Financing challenges in a multi-risk world

A convergence of several risk drivers–including climate change, chronic poverty, insecurities, and displacement–create the compound crises we see across the globe today. The impacts of climate change disrupt food, land and water systems and erode the resource base in many rural and increasingly urban areas. Unsustainable levels of national debt, chronic poverty, and growing inequality cripple countries’ and communities’ ability to invest in infrastructure and services required to achieve the sustainable development goals. Disaster-related displacement and growing fragility in weak governance environments are destabilizing communities and whole regions. At the same time, the global humanitarian community and national institutions in affected countries are increasingly resource constrained. Already low budgets are being further stretched to address a growing number of crises—a situation exacerbated by high inflation (in many countries) and growing donor fatigue. In 2022, global humanitarian aid reached US$ 24 billion, but despite this high figure, most humanitarian appeals remain underfunded, including in countries with high levels of food insecurity and crisis risk [1].

In this context, existing financing mechanisms, particularly international and regional ones, must be evaluated for their potential to create synergies across development goals, crises prevention, and climate action [2–5]. For example, there is considerable potential for climate funds to support improved social protection while furthering adaptation goals [2]. Further, the Green Climate Fund, in principle, can and seeks to contribute to peacebuilding and security [6], (though its results management framework still does not make direct reference to conflict and peacebuilding) [7].

Current levels of climate financing for adaptation, however, remain insufficient. Of the US$ 68.3 billion of bilateral and multilateral public funding for climate action in developing countries in 2020, only 34 per cent was dedicated to climate adaptation [8]. Moreover, there are severe global inequalities in accessing development finance [9, 10]. Most climate finance, whether for mitigation or adaptation, still comes in the form of market-rate loans and balance sheet financing, rather than as grants of subsidised loans, further increasing debt burdens of low- and middle-income countries [11]. Limited financing options make it essential for countries affected by climate change to ensure that the financing they access can create synergies with humanitarian and development budgets [12].

Climate finance has an established political framework (i.e., the United Nations Framework Convention on Climate Change, or UNFCCC) and a series of financing mechanisms (e.g., the Green Climate Fund, Adaptation Fund, etc.). This financing holds the potential, in principle, to address not only its main purpose of climate mitigation and adaptation, but also to address multiple risk drivers. Conversely, reducing environmental degradation, poverty and inequality, and displacement as well as investing in social protection, food security, peacebuilding and disaster risk reduction can directly mitigate the negative impacts of climate change as well as contribute to transforming food systems, which are at the heart of most crises [13].

For these mutual benefits to emerge, and for climate finance to contribute more significantly to crises prevention, the agendas across the various domains must become more aligned. This alignment must take place beyond political statements and global policy frameworks. Rather, it must become a core feature of local and national investment planning cycles. Aligning several factors may enable coherence: the timeframes for planning, implementation, and monitoring; the principles and mechanisms of targeting action; the choice and modalities of existing and new partnerships and institutional arrangements at local, national, and international levels.

For this review, we examine how investments in food, land and water systems can reduce the risk of crises if aligned to harness multiple benefits. While previous literature has highlighted how climate finance can accelerate the achievement of the SDGs [14] or contribute to development goals in specific sectors [15], this review highlights how existing and new investments in strengthening food systems, in land use planning and in integrated water resources management have the potential to simultaneously reduce crisis risk across several domains by contributing to peacebuilding, increased social cohesion, reducing displacement and increasing food security.

Opportunities in food, land and water systems: Generating multiple benefits and reduce crisis risk

The Intergovernmental Panel on Climate Change (IPCC) in its latest Assessment Report has identified several key adaptation categories for the most representative climate risks [16]. A global review of science and evidence from the ground, the IPCC categories include practices from agriculture, land and water management, livelihoods support and food systems strengthening. Here we group the IPCC categories according to the main action areas needed to transform food, land, and water systems in a climate crisis: de-risking, rerouting, and realigning [17] (Table 1). This allows us to better understand how alignment of practices and links to climate finance can contribute to building resilience.

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Table 1. Examples of adaptation in food, land, and water systems contributing to i) peace building and increased human security, ii) reduced displacement and stronger host community resilience and iii) poverty reduction and food security, reducing crises risk and harnessing multiple benefits.

https://doi.org/10.1371/journal.pclm.0000355.t001

De-risking actions focus on securing resilient livelihoods and value chains through early warning systems and adaptive safety nets. Rerouting actions stimulate climate-resilient sustainable practices. Realigning actions focus on improving policies and finance. The examples presented for each of these three action areas, show how existing investment in food, land and water systems can generate higher returns. However, several enabling factors also must be considered as they contribute to more coherent and effective programming for these action areas. These are timeframes and planning horizons, the targeting of investments, and the partnerships and institutional arrangements that need to be in place.

