Managing Climate Risk for Urban Poor
in Asia
Source: World Bank 2011
Protecting the poor and the prospects for growth in Asian cities
against weather-related impacts and extreme events
Business Case
June 2013
1
Table of Contents
1
2
Intervention Summary ......................................................................................... 4
Strategic Case..................................................................................................... 7
2.1 Context and need for ICF intervention .......................................................... 7
2.2 What are the best approaches to tackling these factors and protecting the
urban poor from climate change impacts? ............................................................ 13
2.2.1 Harnessing the role of the private sector and markets for urban climate
change responses ............................................................................................. 15
2.2.2 Impact and outcome that we expect to achieve .................................... 18
3 Appraisal Case .................................................................................................. 20
3.1 What are the feasible options that address the need set out in the Strategic
case? .................................................................................................................... 20
3.1.1 Option 0: Do Nothing and the counterfactual ........................................ 20
3.1.2 Option 1: Direct management and procurement by DFID ..................... 21
3.1.3 Option 2: Partnership model with Asian Development Bank, Rockefeller
Foundation ........................................................................................................ 22
3.1.4 Option 3 – Scale up city climate change and disaster risk planning ..... 23
3.2 Social appraisal ........................................................................................... 29
3.2.1 How could social development and gender issues be addressed within
the programme to benefit women and girls? ..................................................... 31
3.3 Climate and Environment Assessment ..................................................... 322
3.4 Institutional and political appraisal............................................................... 33
3.5 What are the costs and benefits of each feasible option? ......................... 333
3.5.1 Approach and assumptions guiding options appraisal .......................... 35
3.5.2 Counterfactual and Options appraisal .................................................. 40
3.5.3 The Cost Benefit Analysis results ......................................................... 42
3.5.4 Recommended option........................................................................... 43
3.5.5 Theory of Change for proposed programme......................................... 44
3.6 Rationale underpinning theory of change .................................................. 455
3.6.1 How will the partnership lead to the desired impacts? .......................... 45
3.6.2 Country and city selection..................................................................... 46
3.7 What does the proposed programme look like? .......................................... 47
3.7.1 What will the programme do? ............................................................... 47
3.7.2 How is ADB organising itself to improve poor people’s lives .............. 522
3.7.3 How will the investment component be deployed? ............................... 52
3.7.4 Why should DFID fund this intervention?............................................ 555
3.7.5 Links to HMG/DFID and ICF Strategic Priorities ................................. 566
3.8 What measures can be used to assess Value for Money for the intervention?
.................................................................................................................... 56
3.8.1 Summary Value for Money statement for the preferred option ............. 57
4 Commercial Case.............................................................................................. 60
4.1 Indirect procurement ................................................................................... 60
5 Financial Case .................................................................................................. 62
6 Management Case ............................................................................................ 67
6.1.1 Overall governance structure for the programme – The Partnership
Council
67
6.1.2 Our approach to managing the programme within DFID ...................... 71
6.1.3 Special reports and Deep dives ............................................................ 71
Endnotes .................................................................................................................. 76
2
Acronyms
ACCCRN
ADB
BCR
CDEL
CDIA
CoP
CP3
CRF
CSO
DMC
DMF
DRR
FTE
GCF
GHG
HFA
HMG
ICF
IDC
KAS
KPI
LICs
LCD
MDB
M&E
MEF
MICs
MoU
NPV
NGO
OCO
PIDG
RCT
RDEL
RF
RSDD
SIDA
TA
TF
UCCR
UEIF
UFPF
UN
UNFCCC
Asian Cities Climate Change Resilience Network
Asian Development Bank
Benefit Cost Ratios
Capital Departmental Expenditure Limit
Cities Development Initiative for Asia
Community of practice
Climate Public Private Partnership
Corporate Results Framework
Civil Society Organisation
Developing Member Countries
Design and Monitoring Framework
Disaster Risk and Reduction
Full Time Equivalent
Green Climate Fund
Greenhouse Gases
Hyogo Framework for Action
UK Government
International Climate Fund
Indefinite Delivery Contract
Knowledge Awareness Surveys
Key Performance Indicator
Low income countries
Low Carbon Development
Multilateral Development Bank
Monitoring and Evaluation
Monitoring and Evaluation Framework
Middle Income Countries
Memorandum of Understanding
Net Present Value
Non-Governmental Organisation
Office of Co-financing Operations
Private Infrastructure Development Group
Randomised Control Trials
Resource Departmental Expenditure Limit
Rockefeller Foundation
Regional Sustainable Development Department
Swedish International Development Agency
Technical Assistance
Trust Fund
Urban Climate Change Resilience
Urban Environment Infrastructure Facility
Urban Financing Partnership Facility
United Nations
UN Framework Convention for Climate Change
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1 Intervention Summary
What is the programme aiming to achieve?
This programme will help cities plan for, and invest in, reducing the impacts of
weather-related changes and extreme events, and natural resource scarcity, on the
urban poor in 25 medium-sized cities in 6 Asian countries (Pakistan, Bangladesh,
India, Vietnam, Indonesia and the Philippines).
The programme will provide technical expertise to city planners, to help them identify
priorities for action in consultation with communities, develop practical projects for
public, private or public/private funding, and help the best projects attract funding.
These investments will deliver:

Improvements to the quality of plans and measures underpinning city
development in climate vulnerable areas. 20% (£760k per city) will be
provided as technical help to city planners to determine how their cities are
affected by weather-related impacts and extreme events, and consequent
impacts on water, energy, health and food. These funds will also be used to
identify the right policies, regulations and response measures. Two
investments per city will then be made, for instance, to develop early warning
systems, or flood mapping, or to make changes to regulations that guide
infrastructure design. These grant investments will serve to demonstrate to
others what can be done.

Additional public and private finance for new investment opportunities
that will protect the poor from climate impacts. 70% of support (£2.2m per
city) will go towards technical support for project preparation for larger-scale
investments in, for instance, water, drainage, wastewater, housing and flood
protection systems. Effort will be channelled into ensuring projects are
financially viable, have good potential for replication and scalability, and are of
benefit to those affected by climate and related impacts.

Promotion of effective schemes, demonstration and lesson learning
between cities and wider audiences on what works: 10% of support will be
used to support learning between cities, to build evidence from rigorous
monitoring and evaluation systems to capture and share best practice from
the pilots and plans.
The Rockefeller Foundation has been successfully applying such integrated planning
techniques in several cities such as Surat and Gorakpur in India through their Asian
Cities Climate Change Resilience Network programme. For example, in Surat, after
several devastating floods in the 80s, 90s and 2000s, with support from Rockefeller,
the city has:

Developed an early warning system to give people more warning of floods;
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


Developed flood defences;
Provided alternative accommodation for poor people living along the riverbank
(who were being flooded each year);
Started to develop a local weather model to increase early warning to four
days or more, which would allow controlled release of water from a dam
upstream to drastically reduce flood risk for the city.
Whilst the mix of responses will be tailored to the circumstances and needs of each
city, the Surat example is illustrative of the mix of early warning systems and simple
infrastructure that is likely to be appropriate in many vulnerable cities. This new
initiative will build on these tried and tested planning and project experiences further
and, by bringing in more funding, we will increase understanding and confidence in
what works. This understanding can in turn be used to influence the way city
developers and financiers invest in future.
How will this programme deliver?
DFID will establish this programme in partnership with the Rockefeller Foundation
and other potential donors (such as USAID) through a Trust Fund housed with the
Asian Development Bank’s Urban Financing Partnership Facility. Each of the three
partners brings unique strengths to the partnership. Combining our efforts in this
way will bring together highly complementary skills, well suited to the objectives of
this programme. AsDB’s strength lies in urban infrastructure development and their
ability to bring in new finance, The Rockefeller Foundation brings urban planning
skills gained through their 10-city Asian Climate Change Resilience Network. DFID
can provide the necessary technical assistance resources to support the planning
process, build capacity, and influence and develop viable projects for financing by
others.
The programme will be governed through both a partnership council and a technical
advisory board. Special annual reports on key risks will feed into annual reviews.
Independent evaluations of the programme will be held to support the Mid Term
Review and end-points of the programme. DFID will also fund a programme post
based in Manila to be part of the core team.
DFID will provide £85m over 5 years to the partnership. DFID’s funding will be
provided by the International Climate Fund as 70% CDEL and 30% RDEL.
Rockefeller Foundation’s contribution is £3.2m. The programme is fully consistent
with DFID’s Asia Regional Operational Plan, DFID’s “Future Fit” agenda and DFID’s
response to the Humanitarian and Emergency Response Review.
What are the programme’s expected results?
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The direct results of this programme by 2018 will include:






