Seeking synergy: Funding Climate Change Mitigation and Adaptation

In the debate over how best to address global warming, the consensus among scientists, policymakers, and environmental activists is that solutions must incorporate both mitigation – reducing carbon emissions – and adaptation – helping communities cope with the current and future effects of climate change. Yet in the run up to the Copenhagen climate change summit in December 2009, public discourse has focused largely on mitigation – and even more narrowly on the issue of carbon reduction targets. Will developing countries – particularly Brazil, China, India, Mexico, and South Africa – eventually agree to binding targets for reducing emissions? Does the Waxman-Markey bill recently passed by the US House of Representatives go far enough in calling for a 17% reduction in 2005-level emissions by 2020 – and will the bill be watered down, or killed, in the US Senate? Are bilateral negotiations between China and the United States laying the foundation for a multilateral agreement in Copenhagen, or are the world’s two largest carbon polluters merely looking to sidestep the deep cuts the rest of the international community insists upon?

While mitigating climate change is the key long-term issue, adaptation is arguably the more pressing concern for the world’s poorest citizens. Simply put, climate change disproportionately affects the world’s poorest, particularly those in least-developed counties. According to a 2008 United Nation’s Development Programme report, drought-affected areas in sub-Saharan Africa could expand by up to 90 million hectares. Likewise, melting glaciers in the Himalayas and Andes are changing water flows, threatening to undo decades of agricultural progress in Asia and Latin America, undermining food security and threatening human health. By 2080, an additional 1.8 billion people could be living in regions where water supply is scarce, and the number of people affected by malnutrition could rise to 600 million. Meanwhile, the Intergovernmental Panel on Climate Change projects that rising sea levels will inundate 20 percent of Bangladesh, flooding costal areas and raising salinity in croplands, imperiling the livelihood of 37 million people.

Since 2002, the world’s richest countries have pledged nearly $18 billion to various bilateral and multilateral climate change funds and projects, including the World Bank and the Global Environment Facility, the funding arm of the United Nations Framework Convention on Climate Change. Yet, a recent analysis conducted by the Guardian (UK) found that less than 10% of the money promised by rich counties to help poorer counties adapt to global warming had actually been delivered. According to the report, published this past March, just $900 million has been disbursed. More importantly, the main policy instrument being advanced to help counties mitigate the impact of climate change is climate insurance. Yet, while climate insurance may help poor counties buy food when crops fail or re-build communities devastated by floods, hurricanes, or other climate-driven disasters, it does little to help people cope with the day-to-day realities of climate change.

Finding ways to help communities in the developing world both mitigate and adapt to climate change is one of the key moral, political, and economic questions of our time – and one of the principal challenges for global philanthropy. Fortunately, strategies that accomplish both of these goals at once – generating what are known as “co-benefits” – are starting to emerge. Donors, policymakers, and NGOs are developing new models and strategies that cut across issue areas, bringing together the fields of public health, education, economic development, environmental conservation, and energy access. Yet ensuring that the world’s poorest citizens benefit from strategies that blend co-benefits will require innovation and advocacy: innovation to identify replicable models and operationalize them as quickly as possible; advocacy to ensure that public policies and funding mechanisms support integrated action at a scale commensurate with the challenge.

Solar power: Reducing carbon supports health, education, and development

According to the United Nations, 1.6 billion people lack access to electricity. Many turn to wood for cooking and kerosene for lighting. But cutting wood for stove fuel saps the soil’s ability to hold water, creating arid soil and taxing water tables. Meanwhile, kerosene is expensive to buy, dirty to burn, and hazardous to human health. That’s why the Good Energies Foundation (www.goodenergies.com/foundation/), the corporate foundation of Good Energies, a New York-based private equity firm specializing in renewable energy, has made the elimination of kerosene lighting one of its top priorities.

Since the early 2000s, the Good Energies Foundation has partnered with German-based Stiftung Solar Energie (Solar Energy Foundation), which uses the King Baudouin Foundation USA as its local fiscal agent, to bring low-cost solar power to Rema, a village of 3,000 in the rugged Mida region of Ethiopia. Located about 140 km north of Addis Ababa, 90% of Mida’s residents live through subsistence farming amidst steep, arid canyons. Through contributions from Good Energies and other donors, the Solar Energy Foundation and its local partners have equipped the village with solar panels, batteries for energy storage, and LED lamps. Most systems were installed in families’ huts, but public institutions – an orthodox church and three mosques, a clinic, the village school, and the police and local administrator’s office – also got power. To date, the project has installed over 3,000 solar home systems acrosss Ethiopia. Although the project started out with a model based on subsidizing capital costs – with villagers making small payments towards the eventual cost of replacing batteries – the group uses a revolving credit facility, a model that will help accelerate growth into other areas of the country without making the systems unaffordable to the poor.