Timeframes: From short-term response to multi-year programming

Aligning timeframes for planning and implementation across relevant programs and institutions, particularly at national and local levels, is possibly the lowest hanging fruit in the coherence agenda, with a significant multiplier effect. Most importantly, aligned or at least compatible planning horizons are a prerequisite for climate finance to become accessible and useful to humanitarian actors. Whereas humanitarian response within acute crises understandably operates on shorter time horizons than climate adaptation or social protection programming, in the areas of peacebuilding and displacement response and prevention, this does not have to be the case. The challenge lies in tying together the currently divergent mandates, and consequently the time frames of planning and implementation across these domains. For example, frontloading coherent and conflict-sensitive humanitarian and development investments pre-crises (anticipatory action) can improve inclusion of relevant stakeholders when the institutional infrastructure is mobilized in response to a disaster or conflict. During crises, climate-sensitive investment in food, land, and water systems can contribute not just to meeting basic needs, but also to transforming livelihoods and strengthening social cohesion. Examples include, for pre-crisis, forecast-based mechanisms, with allocation of financial resources and interventions agreed in advance for the implementation of early actions [89]. Anticipatory action in the form of cash transfers ahead of forecast flooding in Bangladesh (see Table 1 [23]) is an example of how punctual, short-term yet timely interventions–sometimes delivered by humanitarian agencies–can have mid- to long-term benefits in increased resilience. Post-conflict, environmentally sustainable agricultural practices have the potential to promote social cohesion. For example, fostering such practices among cocoa producers in Colombia and Côte d’Ivoire can provide a valuable contribution to post-conflict peacebuilding, constituting an example of aligning timeframes for climate change adaptation and crisis prevention [90].

The most critical factor in aligning efforts is the connection and sequencing of funding timelines. In international cooperation, the current country development frameworks negotiated between host governments and UN country teams, for example, offer a potential platform for aligning timelines in support of multi-year development strategies—from planning to implementation to monitoring. Several international humanitarian agencies have shifted from reactive programming to multi-year country and regional proactive strategic planning. For example, the World Food Programme has begun to develop 5-year Country Strategic Planning Frameworks that are supposed to be accompanied by longer-term and coherent yet flexible budgets that allow for emergency programming to be delivered in a timely manner but also in pursuit of the long-term objectives [91].

Planning and targeting: Moving towards conflict-sensitive area-based approaches and universal access to services

Aiming for the mutual benefits that climate action and investing in connecting social protection, solutions to displacement, disaster risk reduction, and peacebuilding may bring has implications for processes of planning and targeting. Currently, land rehabilitation or food security often target particularly vulnerable communities rather than take an area-based approach, which may be more appropriate in the context of larger climate financing programs. In the context of social protection, including consideration of climate change may require expanding the coverage of regular social protection schemes that provide basic welfare and seek to address chronic poverty and livelihood challenges for groups considered most at risk of climate shocks. As previously shown, managing the poverty impacts of climate change may not mean new social protection policies need to be put in place, but rather that existing ones need to be ramped up or refined [53]. For this, new approaches to targeting will have to be found, however, to buffer both idiosyncratic shocks that affect only individual households as well as covariate shocks that have an impact on whole communities. In the context of climate change where whole areas are affected by negative impacts of environmental shocks or disasters rather than just specific population groups, targeting for social protection may need to take a different form, moving towards area-based approaches and including more explicit resilience objectives in its food security and land management activities [92]. For example, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India has the potential to contribute to climate change adaptation by moving from predefined target groups and works outputs to participatory priority setting involving the whole community [93]. In addition, such public works schemes can increase climate resilience by investing in construction in risk-prone areas and in physical adaptation measures. In Ethiopia, social protection schemes were coupled with reforestation goals, increasing tree cover by almost 4 per cent over a 15-year period (see Table 1).

In the context of displacement, similarly, long-term resilience building of displaced communities often already requires approaches that include the host communities. The need for a more inclusive universal approach that goes beyond specific targeting will be particularly relevant in climate change affected regions where more communal land use and water management, resource allocation, and livelihoods diversification are critical components of durable solutions [94]. For example, inclusive, area-based approaches to planning for relocation in the face of sea level rise risk in the Pacific can ensure sustainable climate adaptation and long-term resilience building of at-risk communities through consultation and negotiation [95].

In fragile and post-conflict contexts, climate adaptation actions that ensure an equitable distribution of adaption benefits can contribute to ongoing peacebuilding efforts (see Table 1 [46, 47, 96, 97]). More coherent targeting of investment may be required, however, through conflict-sensitive National Adaptation Plans and by developing climate adaption and peacebuilding interventions within climate vulnerable areas and communities [98]. To promote coherence at national and local level, donors have an important role to play, in that they can not only increase their support for conflict-sensitive and more flexible adaptation funding but can also tweak common targeting criteria in social protection and livelihoods programmes. Making targeting requirements more flexible overall, allowing for a move from targeting certain socioeconomic and demographic groups to targeting broader communities and locations at risk from climate change, and including a broader range of eligibility criteria that are relevant to climate security, can create new conditions for climate-smart and conflict sensitive programmes across development outcomes.

