Financing State Action Plans on Climate Change in India

Financing State Action Plans on Climate Change in India

Under India’s National Action Plan on Climate Change (NAPCC), Indian states have prepared State Action Plans on Climate Change (SAPCCs). The SAPCCs identify priority actions for responding to climate change; between 50 and 150 actions are typically identified in about 10 themes or sectors. Some of these actions address climate change specifically, especially when they involve studies. Many are ‘mixed actions’ that contribute to sustainable development while also responding to climate change.

Some states have also estimated the costs of implementing the SAPCC actions. In most cases, these are ‘bottom-up’ estimates based on what is required for their delivery. These costs are being used to apply to national and international climate funds. The mixed actions usually have related actions in the state development budget and managers need to ensure consistency between mixed actions funded from both the development budget and climate funds.

Development and climate change

Climate change brings risks which have important implications for India’s development. The main risks are: more variable rainfall (including more frequent and severe flooding and droughts); higher temperatures; and sea-level rise.

If climate change were to not occur, most Indian states could expect to be at least five times better off by 2050. But the expected loss and damage caused by climate change is likely to mean that they will be only three times better off, assuming nothing is done to adapt to climate change. States that are more vulnerable to climate change (such as Assam, Kerala and Odisha) may be even worse off.

State governments are already undertaking many activities to help reduce the impact of climate change (e.g. on farming systems, water security and disaster management). There is some evidence that the current spending on such adaptation actions will reduce climate change damage and loss by between 10% and 20% (i.e. resulting in GDP being about 3.5 times higher than at present, rather than only 3 times higher), depending on a state’s level of vulnerability and adaptation spending. There is therefore a large ‘adaptation gap’.

State Action Plans on Climate Change (SAPCCs)

SAPCCs describe the vulnerability of states to climate change risks and how the state government plans to reduce that vulnerability and close the ‘adaptation gap’. The SAPCC actions aim to improve the effectiveness of adaptation spending, to increase adaptation spending and to work with the private sector to mobilise their resources and skills.

Most of the high cost actions in SAPCCs are mixed actions and contribute to normal development, while also responding to climate change. Examples include agricultural research and extension, irrigation, forestry conservation and urban infrastructure. These actions are therefore beneficial even if climate change does not occur. However, they give greater benefits when climate change does occur.

Funding for SAPCCs

Some states have started to provide estimates of the costs of SAPCC actions. These have been produced mostly through bottom-up exercises which calculate how much is required to implement the actions.

Managers of mixed development/adaptation actions can now apply for funding from both the state budget and from international and domestic climate funds. The new climate funds provide opportunities to boost the importance of adaptation and to pilot new adaptation approaches.

All states are preparing their first applications to these climate funds. However, it is important to ensure that the mixed actions are not neglected in the budget as a result of the new climate funding.

Integrating SAPCCs and the budget

To improve the consistency of funding from the budget and from climate funds, the first step is to understand the links between SAPCC actions and the budget. This involves checking the SAPCC actions and the funding for departments in the budget. An explanation of how the SAPCC actions will complement the activities funded in the budget is then needed, as well as an explanation of the consistency between the funding under the SAPCC and in the budget to avoid duplication and conflicting policies.

The complementarity between climate funding and development funding will strengthen the position of the departments in charge of mixed development/adaptation actions in two ways. Firstly, it will improve the quality of applications for climate funds, since the selection criteria used by the climate funds require a clear statement of links with development. Secondly, it will help strengthen the departments’ case in budget negotiations, as the state budget process will adjust to respect the increased priority given to development actions that also deliver adaptation benefits.

Climate Change Innovation Programme (CCIP) support

The Climate Change Innovation Programme (CCIP) is offering support to six Indian states to help strengthen the management of budget and climate funding. At the heart of this work is the need to develop a common understanding in government about the relative importance of development and adaptation in mixed actions. This need applies especially to the government departments responsible for the sectors most affected by climate change, including agriculture, forestry, water, energy and infrastructure.

The CCIP support also offers to help develop a ‘Climate Change Financing Framework’ (CCFF) that builds on the existing SAPCC costing work. It also presents scenarios for closing the adaptation gap to ensure that states can continue to achieve 5% annual growth, despite the growing risks from climate change.

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Financing State Action Plans on Climate Change in India

This two page leaflet looks at how Indian States will finance the implementation of actions identified in their State Action Plans on Climate Change.

Date of publication: September 2015

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