Directly protecting 1 million poor people (half of them women) and 1 million other
vulnerable people in the 25 cities across 6 countries, whilst indirectly protecting
several million others, from extreme weather and helping them adapt to the
impacts of climate change through city-wide and targeted investments (with
obvious indirect effects on more people).
Developing 25 “future fit” city plans, building the capacity of 5000 city planners
and stakeholders, and setting up “future fit” coordination bodies in all 25 cities.
Setting up 10 schemes in 11 cities, such as multi-hazard and health early
warning systems, improving water demand and conservation, and facilitating 30
community led solutions in targeted vulnerable areas.
Investing in 25 infrastructure projects such as drainage, wastewater and housing
systems or flood protection, which offer both city-wide and targeted benefits
against climate change.
Attracting $1.1bn of public, private and municipal financing by delivering 25
resilient infrastructure projects.
Influencing the Asian Development Bank to integrate climate change and disaster
risk reduction into all of its urban investments in the vulnerable sectors in the six
countries.
Why is this programmed needed?
Rapid urbanisation coupled with the rise in unpredictable changes in the weather
and extreme events means that there are an increasing number of poor people living
in vulnerable urban areas in Asia. These impacts hit poor people the hardest,
especially women and children – meaning losses to their earnings, savings, health
and possessions. These are made worse if they are already living in unsafe housing,
without access to basic services, or living in flood-prone areas. These factors will
threaten economic growth, poverty reduction, infrastructure, social cohesion, and
increase dependency on humanitarian assistance.
Asian populations and slum populations are projected to double by 2030, with nearly
60% of that growth in medium-sized and small cities. Half of the cities most
vulnerable to storm surges and sea-level rise will be in South and East Asia. Natural
disasters can erase between 1% and 5% of GDP each year especially in countries
with frequent events like Bangladesh.1 In these densely-populated cities with rising
populations, without proactive plans and investments, poor and vulnerable people
will struggle to cope with even heavy rainfall, let alone extreme weather events.
Further, as most of the infrastructure in the developing world is yet to be built, there
is an opportunity to enable cities to grow in ways which use resources more
efficiently, and protect the poorest residents.
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2 Strategic Case
2.1 Context and need for ICF intervention
The world is more urban: urban growth will mainly be in developing countries
1.
Nearly half the world’s population live in cities, a third of these in slums. By 2050
this will rise to 75%, and half the world will be living in slums2. So as the world’s
population grows from the current 6.8 billion people to 8 billion by 2030, and perhaps to
at least 9 billion by 20503, cities will most likely become the home for the additional 2 to
3 billion people of the future world population.
2.
The World Bank estimates that over 90% of urban growth will be in the developing
world, adding an estimated 70 million new residents in urban areas each year 4. Over
the next 20 years, the urban population of South Asia and Sub-Saharan Africa which
includes some of the poorest people in the world is expected to double and increase in
density. However, the bulk of this expansion will be in medium and smaller sized
cities not the existing sprawling megacities like Calcutta, Dhaka, Karachi, and Manila5.
It has been projected that by 2015 nearly 60% of the total urban population will be living
in cities of less than a million people. Figure 1 shows the growth in cities being primarily
between 1-5 million and under 500,000 populations. In Asia, half of the population
live in cities of less than 500,0006.
Cities are drivers of economic growth and of environmental risks
3. Cities are drivers of economic activity, innovation, and wealth. They attract migrants in
search of better jobs, services and prospects for improved living conditions. They are
anchors of regional economies and are often key drivers of national growth. However,
while cities are often engines of growth and prosperity in the short term, in the
longer term, they are
also drivers of
environmental risks
consuming 75% of all
natural resources and
responsible for 80% of
global greenhouse gas
emissions. As centres
of energy demand and
industrial production,
urban areas are also
responsible for 71% of
world’s energy related
CO2.
Figure 1: Total world population by city size class (millions)
Source: World Urbanisation prospects, Revised 2011 7
4.
This not only has consequences for the environment, but also creates negative impacts
on sustainable economic growth (Stern 2006). In the short term, poor resource efficiency
7
can increase economic and social costs substantially while pollution and reduced
biodiversity can potentially create negative effects. These costs are likely to increase
substantially over the coming years as resource constraints including energy, water, raw
materials, and food commodities continue to deepen. As the World Bank has recently
found the failure to account for the true costs of resource depletion is ‘now
threatening the long term sustainability of growth and progress made on social
welfare’.8 As a consequence, cities are at heart of solutions which promote economic
growth and sustainable development.
Frequency of disasters is rising in cities in Asia
5. In Asia, natural disasters routinely erase between 1% and 5% of GDP each year
particularly in countries like Bangladesh and many Pacific Island countries.9 The fact
that 77% of all disasters in Asia during 1975-2007 were weather-related suggests that
the onset of climate change will make the development of comprehensive disaster
management even more difficult.10 From 2005-2010, the Asia and Pacific region
continued to dominate disaster impact categories across regions of the world, with 34%
recorded disaster events (884 separate events11), 32% of deaths, 90% of people
affected, and 33% of economic losses due to natural hazard impact. The region bears a
disproportionately large share of total reported losses, relative to its wealth (i.e.
accounting for 29% of GDP in 2009). Asian and Pacific growth is 7.4% per year in real
terms, whilst reported losses from disasters if smoothed over the same period rises
more rapidly than regional GDP12.
6.
In the period 2007-2009 Asia suffered 95% of all natural catastrophe fatalities, but
only 8.4% of total insured losses,13 revealing the extent of under-insurance in Asia.
Where it exists, it has been concentrated. So, for example, flooding in Thailand resulted
in the highest insured losses ever for a single flood event, at USD 12 billion14.
Flood exposure and sea level rise in Asian cities is increasing
7. An index published by the OECD ranks 136 port cities of over 1 mn population with high
exposure to one-in-100 year, surge-induced flood events based on their exposure of
population and assets, in 2005 and those predicted in 207015. Population growth and
investment in urban infrastructure are the most important drivers for increase in
exposure to surge-induced floods. Overall, without any increase in water levels,
exposure of assets could still grow eight-fold.
8.
The OECD index overwhelmingly shows that large coastal cities in Asia have the
highest exposure to surge-induced flooding now and in the future. Of the 20 cities
with the highest population exposure in 2005, half are in low-and middle-income nations
in Asia. In real numbers, out of the total 38.5 million people currently exposed, 65 per
cent of them live in Asian cities. In the future, the index predicts that 17 out of the 20
cities with the highest population exposure will be in present-day low- and middleincome countries, 14 of them in Asia. Asia’s increasing dominance in terms of
population and asset exposure is a result of increased urbanisation and economic
growth during the period , compared with other regions.
9.
The Centre for Global Development’s 2009 report on Twenty cities most vulnerable to
storm surges and sea level rise16 also cites that of the 20 most vulnerable cities just
under half will be in Indonesia, Vietnam, Philippines, India, Bangladesh, Pakistan
and Myanmar. Risks are especially high in low- and middle-income countries where a
8
third to one-half of the population in cities lives in slums. Coastal cities will be doubly at
risk as sea-level rise increases hazards from coastal flooding and erosion. The
concentration of flood, and future sea level rise exposure in Asian cities only
underscores the need to integrate climate change and disaster risks management
into city development strategies.
One city every 5 years will be affected by a high impact, extreme event
10. The OECD study of 136 port cities also revealed that there is a 74% chance of having
one or more of the 136 cities affected by a 100-year flood event every year, and almost
100% chance of having at least one city being affected by such an event over a 5-year
period. As a consequence, even assuming that protection levels will be high in the
future, the large exposure in terms of population and assets is likely to translate into
regular city-scale disasters at global scale. This makes it essential to consider both
adaptation as well as what happens when adaptation and especially defences fail.
There is a need to consider warnings and disaster response, adaptation
responses, as well as recovery and reconstruction strategies including aid.
11. Further these scenarios analyses also indicate, for examples in Bangkok and Manila, a
projected 1 in 30 year flood where current flood infrastructure plans are implemented,
these cities will see a 30-42% rise in flood prone areas over time17. This means that
not only is there an increase in populations exposed to flooding, flood prone areas
within cities are also rising.
Helping cities plan and protect against these risks protects long term economic
growth
12. For cities, the most obvious increased risk to economic growth, asset losses and poor
peoples’ lives comes from the increase in the number and intensity of extreme weather
events such as heavy rainstorms, storm surges, sea level rises, droughts and floods.
Negative economic impacts from disasters can have rebound effects in the job market
and reduce tax revenue. Indirect impacts such as lost productivity, reduced food
availability, interruptions to transport, commercial and industrial activity can also
affect economic activity in cities. These stresses on the local economy may limit
investment opportunities and deplete funds for infrastructure innovations. In addition,
higher risk and uncertainty stemming from global climate change imposes additional
costs on the insurance, financing and infrastructure industries. In Surat, India, the
chamber of commerce is involved with the municipality in resilient planning and in
investing for frequent flood events to ensure business continuity.
Delaying action has direct costs in terms of loss of life and economic costs
13. While climate change actions require significant investment, delaying action can
increase future costs and limit future options for adapting to climate change impacts
related to natural disasters or sea level rises. The Asian Development Bank review of
the Economics of Climate Change in South East Asia modelled the impacts of climate
change and confirmed that SE Asia is more vulnerable to climate change than the world
as a whole.18 The World Bank Economics of Adaptation to Climate Change studies
estimated that both the impacts and costs of adaptation are likely to be the highest in
the Asia region. Whilst not specifically about urban areas, the highest costs were
estimated for infrastructure and coastal zones. The study also highlighted that 80%
of the costs of adaptation will need to be borne by urban areas.19 Therefore, the
earlier the cities take action the better. A strategy based on growing first, tackling
9
environmental risks later is unlikely to be available to cities in the developing world
given the risks to growth from depletion of natural resources, climate change, and
global population pressures.
Much of the infrastructure in the developing world is yet to be built
14. Much of the urban infrastructure in the developing world is yet to be built (In the case of
India, 80% of 2030 infrastructure is yet to be built)20. This provides an opportunity for
cities to grow in ways which minimise the future economic impact associated with
different environmental risks. Helping cities protect their infrastructure, their people and
their core systems against the impacts of climate change will therefore boost long term
economic growth.
15. Flooding is particularly problematic in cities where basic infrastructure such as,
sewage and solid waste disposal systems are poor because flood waters quickly
become fouled by rubbish and waste, and access to clean water is diminished. The
scale of the risk from these extreme weather events is also much influenced by the
quality of housing and infrastructure in that city and the level of preparedness
among the city’s population and key emergency services.
Urban poor are on the front line – they are most vulnerable to loss of life, reduced
productivity, loss of homes
16. Some one billion people live in slums (half of whom live in Asia), and this is
projected to double by 2030.21 In most cities and towns in low - and middle-income
nations, risks fall disproportionately on the populations living on particular high-risk sites
and with the least adequate provision for protective infrastructure and services 22.
According to the Intergovernmental Panel on Climate Change23 (IPCC) vulnerability to
climate change is a function of exposure to climate variability and change, sensitivity to
climate shocks and stresses, and adaptive capacity of individuals and systems to the
negative impacts. Given exposure will be high in Asian medium-sized cities, the
poorest, and most excluded will be the most vulnerable to these impacts. Further, land
tenure, employment, financial security and availability of social networks affect the
sensitivity and adaptive capacity of the urban poor to climate change and disaster risk24.
17. People in low-income neighbourhoods are made even more vulnerable by overcrowded
living conditions, the lack of adequate infrastructure and services, unsafe housing,
inadequate nutrition and poor health. These conditions can easily turn a natural hazard
into a disaster through the loss of basic services, damage or destruction of homes,
reduction or loss of livelihoods, the rapid spread of water- and vector-borne
diseases, disability, and loss of life25. High dependence on food produced outside
of cities make urban residents even more vulnerable to droughts, flooding, and other
extreme weather events. Food and Agriculture Organisation studies in urban areas
show that a 10% rise in the price of a staple can hurt the bottom 20% of the
income distribution the most. 26
Women and children are affected more
18. The difference in fatalities of women and men can be substantial whether for
climatologic or other natural disasters. During the cyclone in Bangladesh in 1991, death
rates were 71/1000 for women and 15/1000 for men. In 2004, the Asian Tsunami in
Amapara, Sri Lanka fatalities among women was 3972 and 2124 for men.27 Analyses
of natural disasters on the life expectancy of men and women provides evidence that in
countries where women have low social status and access to resources, the differences
10
were larger.
Adaptation to climate change in cities needs to recognise the informal settlements
19. Adaptation to climate change requires local knowledge, local competence and local
capacity within local governments. It needs households and community organisations
with the knowledge and capacity to act. It also requires a willingness among local