“Our goal is to focus on energy access and poverty alleviation,” said Good Energies’ CEO Richard Kauffman, who spoke with members of Synergos' Global Philanthropists Circle in May at a learning forum on climate change and poverty. “We are focused on practical solutions, and we recognize that there are various other co-benefits as well.”

Since the average lamp burns 70 liters of kerosene every year, producing about 160 kg of carbon dioxide, the Rema project prevents 368,000 kg of carbon emissions each year. Students can now study after sundown by the cool glow of LED lights. Tea shops can do more business now that their hours of operation extend into the evening. Meanwhile, solar-powered water pumps, installed last year, have obviated the daily four-hour trek many women had to make, down steep canyon walls, to fetch water from the valley below. The village’s solar-powered disinfection system ensures that the water is safe and clean, and solar-powered refrigerators ensure that the local clinic has safe, cool medicines – all at a much lower cost than kerosene.

The key to Rema’s success with solar power has been local control. While the first phase of Rema’s solar installation was overseen by staff members from the Solar Energy Foundation, long-term sustainability depends on local know-how. In 2007, Rema became home to the International Solar Energy School, which provides a comprehensive six-month technical training course to Ethiopian electricians. By investing in local know-how, the project ensures its sustainability and lays the groundwork for continued expansion. “The idea is that the graduates will go back into their home regions, where they can work with the Solar Energy Foundation – or become solar entrepreneurs in their own right,” Kauffman said.

In addition to Rema, there are three other solar service centers in various parts of Ethiopia. The four centers provide installation and ongoing servicing of local systems. Two more centers are scheduled to come online over the next 18 months.

The Green Belt Movement: Fighting poverty and environmental degradation

The Green Belt Movement (www.greenbeltmovement.org) is a leading example of how local communities can integrate mitigation and adaptation. Founded in 1977 by Wangari Maathai, the Kenyan environmental activist and 2004 Nobel Laureate, the Green Belt Movement began with the simple recognition that poverty, environmental degradation, and lack of women’s rights were inseparable. Over the past 32 years, the Green Belt Movement has planted over 40 million trees, mainly through its network of 6,000 community-based nurseries, which are run mainly by poor rural women around Africa.

“The women of the Green Belt Movement have learned about the causes and the symptoms of environmental degradation,” Maathai said in a 1994 speech at Harvard University. “They have begun to appreciate that they, rather than their government, ought to be the custodians of the environment.”

The Green Belt Movement is a case study in co-benefits. Planting trees preserves soil while also providing shade and firewood. Trees reduce aridity and help trap water in the soil, thus increasing crop yields and improving food security. And the process of organizing that women to do planting increases civic participation and helps empower women. “Through the Green Belt Movement, soil erosion has been reduced in critical watersheds, thousands of acres of biodiverse-rich indigenous forest have been restored and protected, and hundreds of thousands of women and their families are standing up for their rights and those of their communities to live healthier, more productive lives,” Maathai said.

But the real impacts of the Green Belt Movement are most evident at the local level. In rural villages throughout Africa, women are responsible for cooking meals and harvesting firewood. As trees are felled for firewood, women have to travel further from their homes to collect wood, which means that they have less time to care for their children and tend to their crops, not to mention engage in politics or get an education. Yet, according to a recent study by the Nairobi-based World Agroforestry Centre, Kenyan farmers who plant an average of 500 fodder trees are able to provide high-quality feed to their livestock, thus increasing their farm income by $95 to $120 per cow per year.

As Wanjira Mathai, the Green Belt Movement’s Executive Director and daughter of Wangari Maathai, explains, helping women see the connections between poverty and environmental degradation is key to the Green Belt Movement’s model. Whenever the Green Belt Movement begins work in a village, they begin with a seminar called “Know Yourself.” Trainers first ask women to identify their problems, a question that invariably yields a litany of complaints: not enough money, bad crop yields, sick children, a paucity of firewood. Then women are asked to identify where their problems come from. In most cases, women begin by blaming others – the government, their husbands, colonialists. But eventually they begin to see their role: how cutting trees increases evaporation and creates aridity; how monocrop farming requires expensive chemical inputs; and how all of these phenomena are tied together. “After three days of meetings,” Mathai explains, “women understand that they have a role to play.” And that role is to plant trees and care for their environment.

