The world continues to face a climate crisis like never before, dwindling water resources and intensifying climate impacts, have become the norm in many regions. As world leaders meet up at the 28th meeting of the Conference of the Parties (COP28) in Dubai, one of the main issues has been how to address the critical issue of the nature and water sector financing gap.
During the conference, several heads of multilateral development banks, such as the Inter-American Development Bank (IDB), the Asian Development Bank, and the African Development Bank, committed to helping in tackling the challenges, which are as a result of the current climate crisis. There is need for urgent action to ensure sustainable management of water systems and address the inextricable links between climate change, water crises, and biodiversity loss.
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As temperatures continue to increase, water scarcity continues to be a global challenge. In fact, an estimated quarter billion people are projected to face water scarcity by 2030. By 2050, Africa alone, is estimated to lose Sh7.67 trillion ($50 billion) per year due to climate impacts. In order to reach out Africans that are most affected, the African Development Bank has invested an estimated Sh1.13 trillion ($7.4 billion) in water supply and sanitation services delivery, that has benefitted about 90 million people in Africa since 2010.
The bank has pledged to quadruple its financing for climate adaptation to reach Sh3.83 trillion ($25 billion) by 2025, promoting climate-smart investments and encouraging private-sector funding for water treatment, recycling, and other components in the water value chain. It will also consider strategic debt relief programs like debt-for-nature swaps in return for a commitment from regional member countries to invest in climate-resilient infrastructure.
According to Dr. Beth Dunford, the Vice President of Agriculture, Human and Social Development at the African Development Bank Group, the African Development Bank Group will join fellow multilateral development banks in sharing a crystal-clear vision to ensure the availability and sustainable management of water systems for all. “Even a drop in the ocean can make a wave of change,” she said.
Dr. Johan Rockstrom, the Director of the Potsdam Institute for Climate Impact Research and co-chair of the Global Commission on the Economics of Water, who was also present at the conference, focused on the financial architecture for water and nature.
“Nature and climate must go together in efforts to create solutions. The overexploitation of natural resources at a global scale has put the world at risk of destabilizing the entire planet, and we are in a state of planetary emergency. We need to manage water as an entity, valued as a capital that we all depend on because it determines the sustainability of the biosphere…water is a provider of livelihoods, resilience, and part of the mitigation story,” he said.
He also called for collaboration in mobilizing finance and advancing a conceptual framework and restructuring for the overall financial architecture for climate, water and nature, noting the provisioning and resilience of all natural capital assets are fundamental supports to human well-being and economies.
The Inter-American Development Bank (IDB) also shared its IDB CLIMA pilot programme that is part of the solution to tackle the issue. In accordance to Ilan Goldfajn, IDB President, this programme an innovative financial tool that provides grants (5% of the IDB loan principal) to incentivize borrowers to achieve nature and climate objectives.
Through the programme, the bank will be able to assist countries with access to green and thematic debt markets to mobilize capital for climate and nature investments at scale. For borrowers to be eligible they must meet three key performance indicators – setting ambitious environmental targets, identifying the proper policies and expenditures to meet these targets, and measuring and reporting on their progress on time.
Safeguarding water resources and biodiversity should be at the forefront of climate strategies, as they are crucial components in building a sustainable and resilient future. There can be no sustainable future without urgent, systemic, and collective attention to the inextricable links between climate change, water crises, and biodiversity loss.