governments to work with lower-income groups. Adaptation to the likely risks from
climate change for the next few decades centres around adapting buildings and
infrastructure to these increased risks; working with population groups and settlements
most at risk to find solutions that serve them; and good disaster preparedness. Some
initiatives are developing which build relationships between low-income communities
and local government, and mainstream climate change and disaster risks into
development policies and urban planning.
For the poorest, even low intensity events can affect access to basic services
20. For the poor, it is often the more frequently occurring low or moderate intensity events
such as localised flooding and fires that have the most significant impact. In
Kathmandu, Nepal rapidly growing squatter settlements are located along the banks of
the city’s three rivers on steep slopes. Because there is no solid waste collection
services, waste is regularly thrown in the rivers. The existing stormwater and sewage
networks operate at only 40% of their capacity because they are blocked by sludge
and debris. During monsoon season, approximately 25% of households regularly flood
due to inadequate drainage28.
Vulnerability and urban risks
21. Vulnerability for individuals and households is recognised to have three elements:
exposure to risk, susceptibility to harm when exposed and limitations in the capacity to
cope. This as we know from literature is influenced by household income, gender,
health, age, and class with women, young and low income groups cited as the most
vulnerable. Although data is weak on where cities have coped with disasters, and where
urban expansion has avoided dangerous sites, what is recognised is the reinforcing
factors of vulnerability – inadequate and poor quality housing in informal
settlements, lack of infrastructure and services for them, and inadequacies of
local governance.
22. Risk and vulnerabilities in cities manifest at different scales and intensities. It is often
the smaller events that have significant impacts on the poor. Action is unlikely to take
place unless disaster reporting for cities moves down to include smaller disasters and a
broader set of impacts (mortality and economic losses to include damage or destruction
of housing, schools and health centres (i.e. critical infrastructure).
Vulnerable people are not always the poorest
23. Friend and Moench state that it is important to note that those who are vulnerable to
future climate change impacts are not merely those who are currently poor or
close to being poor. Rather, vulnerability includes people who are vulnerable in
different ways to different degrees29. The growth of the ‘vulnerability gap’ in urban
areas increases disaster risks in urban areas. This vulnerability gap is produced by
two factors: the lack of knowledge and financial capacity (and sometimes willingness) of
urban authorities to reduce risks and vulnerabilities and a high proportion of urban
households with limited capacity to reduce their own risks. 30
11
Urbanisation of poverty
24. The 2012 IPCC Special report31 on Managing the Risks of Extreme Events and
Disasters to Advance Climate Change Adaptation states that there is very robust
evidence that rapid urbanisation has led to the emergence of highly vulnerable urban
communities, particularly through informal settlements and inadequate land
management. Poverty has begun to urbanise in Asian countries given rise to the term
urbanisation of poverty – indeed some research by Mckinsey Global Institute32 think that
poverty is now mainly an urban problem. The term can be defined as rising share of the
poor living in urban areas. Ravallion et al33 argue that urbanisation helped reduced
absolute poverty (national headcount indices fall) but has done little for urban
poverty reduction (poverty rates in urban areas). This means a renewed focus is
needed on reducing urban poverty rates along-side efforts on climate change.
Cities can serve as policy laboratories for action on climate change
25. Cities can be natural units for driving innovation, derived from a concentration of people
and economic activity that generate a fertile environment for ideas, technologies and
processes required to respond to the enormity of the challenge. Many cities also have
a high degree of self-governance which allows city policymakers to deliver integrated
policy responses that have a direct, systemic impact in addressing economic, social,
and environmental challenges. Many cities and metro city regions are taking action on
climate change even in the absence of national policies and commitments.
Institutional and government failures also need to be addressed
26. There are institutional and government failures that need to be addressed within a
coherent response on urban climate change and disaster risk reduction. These include
lack of political will, resource constraints, minimal public and private financing
and weak institutions.
 Of the public investment needed for these cities to cope with frequent disasters, the
majority will come from national taxation. But rapidly growing smaller cities tend
to receive a smaller share of resources and have weaker administrative
capacity than large metros. Without donor support, this public governance capacity
will be built later, after rapid unplanned growth often resulting in badly planned,
inefficient and ineffective infrastructure leaving poor people vulnerable to disasters
and climate change.
 Perverse incentives exist against investing in protection: People originally settled
in river deltas because regular flooding made the land fertile, now people live in low
lying land because it is cheaper and city governments routinely rebuild in areas that
have been devastated. This can be because people like living near water and people
have a tendency to not price rare, unpredictable events into their decisions.
Governments, therefore, need to intervene and spend more on preventing disasters
so as to cut their own future costs. According to the World Bank report on disaster,
urban poor and climate change in 2010, 20% of humanitarian aid is now spent
responding to disasters while a paltry 0.7% is spent on preventing measures.
Further, new studies on the economics of resilience reveal that every pound spent on
disaster planning, disaster preparedness, and other investments which help people
adapt to climate change, returned £3 in development benefits and avoided losses34.
Domestic, international and private sector finance will be needed to fill adaptation
financing gaps
27. International climate finance since Copenhagen has steadily been rising. Fast start
12
commitments have been met and apparently $33bn of adaptation financing is reaching
developing countries35. Tracking of this is poor, and country level and city level
mechanisms in place to absorb this finance are still nascient. Further, much of the
global needs for adaptation will need to be met in urban areas, and mobilised through
the private sector. However, of the $55 billion in private sector flows of climate finance
in 201036,the majority has been for mitigation purposes. This underscores the
importance of structuring adaptation programs to attract private sector
investment in climate change investments37.
28. Donor funding to cities by way of climate finance or development finance is still
limited. A relatively small proportion of donor funding for climate change adaptation is
focused on cities. An even smaller ratio of government and donor funding is being
targeted towards medium-sized cities. Further, the Green Climate Fund framework
established in Cancun is primarily channelled through bilateral or multilateral institutions
to national governments. This national level focus makes it hard to accommodate both
the differing risks and vulnerabilities at the city level and works against the local
ownership that is required for effectiveness and long-term sustainability.
29. UK is investing heavily in international climate change responses across our priority
countries through investments in the International Climate Fund (ICF). There is
momentum through the Future Fit strategy to allocate more funding for city level
resilience work. The ICF objective of reducing the vulnerability of poor people to the
impacts of climate change cannot be achieved without a coherent response focused on
the urban poor and vulnerable. It has to be a critical intervention in the ICF adaptation
portfolio.
2.2 What are the best approaches to tackling these factors and
protecting the urban poor from climate change impacts?
Integrated thinking is needed to tackle inter-connected risks
30. The 2012 Future proofing cities report argues that interconnected risks require
integrated thinking about potential solutions. The environmental risks relevant to cities
cannot be looked at in isolation: they are multiple, interlinked, and they are growing.
Cities are in the centre of the storm between driving forces of growth, urbanisation,
increasing urban slums, rising disasters, resource scarcity and damage to vital
ecosystems38. City dwellers deplete natural ecosystems to provide for their
consumption needs of their inhabitants. And cities are particularly at risk from changes
in the price of and disruptions to supply of energy, water, and food. Cities therefore
need to think in an integrated way by identifying policy solutions which can
respond to multiple, inter-related, and uncertain, risks.39 Many of these policies are
an extension of sound integrated urban planning and policy implementation.
Protecting cities from climate change impacts needs a mix of policy and financing
instruments
31. The World Bank report on cities, disaster and urban poor40 underscores several
recommended actions based on experience to help cities learn how to protect and
respond to climate change impacts especially for those at greatest risk. These are
highlighted below: strong institutions for more inclusive urban planning, better
local financing decisions, and participatory local governance.
Need for participatory planning and local governance to ensure political will
32. City governments have the potential to build inclusive and participatory planning
13
processes for good decentralised decision-making. The characteristics of effective
governance – decentralisation and autonomy; transparency and accountability;
responsiveness and flexibility – are all vital in boosting the climate change and
disaster risk responses of cities to disasters and climate change impacts41. Municipal
governments can also improve access to justice for poorer groups including women’s
groups, ensure that marginalised and disadvantaged groups are able to access and
influence local political and bureaucratic systems, and embrace a more systematic
consideration of whose voices should be heard, and how different opinions should be
included in the process of governance42. Incentives for this type of empowerment
are needed to ensure that the political will and leadership for good governance
continues. This political will and leadership amongst mayors will help drive adaptation
actions across medium-sized cities.
33. According to Satterthwaite and Mitlin (2013), low-income urban dwellers want, to
influence local and national government agencies which are tasked to support them,
and can design and implement and scale up their own locally led initiatives. They want
to be involved in planning processes43.
Local and city government financing is a key driving force for municipal governance
34. Revenue raising power of local governments is an important component of the selfgovernance of cities. Local governments play a vital role in financing and managing
basic infrastructure and service delivery for all urban residents. Basic services are the
first line of defence against the impacts of climate change and natural hazards. Budget
pressures are mounting in cities. Climate change action will impose increased costs. It
is very important that urban development finance takes account of the coherence
between climate change, urban development and urban planning frameworks.
Women and children are more vulnerable to impacts of climate change and disasters
35. Peoples’ vulnerability to climate change depends on their capacity to avoid these effects
or cope with them. This capacity depends on income, assets, education, and
knowledge and where there is a gender bias. The work burden of women after
disasters and extreme events increases when the provision of food, fuel, water is more
difficult and ill family members need to be taken care of. Many approaches impact men
and women differently and have to be carefully designed to reach women. For
example, it has been reported that early warning systems in Bangladesh have not
reached women because they were homebound.44 In order to effectively build capacity
to withstand the impacts from climate change, women and men need to be
meaningfully involved in planning, decision making in various sectors such as
energy, transport, water management, and disaster risk reduction and their
access to resources, services and infrastructure.
Learning from innovation in medium-sized cities
36. Cities such as Bangalore are starting to show how to unlock opportunities by combining
measures which incorporate rainwater harvesting and grey water reuse, recycling,
pollution control, and solar power systems to generate strong social, economic and
environmental benefits. These examples can be instructive for other cities facing similar
risks. Other policy solutions in the built environment such as the implementation of solar
orientated neighbourhoods and designing slum upgrade programmes to minimise
resource use are less widespread. Cities in emerging economies such as Curitiba,
Bogotá and Ahmedabad provide good examples of the power of integrated approaches
to planning urban development to tackle issues such as congestion issues and using
14
transport systems to unlock opportunities for more sustainable patterns of urban growth.
What works in terms of resilient investments
37. Evidence from lessons from Rockefeller Asian Cities Climate Change Resilience
Network programmes highlights
ten investments that emerged
through multiple urban resilience
planning processes for achieving
urban climate change resilience.
These are highlighted below in
Box 1.
Figure 2: Ten critical actions
for urban resilience
In addition, the UNISDR ten point
checklist45 for making cities
resilient highlights the need for:
(a) institutional coordination
mechanisms to understand and
reduce disaster risk based on
participation of citizen groups and
civil society, (b) budgeting
mechanisms (e) developing data/
vulnerability and risk
assessments (f) investing in and maintaining critical infrastructure that reduces risk, such as
flood drainage, upgrading of schools and hospitals (g) installing early warning systems (h)
enforcing realistic risk compliant building regulations (i) and land use planning (including
provisions for safe land for low income dwellers).
Building resilience principles into infrastructure investments
38. UNISDR’s resilient cities scoping study46 highlights the principles of resilience of
building redundancy and diversity of sources for urban systems, building flexibility so
that there are multiple pathways for action, safe failure to avoid catastrophic failure,
multi-level, networked, responsive, and feedback loops for learning capacity. That study
also highlights seven priority areas including disaster responses, urban planning/land
use planning, food security (land use planning for production within cities), waste
management, energy supply, transport and water management. There are significant
overlaps in priorities identified under these different processes.
2.2.1 Harnessing the role of the private sector and markets for urban climate
change responses
39. The key barriers for getting more private sector investments in adaptation and disaster
risk and reduction investments are related to the (a) enabling investment framework and
planning systems and to the (b) financing of investments on the other (See Annex 1).
With respect to the enabling framework and planning systems, there are shortfalls in:


