2011 Carbon & Climate L. Rev. 190 (2011)
Investing in Adaptation: Mobilising Private Finance for Adaptation in Developing States

handle is hein.journals/cclr2011 and id is 198 raw text is: 190   Investing in Adaptation                                                            CCLR 2~2011

Investing in Adaptation: Mobilising Private
Finance for Adaptation in Developing States
Kate Miles*
This contribution looks at public and private financing of climate change adaptation
from an equity perspective. Having set out the key concepts and provided an overview of
the current international legal framework for adaptation, it considers ways in which the
current funding shortfall for adaptation could be filled, including through reform of the
CDM. Bearing in mind the currently unrealized potential of this instrument to support
equitable adaptation activities in developing countries, the paper explores the idea that
'bonus CERs could be awarded to projects supporting adaptation. Ultimately, both
in relation to the CDM and more generally, the paper concludes that mobilizing private
sector finance for adaptation will require 'nuanced, hybrid approaches utilizing both
incremental regulatory shifts and market mechanisms.

I. Introduction
The private sector is deeply involved in climate
finance initiatives designed to reduce carbon emis-
sions. Indeed, recognition of the commercial poten-
tial presented by certain climate mitigation activi-
ties has accelerated the development of new mar-
kets, technology, and mechanisms, such as renew-
able energy markets, emissions trading schemes,
the Clean Development Mechanism (CDM), energy-
efficient technology, and their supporting indus-
tries. The same, however, cannot be said for adapta-
tion finance. In many respects, it is this clearly visi-
ble capacity to generate profit from mitigation
activities that has differentiated the character of the
mitigation and adaptation financing fields. Further-
more, as adaptation requirements are also often
closely entwined with a state's development needs,
the 'public-oriented' nature of financing sources
has been reinforced.
Recently, however, as substantial funding short-
falls become apparent, attention has turned to the
role of the private sector in financing adaptation
measures in developing states. Indeed, the Copen-
hagen Accord refers expressly to the need for a
wide variety of sources of finance for both mitiga-
tion and adaptation, including private and 'alterna-
tive' sources of funding.1 This article explores the

implications of such a shift in emphasis and the
increasing focus on the private sector in financing
adaptation. In so doing, it examines considerations
of equity for developing states, controversies sur-
rounding the mitigation/adaptation discourse, mar-
ket mechanisms to mobilise private finance in
adaptation, and reform of the CDM. In particular,
this paper examines possible ways in which to
incentivise more adaptation-focused CDM proj-
ects and create synergies between mitigation, adap-
tation, and sustainable development objectives.
In the course of this analysis, it becomes clear
that issues of equity are necessarily implicated in
questions of climate adaptation and its financing.
On a fundamental level, climate equity entails a
consideration of developed state responsibility for
dangerous anthropogenic climate change and the
provision of assistance to those most vulnerable to
Senior Lecturer, Faculty of Law, University of Sydney, Australia. I
would like to thank Bryce Rudyk and James Chapman, both of
NYU School of Law, for numerous conversations on these issues
during the Copenhagen Climate Conference. I would also like
to thank the participants in the UCL/University of Hong Kong
conference Climate Change Governance After Copenhagen,
held in November 2010, for their comments on this paper.
1 Decision 2/CP.15, Copenhagen Accord in Report of the Confer-
ence of the Parties on its Fifteenth Session, held in Copenhagen
from 7 to 19 December 2009, UN Doc. FCCC/CP/2009/1 l/Add.i,
30 March 2010.

CCLR 212011

190 ] I nvesti ngin Adaptation

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