Finally, current approaches to both climate change adaptation on the one hand, and investments in poverty reduction, social protection, solutions to displacement, and peacebuilding on the other, often have a limited understanding of intersectional inequalities and how they relate to climate risks [99–101]. Programmes are often created in ways that are blind to the different ways in which climate change impacts are mediated by gender, sex as well as age, disability, ethnicity, caste, and other characteristics; this limits effective targeting that could produce climate adaptation benefits as well as various development outcomes and stability. Therefore, for certain areas, such as social protection or solutions to displacement, programme design may need to go beyond aiming for resilience at the household level and instead think of resilience at the individual level, considering specific challenges as well as capacities [99]. For example, designing social protection to better support women’s climate resilience entails both supporting women’s ability to respond to climate change and reducing root causes of their disproportionate vulnerability such as differences in resource control, livelihoods, and empowerment. Gender-related considerations for social protection program design can include assessing the feasibility of targeting women as the main recipients of intervention, providing complementary programming that may be particularly relevant to women’s needs such as training on climate-smart practices, considering time burdens and safety of program activities, framing activities to households and communities in view of local norms such that women are able to fully participate, and ensuring women’s preferences are incorporated in the design and delivery of programming.

Institutional arrangements and partnerships: Coordinated national planning and jointly implemented local action

For mutual benefits to emerge more strongly from climate action on the one hand, and efforts to reduce poverty, displacement, and conflict on the other, organizational alignment is necessary within different types of institutional arrangements: from policies to budget planning, from working groups and programme coordination to funding streams, from national coordination mechanisms to international partnerships. While there are some exceptions, coordination between different development and humanitarian sectors, climate action, and peace and security programmes often are ad-hoc and lack a common vision. Such a vision at national as well as regional levels, underpinned by adequate financing, is the foundation for the types of institutional arrangements that will be required in the future.

Negotiating climate finance, including support for national adaptation to climate change, has become a matter of strategic importance to countries. As a result, the development of national adaptation plans (NAPs) and updating National Determined Contributions (NDCs) today are usually under the leadership of senior figures within a government. While specifically dedicated positions and departments can create siloes, the central position of climate action planning in many countries carries the possibility of enhanced coordination and cooperation across line ministries and sectors. Where such alignment is happening at the national level, in principle this could be more easily recreated at provincial and district levels, with more coordinated planning of budgets down to the community level. Further, even though integrating climate solutions in national-level strategies is crucial, it is equally important to involve representatives from local and sub-national levels in this integration process. Participatory land-use planning as for example done in Mindanao, Philippines (see Table 1 [78]), can contribute to the triple outcomes of strengthened social cohesion, increased climate resilience and reduced conflict risk. Such inclusive approaches provide a solid foundation for implementing actions that are tailored to local contexts and have the requisite support for effective implementation [102].

Importantly, international actors such as humanitarian agencies or development cooperation and research partners can tap into existing national visions and coordination mechanisms as well as actively support and strengthen them. There are examples of social protection programmes that have adopted such a national vision that includes climate risks, such as India combining social protection and water conservation through the MGNREGA programme or Ethiopia using its Productive Safety Net Programme (PSNP) [27]. However, coordination across relevant but distinct and sometimes institutionally distant sectors is inherently difficult as different political agendas, technical languages, and administrative processes need to be accommodated. In addition, international humanitarian and development actors must learn to engage with a new set of and in support of more effective engagement, this may need to review their own institutional set-up and processes.

Working at the triple nexus of humanitarian response, development investment, and peacebuilding, means renewing the focus on truly collaborative partnerships between local institutions from both government and civil society. As most conflict arises from local grievances and insecurities, escalating to national or regional levels, linking community-based response, climate action, and peacebuilding may be most effective in creating the transformative processes required for lasting change. Importantly, financing will have to reach local levels more directly and predictably, and with longer timeframes than currently allowed for under humanitarian budgets.

Conclusions

A convergence of several risk drivers creates the compound crises we see across the globe today. At the same time, the global humanitarian community and national institutions in affected countries are increasingly resource constrained. In this context, existing financing mechanisms should be evaluated for their potential to create synergies between social protection, peace, and inclusion objectives on the one hand and climate resilience outcomes on the other. Climate finance has an established political framework and financing mechanisms, which can, in principle, address multiple risk drivers. Real-world examples, creating multiple benefits across development goals, crises prevention and climate action, as presented here, already exist. For these mutual benefits to emerge, however, and for climate finance to contribute more significantly to crises prevention, the currently disparate policy and program timeframes, planning horizons, targeting practices, and institutional set-ups need to be become better aligned. While there is growing recognition of this requirement, coherence between the ministries and departments responsible for the different policy areas is still a challenge and partnerships between the providers of currently separate services rare. By incentivizing increased alignment through its climate and development financing architecture instruments, however, national governments and the international donor community can accelerate progress and increase the economic and social return on its investment.