Lack of capacity to conceive, design and structure projects in a way that beings in
private investment
Knowledge of best practice in integrated planning frameworks which provide
options for private sector involvement and investment (e.g. through Public Private
15




Partnership (PPP) structures);
Knowledge of technological options conditions under which the private sector is
the optimal choice;
Capacity and resources for designing/ implementing such frameworks, planning
systems and project development;
Knowledge of, and capacity for, budgeting frameworks for adaptation and
infrastructure47 - including those supplied by the private sector; and
Capital market enabling frameworks and instruments which restrict the provision of
long term private sector funding to local government infrastructure.
40. The barriers to achieving potential private sector investment and the most appropriate
use of the limited resources are:





Lack of provision of targeted incentives to the public sector to support the
incremental costs, and demonstrate the viability of, private sector financing of
adaptation and DRR investments (e.g. Public Private Participation investment in
infrastructure).
Lack of provision of targeted incentives, such as guarantees, to the private
sector to deliver appropriate support at the community level (eg insurance).
Lack of knowledge and capacity development in private sector and community
involvement in capacity building for understanding climate change impacts.
Lack of expertise for private sector provision of urban systems and investment in
the planning and project development.
Need for partners who have experience of guarantees, municipal finance
instruments, and insurance providers such as Infra Co, Swiss Re, Private
Infrastructure Development Group, (PIDG) and European Investment Bank.
41. Private sector has great possibilities with market potential in micro insurance, waste
management, affordable housing, off grid energy, microfinance, new technologies, and
water management. There are enablers within government, on the supply side,
demand-side and financial that could bring about constructive action. These include:

on the demand side, helping build demand generation, for financial products, to
enhance capacity to pay for home upgrading, weather proofing (eg storm surge
housing credit schemes)

financial enablers such as provision of patient capital funding by way of guarantee
funds, concessional debt, viability gap funding and technical assistance

supply side enablers such as market makers (demonstration projects), forging new
partnerships for insurance products.
42. Working on each of these enablers but in particular on the supply side and
financial enablers and government enablers must be a key part of any
intervention. In particular, the evidence from reports48 on financing has recognised that
there is a major funding gap between annual adaptation needs and government, donor
and private funding. Enterprise capacity building and business model development
requires grant funding for integrated climate change and disaster risk initiatives.
16
FUTURE FIT CITIES IN ACTION
Integrating Climate Change Into City Planning
- Micro resilience planning in Gorakhpur, City planners integrate climate change into city planning
addressing multiple issues on solid water and drainage management and housing and health had a
direct impact on 12000 households, strengthened capacity of municipality and reduced flooding
during the next monsoon. Model is now adopted by State.
- Jakarta resilience planning – Following billions lost in 1 in 5 year events. Set up early warning
systems and coordination hubs to ensure an extra 6 hours of warning time to 40% of residents
most exposed to flooding.
Resilient Housing
- Revolving loan fund for storm resistant housing: 1000 poor and near poor people supported access
to construction finance and expertise. Through a revolving loan fund providing credit for storm
resistant housing through the Women’s Union of Da Nang City in 7 disaster prone wards.
- By raising plinths in homes, providing income generating assets, and latrines, a DFID livelihood
and climate change programme in Bangladesh will help 225,000 households.
Supporting Urban Poor Groups Initiatives:
- Owner driven reconstruction (community fund) after Tsunami in Sri Lanka has led to 100,000 more
homes at less cost being reconstructed.
Land use planning:
- Land use preserved for peri-urban agriculture in Delhi has resulted in diversity and increased
proximity of food systems serving all populations.
- Tree planting scheme (3000 trees per year) in Makati City, Philippines, intended to improve open
green spaces and sequester carbon, and reduce urban heat.
Protecting against storm surges, cyclones, flood protecting infrastructure
- In Caribbean, protected hospital buildings up to a category 5 hurricane and set it up to be dual
purpose as a shelter for 1000 people. Cost of increase to infrastructure retrofit was 5%.
Sustainable Transport
- In Kuala Lumpur, Asian Development Bank provided a 3 level tunnel using the lower tunnel as a
floodwater storage reservoir. In the 3 years since development, tunnel was used 114 times,
averting losses from 7 flash floods.
Multi-hazard Early warning systems
- In Kathmandu, Nepal, DFID is providing a package of disaster risk management support- training
600 Government workers, community-based earthquake and disaster preparedness in 200 village
development committees, rebuilding 162 schools in earthquake-affected areas, retrofit plans for 10
hospitals and improved preparedness for emergency response training 4,000 volunteers.
Flood and drainage management
- 45,000 households supported by providing a maintenance fund for community groups les
maintenance of roads and drainage systems through community groups in Indonesia.
- Relocating businesses out of flood prone areas – a renewable company in UK, DRAX power,
relocated its plant, looked at climate change impacts including scenario of a 75 year project life,
achieved a positive benefit cost ratio even with 50% increased costs to constructing of its plant
43. An ‘urban systems’49 approach where integrated climate change and development
projects were identified is laid out in Annex 1.50 This approach also highlights how
resilient investments are prioritised based on a process that involves poor people as
decision-makers, and where resilience principles are built into investments design within
critical sectors. There is a need to learn from climate risk assessments, urban systems
development; emerging technology solutions (e.g. Geographic Information Systems and
17
satellite based programs); Investment finance; incentive finance; and financial risk
management / mitigation products (e.g. specialised re-insurance products and
derivatives addressing weather, agriculture risks being promoted by companies such as
Munich RE and Swiss RE).
2.2.2 Impact and outcome that we expect to achieve
44. Impact: The intended impact of the program is that urban populations, especially the
urban poor, are less vulnerable to the direct and indirect impacts of climate change in
medium-sized cities in Asia and the global response to building urban climate change
and DRR responses are scaled up.
45. Outcome: The partnership and projects funded under the programme deliver Urban
Climate Change Resilience (UCCR) benefits; demonstrates potential for replication and
scaling up, attracts and mobilises complementary action and other public and private
financing.
46. The programme is expected to deliver the following 6 outputs:

Strengthened capacity of urban planning authorities to incorporate UCCR
considerations into city-wide and sectoral planning and regulation.

