· Green finance: FONPLATA’s Strategic Plan 2018-2022 has at its core a commitment to finance climate change operations, but also aims at reducing the time to identify, assess, and approve these operations (low transaction costs). The Rapid CRVA tool makes this feasible.
· Transparency: The CRVA tool is a resource that helps the Bank’s increase its transparency on climate related investments.
· Cost-effective: A CRVA does not need to be costly in time and money to be useful on the ground and to orient engineers and (municipal) decision makers toward climate smart designs and planning.
· Client relationship: since the tool is cost-effective and does not incur in unnecessary delays, it strengthens the client relationship.
|Date Policy /Tool Established||How established?|
|Rapid Climate Risk and Vulnerability Assessment (R-CRVA).From September 2019 this tool was designed and adapted to FONPLATA’s particular characteristics (through outside consultants: TYPSA-ASEA). The first application started in early 2020.||In July 2018 FONPLATA signed a Regional Framework Loan (USD 60 million) with the European Investment Bank (EIB), that contains a key element of Technical Assistance (with LAIF funds). The loan focuses on climate change adaptation and mitigation projects . Refinement and application of the Rapid CRVA tool by TA consultants (externally funded) has been achieved in close coordination with the Strategic Alliances Unit (UCAE) and the Social and Environmental Unit of FONPLATA.|
|How is the tool implemented?||Additional capacity required?|
|The TA consultant that dedicates part of his time to the tool presented here is working within the existing FONPLATA structures and in close coordination with staff in HQ and in the national offices (5 countries).||One outside consultant, integrated into the existing structure, dedicates around 75% of his time to developing and applying the CRVA tool. A local staff member dedicates a considerable part of her time helping with the CRVAs.|
|Monitoring, reporting tools||Specific and detailed R-CRVA reports for each project or area of focus and a general methodological report outlining the key steps and available tools.Monthly reporting to EIB and FONPLATA on all TA activities, incl. progress with the Rapid CRVA tool. The same goes for the 6-monthly progress reports by the consulting company (that are a contractual obligation to the sponsor, the EIB).|
Introduction to the Policy/Approach/Tool
The Environmental and Social Management System of FONPLATA lacked a tool for assessing climate vulnerability and risks, that is geared to maintain the Regional Development Banks’ quick response time for loan approvals and ensure key climate information for assessing the risks (financial, reputational, operational) for the bank and its clients. A relatively inexpensive and quick Climate Risk and Vulnerability Assessment tool was developed, with external financial support, that combines with the Banks’ Environmental and Social Standards to lower those risks. The tool is in line with the recently released IPCC 6th Assessment Report (AR6) that carries out comprehensive risk analysis on compound extreme weather events. It helps to avoid risks of poor adaptation to climate scenarios and high adaptation costs in the future. At present, an average of two R-CRVAs are elaborated each month, each filling in part of the picture of where in FONPLATA’s member countries (Argentina, Bolivia, Brazil, Paraguay, Uruguay) specific climate risks and vulnerabilities should cause concern.
Development and design
The tool measures climate risks and vulnerabilities using mainstream, online available datasets, that are typically accepted and used for CRVAs. When new tools become available, they are reviewed and included in the toolbox, either to replace an existing tool, when being more robust, or to complement the existing tools with new data and modelling. Most investment projects financed by FONPLATA are located within the coordinates 5°S to 41°S and 33°W – 69°W. Considerable time was spent to organize relevant sets of high-resolution climate data within this area in order to have access to most of this information by entering sets of coordinates corresponding to the area of interest for a particular loan. From this point it is a matter of a few days to produce the first version of a R-CRVA, which will present the most typical climate parameters in a document of 20 to 30 pages.
Basic elements of a Rapid CRVA:
- Project localization and influence area
Visualization of the project area: the map may span between 4° to 5° in latitude and longitude. Topography is shown, relevant for the interpretation of the precipitation and temperature maps.
- Precipitation and hydrology
Hydrology is a key hazard to infrastructure projects financed by FONPLATA. Therefore, the sections on hydrology generally occupy a large part of the Rapid CRVA reports.
- Precipitation projections and anomalies
Calculation of a “climate change factor” such as the expected change in rainfall in the future, compared to a baseline (CESM1 CAM5 model, running a RCP6.0 scenario for the 2080s).
- Temperature and heat stress
the temperature section in the CRVA reports starts by showing the anomaly between the baseline situation and values obtained from scenario modelling. Where relevant Urban Heat Islands are pictured. Since February 2021 the Rapid CRVA includes an adapted version of the Global Heatwave and Warm-spell Record (GHWR) toolbox.
- IDF-curves and micro-watersheds
The IDF (Intensity, Duration, Frequency) database and curves are key information for FONPLATA to approve a loan, since they are a way to find out if an infrastructural design (e.g. a bridge) has taken into account expected rainfall under probable climate change scenarios.
- Drought and risk of wildfires
The toolbox includes the GRACE-FO tool (NASA). Based on gravity variations, GRACE measures groundwater storage on land. Anomalies are calculated to see where groundwater storage has been depleted. It documents periods of drought and stress on the water table affecting water supply, thus providing excellent data for discussions of climate smart measures at the local level.
- Sea-level rise
When investing in development projects in low lying coastal areas, sea-level-rise should not be ignored. A well designed tool is the Coastal Risk Screening Tool from Climate Central.
- Ecosystem change and climate zones
For a good visual presentation of the effects of climate change over large areas, the tool compares the present situation using maps of the Köppen-Geiger climate classification at an unprecedented 1 km resolution with projected future conditions (2071–2100; scenario RCP8.5).
The results of a Rapid CRVA are discussed with local authorities who propose or manage a loan from FONPLATA. This orients them and their engineers not only toward better project designs, it also shows the need for strategic investment planning tools, such as a storm drainage master plan or climate risk contingency plans. As an example, some findings of a CRVA for a project in Brazil: Urban sustainable development in the city of Corumbá.
Extreme Precipitation: Interactions between local extreme precipitation events and high-water level in the river system point to increased probability of flooding in the future. Extreme events are likely to intensify. Change in design of drainage works is needed.
Rising temperatures: Temperatures in the city are increasing. The average increase towards 2080 is likely to be between 2.5 to 3.0 °C. The figure shows temperature anomaly of the baseline situation compared to the CESM1 RCP6.0 scenario for the 2080’s (Corumbá is the pink square). Green public spaces with a design based on the best natural cooling possible, are therefore very important and urgently needed.
Experience and impact
A Rapid CRVA will be most effective when initiated at an early stage of the project cycle to ensure appropriate adaptation measures are part of project planning, design, operation and maintenance to ensure adequate levels of climate resilience. In any case, the tool strengthens FONPLATA’s ability to analyze which climate risks are present in its portfolio and pipeline of new investments, as well as the most appropriate ways to help clients manage their risks. It also facilitates the implementation of the Climate Bank Roadmap 2021-2025 of the EIB. In this sense, the tool is instrumental to two development banks, one active on a global scale, the other on a (sub)regional scale.
Since the R-CRVA is relatively inexpensive and fast it can be replicated by other local and regional banks, including MDBs. For the same reason, the tool can strengthen the ability of small and mid-sized cities to create resilient and sustainable urban development plans.