy and water sectors, followed by those for two additional regions, Lambayeque and Puno. In the long term, the guidelines developed for the tourism sector are intended to contribute in particular to protecting tourist destinations from the effects of climate change – particularly those in the Andean highlands and world heritage sights such as the clay structures in Caral, the oldest known urban settlement in the Americas. By 2019, at least one third of public energy and water projects in Peru are envisioned to integrate climate risks and adaptation measures within their planning processes.
To foster the effective application of climate risk management, the finance ministry’s information and monitoring system will be overhauled and outfitted with detailed regional hazard maps and climate scenarios. This system will assist in evaluating the effectiveness of climate adaptation measures in the future.
Colombia and Brazil have expressed their desire to incorporate the results achieved in Peru within their own borders. The project partners in these two countries are the national planning ministries and authorities. To date, agreements have been concluded with the relevant institutions and technical teams have also been established. By 2018, at least one public investment project that accounts for climate risks and incorporates adaptation measures in an exemplary manner is to be implemented in each country. These projects are intended to serve as a basis for systematically integrating climate risk management within public investment projects in the respective countries.
Additionally, a web-based knowledge platform and channels for entering into dialogue and exchanging knowledge among the three countries, as well as throughout Latin America, are being developed. The purpose of these is to foster the dissemination of experiences and useful examples from the field among other users of climate risk management within public projects.