By allowing women to embrace their own agency, the Green Belt Movement has become a force for democratic reform in Kenya and a clarion voice for sustainable economic development worldwide. In 1989, the Movement was instrumental in halting President Daniel Moi’s plans to build a 62-story office building – featuring a four-story statue of Moi himself – in Uhuru Park, the largest public park in Nairobi. Wangari Maathai directly lobbied the British government to cut off financing, a move that provoked a crackdown by Moi. Protests erupted when Maathai was jailed but, when the tear gas had cleared, project financing was withdrawn and the park had been preserved.

“The former government was completely against the Green Belt Movement and our work of mobilizing women into groups that could produce seedlings and plant them,” Maathai said. “The government was also against the idea of educating and informing women. It didn’t want citizens to know that sometimes the enemy of the forests and the environment was the government itself, which was supposed to be protecting the environment.”

Taking co-benefits to scale

Both Maathai and Kauffman are optimistic about the impact their work is having on local communities. But both note that far more needs to be done in the philanthropic and policymaking communities to take projects like theirs to scale. Kauffman, for instance, makes a persuasive case for linking the fight against global warming to the politics of energy access. “A lot of governments are more interested in looking at issues of global warming than they are at looking at equity in terms of access to electricity. But there are companies coming online that are looking at delivering small-scale solar power at a remarkably low cost.” And that, he continues, could be revolutionary. “We’re talking about providing a two-watt panel and a few LED lights for around $12. That’s affordable, even to the very poor.”

Meanwhile, Maathai notes that the Green Belt Movement’s goal of planting 1 billion trees worldwide is already benefitting from the emerging market for carbon offsets – yet another example of how climate change mitigation and adaption dovetail. In 2006, the Green Belt Movement signed an agreement with the World Bank’s BioCarbon Fund to reforest 1,876 hectares of land within the Mount Kenya and Aberdares region of Kenya. Under the agreement, the BioCarbon Fund will purchase 375,000 metric tons of carbon offsets between 2007 and 2017, with a call option to buy 150,000 more.

“We have set some building blocks with this pilot project,” Maathai said. “We hope that we are showing the way for many other organizations in Africa and beyond to follow.”

The reforestation will bring important environmental benefits by reducing the erosion process, protecting water sources, and regulating water flows. Plants and fauna, primates, and birds, will also benefit from the re-introduction of a wide range of natural tree species. Meanwhile, community forest associations (CFAs) will employ local residents to plant and tend the seedlings during the first two years, thus stimulating the local economy. Likewise, CFAs will be allowed to extract honey, deadfall firewood, and medicinal goods from the forest.

For philanthropists, the challenge will be to find and support innovative work. Part of this challenge involves scaling up what works. In a 2006 organizational update, for instance, Wanjira Mathai pointed to the success of the Green Belt Movement’s Billion Trees Campaign as a sign that the international community is slowly moving in this direction: “The launching of the Billion Tree Campaign in November during the Climate Change Conference in Nairobi was a great success. To date, individuals and institutions around the country have committed to plant over 123 million trees.”

But innovation also requires breaking down the barriers between various issue areas and developing funding models that integrate grantmaking, social investment, and policy advocacy. “The combination of microfinance and renewable energy is a really important enabling innovation,” Kauffman said. SELCO India, another social investee of the Good Energies Foundation, was a pioneer in the financing of solar power through micro-credit. “It was challenging at first, because many microfinance institutions are cash-flow lenders, not asset-based lenders, but now that SELCO and others have shown that this can work, we’re hoping that microfinance can help low-cost solar projects become more sustainable.” Kauffman points to ARC Finance and Micro Energy Credits Corporation as two pioneering intermediaries in the financing field. (Indeed, by using revenue from carbon offsets for forest preservation in local communities as capital for low-cost solar systems, Micro Energy Credits’ model gets a double bang for the buck.) “These companies may not be viable as straight commercial investments – yet. But there is definitely room in this space for philanthropic venture capital to help get them there.”

Kauffman insists that the elimination of kerosene lighting is an attainable goal within the next fifteen years. “By our estimate, providing a 50-watt system – enough to power lights, a radio, and, possibly, a small television – to the 1.6 billion people who currently lack access to electricity would cost roughly $150 billion. That’s less than the size of the AIG bailout.” Kauffman likens the challenge of low-cost solar to disease eradication. The key, he continues, is finding the right combinations of technology and financing – along with the right management teams - and then scaling them up. “What’s so exciting is that there is a finite number. We can foresee the elimination of kerosene lighting in 10-15 years if we shine a spotlight on it.”