Strengthened multi-stakeholder mechanisms inclusive of poor and vulnerable
people in UCCR planning and investment design.

UCCR focused projects which target vulnerable, and build resilience are identified
developed and financed by both public and private and domestic financing sources
emerging from UCCR planning processes.

capture development and mitigation co-benefits

City level actors in partner cities generate, access, understand, and utilise
knowledge products in urban projects.

Partnership demonstrates increased harmonisation, alignment and collaboration
around UCCR in priority cities.
47. The full logframe for the programme is attached in Annex 3. Indicator 1 feeds into the
Departmental Results Framework (DRF) indicator for DFID. Six indicators will feed into
ICF KPI (Key Performance) indicators on leveraging in of public and private sector
financing (Ind 10,11), knowledge uptake (Ind 14,15), and extent to which integrated
planning is occuring (Ind 6,9). These are also indicators that will support impact
evaluations eg on numbers made more resilient (Ind 2), or avoided damages (Ind 3).
Methdologies for these will be tested within the programme.
48. The remaining 6-7 indicators will be testing the assumptions within the theory of
change (See Annex 4). This programme will also deliver wider development results.
Monitoring all the co-benefits of this programme will be difficult as this is not the
primary objective of the partnership. These secondary benefits to the programme have
also been captured in the economic appraisal. M&E of the programme will endeavour to
capture the transformational impact of the programme.
49. The programme therefore will seek to:

Protecting 1 million poor people (half of them women) and 1 million other
vulnerable people in 25 cities across 6 countries from extreme weather and
18





helping them adapt to the impacts of climate change through city wide and
targeted investments.
Developing 25 city plans, building the capacity of 5000 city planners and
stakeholders, and setting up coordination bodies in all 25 cities.
Setting up 10 multi-hazard and health early warning systems, improving water
demand and conservation in 11 cities, and facilitating 30 community led solutions
in targeted vulnerable areas.
Investing in 25 infrastructure projects which build resilient water, drainage, housing
and flood protection, and wastewater systems and offer both city-wide and
targeted benefits.
Leveraging $1.1 bn of public, private and municipal financing by bringing to
financial closure 25 resilient infrastructure projects.
Influencing the Asian Development Bank to integrate climate change and disaster
risk reduction risks into all of its urban investments in the vulnerable sectors in the
six countries.
19
3 Appraisal Case
3.1 What are the feasible options that address the need set out in the
Strategic case?
50.
Four options were proposed in the concept note approved by Ministers:

Option 0: Do nothing and counterfactual: Address climate change through
mainstreaming within current and planned bilateral projects on urban development
within DFID work in Asia.

Option 1: Develop a new partnership to be managed directly by DFID under bilateral
procurement procedures.

Option 2: Develop and support an Asia partnership addressing urban climate change
adaptation and disaster risk responses through the Asian Development Bank (ADB),
involving other donors, parallel financiers, knowledge partners and private sector
partners.

