Equity and efficiency in adaptation finance: initial experiences of the Adaptation Fund

The Adaptation Fund, established under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), has now been approving funding for adaptation projects for more than two years. Given its particular institutional status and specific focus on concrete adaptation, it is particularly relevant to study the initial experiences of it for any future upscaling of international adaptation finance, despite the fact that its own resources are getting scarce. Alternative rationales for allocating funds, based on equity and efficiency concerns at both international and subnational levels, are here tested against the criteria and priorities of the Fund and decisions made on project approval. It is concluded that equity concerns appear to be the primary motivation and that allocation is de facto made between states rather than by considering inequity between subnational communities. However, the currency of vulnerability for determining equitable outcomes in allocation decisions has not been formalized, despite its central importance to the Fund. Instead, uniform national caps have been introduced. Such an equality approach can be considered inequitable. Finally, it is noted that although the Adaptation Fund Board has continuously developed its proposal review practices and adopted a learning-by-doing approach, it should provide both a further specification of the evaluation criteria and a compilation of best practices from approved proposals, and moreover enhance the transparency of the review process, all of which would clarify its core priorities for current and future project proponents.