The Kyoto Protocol's Adaptation Fund could take on a wider role to manage money destined to help poor countries deal with the consequences of climate change. Farrukh Iqbal Khan, chair of the Adaptation Fund Board, spoke to EURACTIV in an interview.
Khan argued that the small UN Adaptation Fund could in future be affiliated to a new green fund, which world leaders are attempting to agree on at the Cancún climate negotiations kicking off next Monday (29 November).
"The Adaptation Fund could be the adaptation window for the larger new climate change fund," he told EURACTIV.
Earlier this month, the fund signed a $8.6 million contract to assist Senegal in protecting its coastline from rising sea levels. It has also agreed another deal to improve water management in Honduras.
Developing countries now hope that the majority of the $100 billion climate aid package pledged last year by industrialised countries could be channelled through the Adaptation Fund, Khan said.
The fund currently operates on the basis of donations and UN credits generated by emissions reduction projects in developed countries. But this "does not yield very significant financing," Khan conceded.
He argued that any new mechanisms agreed under a new climate treaty could also be used to replenish adaptation funding. The UN High-Level Advisory Group on Climate Change Financing earlier this month identified carbon taxes, emissions trading, levies on international flights and shipping and redirecting fossil fuel subsidies as potential sources of finance.
"I think that other sources of funding must include whatever market-based sources we will take, for instance any levies. If that levy has to be imposed then it should in some way also contribute to adaptation funding," Khan said.
"Adaptation is a strategy for developing countries and therefore substantial resources are required," Khan said. Most of the project proposals the Adaptation Fund has received have focused on agriculture and livelihood issues in vulnerable communities, he added.
"Putting the system right is very important," he stressed. He pointed out that even the establishment of the new climate fund and its governance are still under discussion, while debate on sources of finance has hardly even begun.
"What has happened during these past six months is that options have become very clear," Khan said, arguing that there is "a level of maturity" in the finance negotiations. Now it's a question of boiling three proposals from the EU, the US and the G77 into one, he said.