Option 3: Support one aspect of a possible partnership – i.e. planning and knowledge
activities (technical assistance only), potentially in a larger number of cities, excluding
support for leveraging in of public and private investments.
51. A wide range of potential delivery options was considered at the time of the stakeholder
and validation exercise, where best models and partners for Urban Climate Change
Resilience (UCCR) delivery were explored. Options for scaling up Rockefeller
Foundation’s own Asian Cities Climate Change Resilience Programme (but new partners
for investment implementation would be needed), scaling up of World Bank’s planning
models (mostly pilots with few tested experiences) and finally a ‘do nothing’ option which
was about scaling up existing urban initiatives in India (these were at full absorption
capacity without explicity consideration of climate change).
3.1.1 Option 0: Do Nothing and the counterfactual
52. This option would address adaptation and disaster risk reduction activities through
scaling up of current and planned bilateral work in Asia. A range of other initiatives and
institutions will continue to provide support to cities for climate resilient urban planning
and investment including Research Division’s programme on urban, the IIED
accountable grant, ADB urban development programme, and Rockefeller Foundation’s
ACCCRN programme. A number of technical service providers are working with
individual cities with support from donors and cities themselves, many of them doing
innovative work and developing knowledge about good practice. Activity in mediumsized cities will be limited however. A number of networks are working to promote
learning between cities. Donors are increasing funding for climate change, with both
USAID and AUSAID for example looking to expand their climate change engagement in
Asia. DFID could support such activities itself through current and planned bilateral urban
development, growth and governance programmes; increasing funding for such bilateral
activities would complement the programme and should not be seen as an alternative.
KfW, AFD, World Bank and ADB itself are looking for opportunities to invest in new
projects in sustainable urban development with a climate change dimension, but are
constrained by a lack of sufficient resources for project development which comes from
scarce grant resources. Another donor might take a partnership approach but in slower
20
time.
53. This option assumes a slower pathway in terms of DFID engagement on urban
adaptation and disaster risk as this business case is the most advanced of the Future Fit
initiatives. DFID funding of research programmes through the IIED accountable grant,
and through Research and Evidence Division will begin to fill the evidence gaps.
Research investments are unlikely however, to fill the gaps on what works in urban
settings. Urbanisation, writ large, is rising in importance so we should see increased
programming happening – albeit with a two year lag. There are no good partners
currently linking planning, investments and knowledge as in the design of this
partnership. The Rockefeller Foundation will continue its work on ACCCRN building
integrated planning models with investments limited to softer interventions. ADB will
continue to focus on urban development and Public Private Partnerships, through their
Green Cities Initiatives but perhaps with a stronger low carbon focus.
54. Advantages – It is a lower risk strategy not to engage in a broad partnership where
learning and risk-taking is at the forefront. This is an ambitious programme and
potentially risky in terms of complexity of the programme. There are concerns about the
capacity of ADB to carry this programme alongside a fair number of other new initiatives
including Climate Public Private Partnerships (CP3) but these will be managed through a
stronger ADB shareholding relationship. This is an ambitious programme, with few
tested examples (ACCRN being one) so lower risks alternatives could be developed.
55. Disadvantages - Future Fit Cities is getting underway and there will be delays in
implementation. Urban climate change work will remain a very new landscape. Medium
and smaller sized cities would be relatively neglected. Other UCCR efforts would be
largely isolated with no systematic arrangements for joining the dots between them to
maximise learning and coordination and minimise duplication. Although there is evidence
of service providers working together there is also a sense of competition over cities and
models being used. Perhaps most important, an integrated approach linking planning,
investment and knowledge would be lacking, reducing the overall impact of the various
initiatives through the absence of the feedback loops highlighted in the theory of change
below.
3.1.2 Option 1: Direct management and procurement by DFID
56. Option 1 would be a bilateral initiative delivered through a management consortium
directly procured by DFID. Strategic management and oversight would be provided
directly by DFID, which would play a more hands-on role. DFID staff in country offices
would play a stronger role in linking up with national and city-level partners, and ensuring
coordination with existing DFID programmes. This option would mirror Option 2 in its
design, response to the theory of change set out above, and activities, differing only in
terms of management and implementation arrangements. Under this option it would be
possible for support to be provided to cities outside Asia.
57. Advantages: Under this option, DFID and Rockefeller Foundation would have a stronger
control over the programme, the logframes results and in particular the extent to which
integrated planning is leading to national government actions. DFID and Rockefeller
Foundation’ strengths on knowledge management and integrating monitoring and
evaluation into programmes would allow for these components to be emphasised. We
21
would have a stronger control over the extent to which stakeholder participation includes
the poorest and vulnerable and the consideration of the informal sectors. Choice of cities,
partners and countries could be more global in scope.
58. Disadvantages: Although Option 2 could in theory be opened up to participation from
other donors, in practice it would be less likely to become a platform for donor
harmonisation and cooperation compared with a multi-donor fund established under
ADB. DFID lack the credibility in the area of urban development, and infrastructure
financing to be a pull factor for investment donors. We also cannot piggy back on the
ADB’s umbrella Urban Financing Partnership Facility, the Swedish guarantee facility, the
Infrastructure Facility (UEIF) and the project preparation body (CDIA) of the ADB. We
would not have the relationships with many of the middle income countries where threats
from disasters are rising thereby reducing the country footprint to low income countries.
This would reduce the impact to poor people. The potential for private sector
involvement beyond planning stages is likely to be very pilot project based and it would
be difficult to achieve any scale. It would also not offer the same opportunity as Option 2
to mobilise ADB loans behind urban adaptation investments including its expertise in
private sector lending operations, or ADB’s relationships with a wide range of Asian
governments. This option would be far more transactions-heavy, both in terms of
administration and in terms of lack of entry points at the city level in many of our
countries. Sub national engagement remains a challenge for DFID unless we have a
strong presence in the country. The likely management costs of a consortium
arrangement, and costs of additional DFID staff time would need to be compared with
the service fees which would be charged by ADB for administration of the programme.
The potential to leverage other infrastructure providers to think about resilient
infrastructure and inclusive planning to help prioritise investments will be limited.
3.1.3 Option 2: Partnership model with Asian Development Bank, Rockefeller
Foundation
59. Option 2 would establish a multi-partner mechanism of some kind to bring the core
elements of the theory of change. The aim would be to build a partnership of donors,
parallel financiers, alignment partners, implementing and collaborating partners to help a
number of medium-sized cities in Asia to integrate climate change and disaster risk
planning into city plans, regulations and investments. One option would be to be
establish a Trust Fund in a key International Financing Institution with long standing
experience in urban development to house this partnership within the umbrella of the
ADB’s existing Urban Financing Partnership Facility (UFPF). The UK could provide £85
million to this trust fund over five years from 2013 from the International Climate Fund to
deliver all 6 outputs of the 3 components described in the theory of change above:
planning, projects and knowledge. The initial donors to the trust fund would be DFID and
the Rockefeller Foundation, although other donors have expressed interest in a
partnership model. The World Bank and KFW have expressed formal interest as
alignment partners and others have expressed interest as implementing partners on
knowledge and planning (CDIA, Atkins, Swiss Re, ICLEI).
60. Advantages: The validation report commissioned to look at the theory of change and
delivery channels identified this kind of partnership as a pioneering approach in scaling
up climate change into infrastructure delivery in ADB and coordinating urban climate
change work in cities. This has the potential for transformational impacts on making
22
cities fit for future climate and disaster impacts in the countries at greatest risk with high
numbers of exposed populations. If the inclusive planning processes are as successful
as they have been in some of the Rockefeller ACCCRN programme, then vulnerable
people’s needs will be prioritised and built into design of initiatives. The setup of an
stakeholder coordination mechanism too offers possibility for local accountability to be
strengthened. The returns on investments from private and public leveraging of finance
would be strongest through ADB as the administrating partner. The potential for
exploring different private sector models working across middle income countries and
low income countries working through ADB countries would be most efficient. This aligns
well in terms of timing of ADB’s new urban development strategy, their new focus on
knowledge, and a new public private partnerships strategy. ADB already has an umbrella
Urban Financing Partnership Facility and facility which helps build project preparation
which this trust fund will be a part of and which we can further influence. So this
partnership could piggyback on ADB strategic priorities in this regard. Working through
the ADB would mean the arrangement is more cost effective – in terms of transactions
costs and management costs. Senior management within the ADB are supportive of this
concept. The Rockefeller Foundation remain a strong technical partner who could create
a strong balancing effort with ADB.
61. Disadvantages: The ADB is an administratively light organisation which means their
business model is based on low levels of staff for every loan they issue. They work on
the principle of driving down the transactions cost of developing investment loans. They
work heavily through consultants and through partners, which means that it may be
harder to incentivise ADB country advisers to take on resilient type business in difficult
geographies even if the grant capital is being provided. They have traditionally not
engaged in planning processes as a means of identifying investments, so this will be a
significant cultural shift. Whilst addressing the informal sectors and the urban poor is
part of all of their investments, infrastructure development by its nature favours the
formal sector. The donor partners will have less direct control over the day to day
decisions. The strength of the governance of the partnership rests partly on the ADB
team and risks of staff changes could affect the good governance of programme. ADB
will need to resource the team well to to carry such a complex programme.
3.1.4 Option 3 – Scale up city climate change and disaster risk planning
62. Option 3 assumes that only the planning component is scaled up – working with
identified cities to develop capacity to integrate climate change and disaster risks. Other
assumptions about the timing and delivery of the planning component are similar to
those of Option 1. This option would focus on scaling up of integrated climate change
planning at the city level working through a consortium of partners linked up with a
smaller network on knowledge and peer to peer learning across cities. The ACCCRN
network of the RF springs to mind as a model of delivery. This would be a partnership
light facility in connection with RF, and other knowledge partners focused on climate
change adaptation and DRR planning and knowledge. It would not have the investments
and private sector financing components within the remit of the programme. This would
be administered through a bilateral procurement process along the lines of Option 2.
63. Advantages – Lower transactions costs as the programme would need to be focused on
technical capacity alone and not be concerned with any form of subnational lending. It
fits closer with DFID’s core ways of working. There are a range of partners delivering
23
urban planning approaches whom we could work with. Rockefeller and ICLEI have now
partnered together to reduce the cost and time taken to do integrated city resilience
planning. The procurement of this partnership would be simpler but probably would not
have the same impact on the urban climate change landscape.
64. Disadvantages – The theory of change assumes that the planning processes needs to
lead onto soft and hard investments. Without the carrot of investment funding, ADB’s
experience shows that uptake and interest for transactions heavy, integrated planning
processes may not exist. World Bank and ICLEI and other partners already looking to
scale up their planning efforts. The learning just from planning would be more limited.
The scope for securing financing for urban climate change adaptation and disaster risk
investments is largely reduced as evidence of planning processes de linked from lending
organisations shows that all the transactions of preparation of projects falls on country
governments. Securing the results from the Theory of Change would be difficult.
B. Assessing the strength of the evidence base for each feasible option
65. Option 1,2,3 - Evidence of integrated planning: The evidence on planning and
mainstreaming climate change has become the mainstay of adaptation research in
recent years starting with the 2009 OECD Planning guide on integrating climate
change51. Learning from recent experiences from national level adaptation planning and
Local Adaptation planning processes in Nepal identify some common learning points
around the processes of planning which focus on the need for strong leadership, broad
stakeholder engagement, working in an integrated manner across sectors, flexible
planning which can accommodate new knowledge, and strong supporting institutions52.
Future Proofing Cities Report (Godfrey N., Savage R. 2012) also highlights the need for
integrated approaches to tackle inter connected environmental risks occurring in
medium-sized cities. The report also points to key urban enablers for future proofing of
cities including strong institutions, municipal governance and robust financing processes.
Satterthwaithe et al53 highlight two basic conclusions that can be drawn on what works in
best practice – explicit provision of voice for low incomes groups, and secondly to
change relationships between urban poor groups and local government – with a strong
focus on local initiatives around land tenure, basic services, housing).
66. Option for 1,2,3: Inclusive planning processes The learning paper of the ACCCRN 10
city Asian cities climate change resilience network of the Rockefeller Foundation54 shows
that building system resistance to climate and disaster impacts and increasing access by
marginalised populations to system services will reduce vulnerability. Reducing poverty
can contribute to vulnerability reduction because it enables better access to the services
and systems. This approach has significant implications for how assessments of
vulnerability and poverty are conducted. Traditionally the main focus of investigation for
poverty assessment has been at individual-household-community scales. It is perhaps
this scale – and the complex interaction of systems, agents and institutions – that urban
climate change brings to the fore. At the same time, however, the focus cannot only be at
the individual-household-community scale. Because many of the systems, institutions
and social networks that individuals depend on cut across scales from the local to the
global, both the impacts of climate change and the opportunities and constraints in
responding to them are heavily influenced by large-scale systemic factors. Developing
appropriate methodological approaches that can balance these different scales, complex
24
relations, and interactions, will be a major challenge.
67. Option 1, 2: Evidence of what Urban Climate Change Responses (UCCR) looks like? : A
report55 commissioned to validate the partnership proposal in which a review of evidence
and programming for UCCR (over 50 reports and documents) was conducted. It revealed
that support for urban climate change resilience work is still in the innovation phase. The
validation commission also highlighted that UCCR is not yet grounded in urban practice.
Clear conceptual models akin to the 5-capitals or triple-bottom line for sustainability in
businesses do not yet exist. The closest focus so far is the UNISDR campaign for
making cities resilient, ACCCRN lessons, and a useful UN Habitat handbook on urban
planning for climate change and disaster risks. A lot more work is needed in order to
build the evidence base with which to demonstrate to city governments why planning for
future climate change and extreme events is important.
68. Option 1,2,3: City level demand for UCCR support: Early city level engagement on
ACCCRN revealed a significant lack of awareness, let alone understanding, of climate
change risk at the local level. ACCCRN's contribution to getting UCCR on the agenda is
an achievement in itself, but is only the first step. The situation is changing however and
there are increasing numbers of networks and actors whose experience can inform
development. CityNET (The Regional Network of Local Authorities for the Management
of Human Settlements)56 for example has brought together cities across the region on
another agenda but increasingly with a climate change and disasters risk perspective.
Others (e.g. UNISDR57) similarly provide evidence of interest and a growing demand for
UCCR support that complements the supply side approach of efforts to date. The
validation report conducted a country level stakeholder mapping that interviewed a
significant number of stakeholders in priority countries, including mayors, on the concept
of UCCR, climate change and undertaking climate change initiatives, and found:

Awareness about climate change at the city level: Understanding of UCCR was
particularly strong in Indonesia, where there is a broad range of UCCR activities and in
Bangladesh, where there are a significant number of differing CC and urban initiatives.
Understanding in Pakistan was good despite limited climate change interventions,
though Pakistan saw CC adaptation in terms of Disaster Risk Reduction (DRR) which
is receiving significant attention following recent flooding and earthquakes.

Actors at City Level, Government, Private Sector and Civil Society – An effective
city administration together with a locally elected city champion are key to the effective
implementation of initiatives at the city level (e.g. Mayors in Bangladesh and the
Philippines). Without such political will, posting of officials (e.g. Indonesia) or weak city
administration (e.g. Bangladesh, Pakistan) can impact on delivery at city level. Such a
champion has the potential to draw in other stakeholders, including the private sector,
civil society and the community, including those from poor and vulnerable communities.
Evidence linking climate vulnerability to poverty.

Undertaking Urban Climate Change Initiatives – Cities where success is likely to be
achieved should be targeted under the programme - those with a proactive mayor or
strong administration – together with cities predicted to be most vulnerable to CC
impacts. Where cities impact on one another (e.g. Vietnam), these linked cities should
be selected for shared planning and resources and, if necessary, a regional approach
should be taken (e.g. Mekong Delta). Consideration may be given to State level
25
Capitals (e.g. India) to engender buy-in at State level, and roll out in cities across the
state. Cities should be scanned for overlapping initiatives and chosen only if there are
synergies between initiatives (e.g. Can Tho, Da Nang, Vietnam)58.
69. Option 1,2,3: Evidence from evaluations of urban development and infrastructure
programmes to date - The 6 programme urban study within DFID India evaluating
programmes from the 1980s has revealed some key lessons including the move to
smaller, that programmes have moved further upstream looking at wider city/state level
reforms rather than focusing just on slum improvements programmes. Lessons in
implementation include:








Aligning with existing policies and programmes of the national and State governments
and supporting more effective, efficient and inclusive planning and implementation
leads to a greater buy-in and ownership by the State agencies.
Improving structures, institutions and processes (participatory and inclusive) across
Urban local bodies for better performance is needed.
Need for institutionalisation of community processes
Need for political economy analysis to support urban work
Focus on municipal bodies as well as State Governments
Consideration of climate change
Focus on urban livelihoods and especially gender
Focus on legal status and entitlements.
70. IDS systematic review of Public Infrastructure Development Group (PIDG) on
Development Financing Institutions and the impact of infrastructure investments on
poverty reduction and growth revealed that hard evidence is scarce for a causal
relationship but this is mainly due to lack of measurement of impacts. The review also
highlighted that there was financial additionality,of leveraging particularly in low-income
countries (LICs) and in less commercially attractive sectors but less so in middle income
countries. This study, however, did not look at development additionality of resilient investments
or at subnational levels.
71. Options – all. Evidence of disaster preparedness at city level. The evidence on urban
dwellers in informal settlements is unreliable and undercounts the numbers. The most
widely used data source EM-DATA CRED is known to understate the number of
disasters and lacks detail on spatial characteristics. The way disasters have been
viewed in the past has changed greatly from studying direct impacts of hazards, to
assessing vulnerability, to assessing responses, to building resilience. The UN have
suggested the need to consider both intensive disaster risks (underpins large disasters)
and extensive disaster risks that takes account of events where numbers of people killed
falls below the criteria usually set for disasters. Different models of risks assessments
are emerging at the city level through the WWF, UNISDR, ACCCRN, ICLEI, ARUP but
what is important is that local level assessments are necessary to underpin planning, and
interventions. In Asia, countries like Indonesia, Bangladesh, Philippines and India are
the few countries that have active national urban DRR programmes.59
72. Option 1.2,3: Evidence of climate change adaptation and natural disasters: The impacts
of natural disasters have been increasing over recent decades. The costs of
humanitarian crises are equally growing (20% of aid is humanitarian, whilst less than 1%
is for DRR activities). Growing consensus that greater investments need to be made on
26
preparedness to reduce the impacts of crises and an even greater imperative for further
work to build the capacity of communities to be able to cope with these events
themselves. Evidence is weak but growing in this area. Recent study using household
economy analyses in Kenya and Ethiopia showed that early response is far more
effective than later humanitarian response (decreases the cost of humanitarian response
and losses by 48% in Kenya), that building disaster risk responses costs significantly
less than humanitarian responses and that there are many climate change and DRR
building measures that are good value for money.60 An evaluation of Community based
adaptation (CBA) activities revealed that it was good value for money to invest in
community based adaptation where household assets are protected61.
Table 1: Strengths, weaknesses and evidence base for options.
Option 0.
Do Nothing
Strengths
Weaknesses
Evidence Base
- No cost
- Limited capacity and
investment flows to
Medium-sized cities
Limited
Limited evidence that current portfolio of activities within Urban
will fill evidence gaps, and address urban poverty and climate
change adaptation and DRR. Limited evidence of good systems
planning in cities. Current ad hoc level of activities on planning,
and investments at city level have not yielded results. Economic
costs of inaction are high.
Good programmes under development in India, Bangladesh,
South Africa evidence of helping slum dwellers exists. Newer
programmes are just developing business cases. Evidence of
climate change activities is limited.
Current lack of evidence on best ways to improve climate
adaptation makes it difficult to argue for additional funding.
Similarly, limited DFID experience on urban may also be difficult
in arguing for DFID to lead in this area.
- Research investments
may help with gaps.
- Lack of regional
network development
and learning
- DFID will do little to
address urban
adaptation
- Costs of inaction high
- Slower pace
understanding of what
works.
Option 1.
DFID
Manageme
nt of the
programme
- Closer oversight and
involvement of DFID
offices
- Potential for greater
mainstreaming within
DFID urban/climate
programmes
- Potential for expansion
outside of Asia
- Potentially higher set
up and management
costs
- Programme
implementation time lag
- Lack of DFID country
office coverage in Asia
- Lower capacity to
leverage in other MDB
and Development
Financing Institutions’
investment
Limited:
Evidence for integrated planning is strong. (Arup, Atkins, ISET,
ICLEI studies)
Evidence of dealing with urban disasters is poor, evidence of
targetting cities is poor. Future Proofing Cities report first of its
kind. Others have limted country coverage.
Examples of good adaptation infrastructure investments just
emerging.
DFID procurement shows to be more expensive than through 3rd
party. Also admin constraints make it difficult to deliver this option
at scale.
Without city level engagement, networks or the experience, DFID
would gain little by solely procuring these services.
Option 2.
ADB
Managed of
the
programme
- Influencing ongoing ADB
infrastructure investment
- Capacity to attract
private sector funds
- Strong network of
existing city level
relationships
- Rapid scale up of
- Limited to Asia
Limited:
Evidence of UCCR planning is growing
City level demand is growing
ADB and Rockefeller market leaders with published evidence of
their experience.
ADB’s own PPP experience remains limited but growing esp in
climate change. Evidence from Resilient Infrastructure
27
engagement and delivery
Option 3.
Planning
Only
Lower cost
Focus on capacity issues
Improve ability to raise
domestic (public and
private finance)
Improvement in quality of
project design and
investments is also limited.
MAR results for ADB strong. RF reputation in this field equally
strong. Other partners in UFPF proven to be long standing urban
partners.
- Limited direct leverage
of investments
- Limited learning and
network building
Medium
Strong evidence that integrated planning is key to building
adaptive capacity.
Strong evidence of participatory stakeholder planning processes
being key to building political will, and voice and accountability.
Planning experiences within DFID are strong.
Evidence of whether planning can deliver investments at scale is
pretty limited. Knowledge gaps filled through a planning function
would also be limited.
28
3.2 Social appraisal
73. The main impacts of climate change on urban areas in the next few decades are likely to
be increased levels of risk from existing hazards. For poorer groups, these will present a
variety of impacts: direct impacts such more frequent and more hazardous floods; less
direct impacts such as reduced availability of freshwater supplies for many cities that
may reduce supplies available to poorer groups; and indirect impacts such as climate
change related weather events that increase food prices or damage poorer households’
asset bases 62. Within any urban centre, it is common for poorer groups to be
disproportionately at risk from climate-related hazards for a variety of reasons,
including63:

Greater exposure to disasters (e.g. through living in makeshift housing, on flood
plains, or unstable slopes).

Lack of risk-reducing housing and infrastructure (e.g. poor quality housing, lack of
drainage systems, few roads to allow emergency vehicle access).

Less adaptive capacity (e.g. lacking the income or assets that allow a move to
better quality housing or less dangerous sites).

Less state provision for assistance in the event of a disaster (e.g. needed
emergency responses and support for rebuilding or repairing homes and
livelihoods. Indeed, state action may increase exposure to hazards by limiting
access to safe sites for housing).

Less legal and financial protection (e.g. a lack of legal tenure for housing sites, lack
of insurance and disaster-proof assets).

Friend & Moench expand the definitions of vulnerability to explain that inclusive
access to gateway systems such as energy, transport and communication are also
key64.
The role of local government in reducing low-income groups’ vulnerability to climate
change impacts.
74. There are likely to be strong synergies between pro-poor development and adaptation
over the next few decades. However, in order to capitalise on these synergies,
competent, accountable local government is required which is ready to work with poor
and vulnerable groups. The scale of what households and community-based
organisations can achieve in developing protective infrastructure is more effective where
they can work in partnership with government agencies.65 Therefore, a large part of
adaptive capacity of individuals and cities relate to the ability of local communities to
identify needs, make demands, find solutions, and, for local governments where
possible, to work with them.
75. Addressing these challenges will vary across the options in the following ways:
76. In Option 0 as the counterfactual: DFID’s urban programmes for the most part deal with
the the urban poor and slum settlements. Bangladesh’s large Urban poverty reduction
programme is a good example but climate change and DRR are not the specific focus.
And therefore the social issues associated with climate change and DRR will not be
sufficiently addressed either.
29
77. In Option 1 - There are also challenges associated with the partnership being directly
managed by DFID. A DFID procurement programme would more likely address the
urban poor but perhaps not at the scale relevant to addressing real social concerns. The
benefits would largely come from involving urban poor, and women in planning
processes in this case and would not feed through to investments.
78. In Option 2 - This partnership model will need to include partners who are strong in
ensuring that poor and vulnerable are involved in planning, and investment designs.
These partners will be drawn from across the following groups: advisory council partners
(e.g. Asian Coalition for Housing Rights, Slum Dwellers International), implementing
partners (e.g. CityNet) and collaborating partners (e.g. PIDG, Swiss Re). The logframe
put in place ensures that the urban poor, marginalised groups and women are consulted,
targeted, represented and able to participate in the programme initiative, but this will
need to be monitored. Criteria for investments and city selection included in the
Implementation Guidelines prioritise investments based on targeted vulnerable and
demonstrated resilience within investment proposals.
79. Option 3 – This option could really test the extent to which stakeholders are truly part of
the integrated planning processes in cities. This option would leverage in the successes
to date under previous urban development programmes, learn from ACCCRN
programmes. However, there
The experience of Asian Cities Climate Change Resilient
would be less potential for scale
Network dealing with marginalised groups
up of large numbers of people to
be made less vulnerable. The
The concepts of climate change which underpin the
knowledge gained will primarily
Rockefeller Foundation initiative Asian Cities Climate Change
Resilience Network (ACCCRN) focus on the marginalisation of
be limited to planning and
agents and their capacity, rather than a more narrowly
possibly budgeting processes.
conceptualised vision of poverty measured by material or
financial assets. The Rockefeller Foundation and Arup
International Development team developed a set of
intervention selection criteria. Gateway criteria that must be
met include contribution to urban climate change resilience
(UCCR), impact on the lives of poor and vulnerable
populations and ability to achieve scale. Additional criteria that
are assessed relate to credibility, viability, sustainability, local
ownership, integration with other measures in the city,
opportunity to mobilise further resources, potential for
replication and expansion, innovation, ability to contribute to
new UCCR knowledge and contribution to a diverse portfolio
of ACCCRN city interventions across the 10 cities.
80. The ADB, who will manage the
Trust Fund, is also guided by its
own organisational Safeguard
Policy (June 2009). Safeguard
policies within ADB are
understood to be operational
policies that seek to avoid,
minimise, or mitigate adverse
environmental and social
impacts, including protecting the
rights of those likely to be
These projects build on a series of climate change and DRR
affected or marginalised by the
planning requirements. The ACCCRN experience suggests
development process. All
that reaching vulnerable groups and engaging them in the
shared learning process requires a multi-layered
safeguard policies involve a
approach, in which shared learning dialogues (SLD),
structured process of impact
vulnerability assessments, participatory planning processes
assessment, planning, and
and pilot projects each play a role.
mitigation to address the adverse
effects of projects throughout the project cycle. These policies are unlikely to provide for
targeted interventions focused on climate change impacts on the poor.
81. It should also be noted that gender issues already receive specific and focused attention
30
in ADB operations through the implementation of ADB’s Policy on Gender and
Development, whilst broader social protection issues are included in ADB’s Social
Protection Strategy. Whilst these are new developments, this represents a strong steer
on ADB’s new priorities.
3.2.1 How could social development and gender issues be addressed within the
programme to benefit women and girls?
82. Overall, although DFID procured programmes are more likely to ensure that significant
priority is given to the needs of women and marginalised groups, early discussions with
advisors across DFID have identified enhanced opportunities throughout the design of
the programme to incentivise this so that they are central to the design:
83. Planning: Efforts will be made to ensure that urban poor groups and women specifically,
marginalised communities, and self-help organisations participate in multi-stakeholder
climate change and DRR planning. Efforts will be made to ensure that analytical work at
city-level leads to climate adaptation strategy and project development. This may include
gender-sensitive urban planning or sex disaggregated vulnerability analyses.
84. Projects: Implementation Guidelines for projects identification will draw from the
inclusive planning processes, with emphasis on building the climate change and DRR of
poor communities. Projects would need to have an element of targeting of the urban
poor, but also households headed by women. MOUs with partners such as the ones
ADB has with the Asian Coalition for Housing Rights who have a track record in multi
stakeholder dialogues and who can help promote access for the informal sector would be
needed.
85. Tools: There are already examples of how both hard and soft interventions can be
implemented in a pro-poor fashion. The Cities Development Initiative for Asia (CDIA) –
who are expected to be a key implementing partner - has developed a toolkit to guide
municipalities in pro-poor urban infrastructure development66, whilst the Rockefeller
Foundation’s Asian Cities Climate Change Network (ACCCRN) has sought to ensure
that all phases of the initiative have included the participation of poor communities67.
86. Sustained emphasis: However, this is not to say that it is easy to achieve the desired
level of participation/ representation, and it will certainly require dedicated effort and a
commitment to feed learning in this area into the partnership. For example, ACCCRN
mid-term evaluation68 stated that whilst “ACCCRN’s ultimate impact entails improving the
lives of poor and vulnerable men and women...citizens are not at present strongly visible
in the initiative” and made recommendations for a tracer survey.
87. Knowledge: The knowledge component will ensure that representatives of those groups
that work with the urban poor, the vulnerable and marginalised are involved in key
activities such as developing appropriate knowledge frameworks, project monitoring in
some of the cities.
88. Indicators: A number of indicators in the logframe have been developed to prioritise this
including one on stakeholder participation and the need for 50% women, as well as
numbers of people supported. Other outcome indicators on adaptation will also be
tracking disaggregated gender data. Each of the investments will be monitored for
increased inclusive access to resilient infrastructure.
31
3.3 Climate and Environment Assessment
89. All options above fundamentally address climate and environment risks and opportunities
as clearly outlined in the Strategic Case and above. Risk ratings for all options are
outlined in the options below, however these are indicative based on actual programme
activities and nature of the types of project investments. The overall risk rating of the
preferred option is D and although this is not a core contribution to ADB, the trust fund
will be working alongside ADB country teams and urban development teams to deliver
against this programme. This means that ADB’s environment and climate change
safeguards would be applied throughout the programme. However, the section below
outlines the climate and environment opportunities that the programme might want to
monitor.
90. ADB has comprehensive and wellestablished Environmental Assessment
guidelines including strategic tools such
as Country Environmental Analysis
(CEA) and Strategic Environment
C
B
Assessment (SEA) processes for all its
B
A
investments. Its’ Safeguard Policy
Statement (SPS) — earlier known as the
D
D with high opportunity
Safeguard Policy — requires a set of
C
B
obligations on the CEA/SEA process to
be followed and adhered to by the borrowing countries. The CEA/SEA process
particularly focuses on how programmes and investments are likely to have an impact on
the environment; however, it still lacks adequate incorporation of assessments of
climate risks or addressing climate vulnerability within programmes and
investments69. This trend is changing in recent years and this programme should
catalyse change in ADB ensuring that lessons from the programme feed into and
strengthen ADB’s corporate processes in mainstreaming climate considerations. This
has been discussed with the ADB shareholding team and fed back into replenishment
and climate change discussions with the ADB.
Option
1
2
3
4
Climate
change
and environment
risks and impacts,
Category (A, B, C,
D)
Climate
change
and
environment
opportunities,
Category
(A, B, C, D)
91. Evidence shows that the most successful urban planning projects build on strong preexisting partnerships with buy-in from local and municipal government, promote longevity
in physical and social infrastructure through dual use investments that have an everyday
as well as a disaster risk reduction purpose, and integrate local participation70. The CEA
recommends and the implementation guidelines for this trust fund will enhance
investment selection criteria so that it includes minimum climate and environment
safeguards.
92. The programme should also establish and/or strengthen formal/regulatory linkages
between urban planning on all levels to environmental planning and climate change
aspects as part of an overall national Adaptation Planning Framework. ADB is not
traditionally known for its policy influencing and dialogue but more for its investments
transactions. The recommendation for the partnership to ensure that adequate space
is created to allow for lessons from medium-sized cities to feed into national
policy processes is included in the knowledge component. This is vital from both a
sustainability perspective as well as in terms of fully embedding political support for the
programmes and building institutional capacity in national and local government
32
structures.
93. This programme will make a significant contribution to the evidence base of what works
for climate proofing urban centres and building the capacity of urban residents
(particularly slum dwellers), systems and institutions to cope with climate impacts. The
CEA recommends and the partnership will be tracking the extent to which the
knowledge generated will actually feed into wider, global efforts to build urban
climate change and DRR work in different contexts..
3.4 Institutional and political appraisal
94. Many of the risks of a systems approach to urban climate change are to do with political
and institutional barriers. The political economy of cities is complex. Cities are both the
drivers of environmental risks, and have the enablers for delivering UCCR. The key
issues as outlined in previous sections are the need for strong municipal governance,
the lack of strong institutions that can help combine climate change and
development policies, the need for political leadership alongside responsiveness
to the country/city context, and need for strong coordination mechanisms. Option
2 responds best to the main institutional issues because the ADB and their partners have
on-going engagement with city level governments, whilst the Rockefeller Foundation has
been engaged in urban climate change and DRR planning in Asia through ACCCRN.
They have the mechanisms to work at sub national levels and carry this work to scale.
95. Options 2,3 and 4 could address institutional challenges in 4 ways: a) by driving forward
a multi-stakeholder planning and investments design process. This should be
complemented by the logframe indicators which measure the extent and levels of
participation in planning and design into. b) integrated planning models themselves have
shared dialogue processes which involve feedback loops throughout the planning
processes c) City selection will rest heavily on, amongst other factors, on strong
municipal governance and evidence of self-governance Although much of the city
selection will be demand led, every effort should be made to ensure that the city
selection goes beyond an individual mayor with a personal drive, other enabling factors
must be present for this to be sustainable d) finally, building linkages between national
level, state level and city level actors will be key to pursuing any regulatory reforms,
building new budget instruments or indeed influencing national level policies. Throughout
this procedure, an evidence driven process that can act as a benchmark and reference
point for many cities will be key to sharing lessons across the 25 cities on how to address
these issues.
96. Building strong institutions is how this programme will gain sustainability and much of this
capacity building will need to be done through the planning processes. Any programme
will need to push partners to embed coordination bodies within all the city planning
processes, so that resilience planning and action is coordinated and concentrated.
3.5 What are the costs and benefits of each feasible option?
97. This section sets out the approach taken towards valuation of costs and benefits.
Secondly, it describes the counterfactual and options. Thirdly, it appraises the options
for the programme. Finally, it sets out sensitivities. The full appraisal is set out in Annex
5 and is summarised below:
33
98. A summary of the Economic Appraisal process is outlined below:

Three options are set out – 1) DFID managed urban climate change adaptation and
DRR responses programme, 2) ADB managed urban climate change programme
and 3) DFID managed planning only programme. A counterfactual business as
usual scenario is also developed in the absence of the programme;

For each option, the costs of DFID funded post and independent management and
evaluation of the programmes is deducted. The total remaining donor fund
allocation (DFID plus third party) is allocated to 3 project components – project
investment, planning and knowledge. These funds are allocated across a 5 year
period based on budget allocation forecasts. The 5% charge for Technical
Assistance is deducted when the TA has been commissioned, equally the charges
relating to investment finance will also be deducted once identified;

These programmatic donor funds are assumed to pull in investment funds,
particularly those targeted at projects and planning activities. The additional
leverage of these funds is calculated based on ADB assessment of public and
private investment direct leverage at a project investment and planning level. Direct
Investment leverage ratios are estimated to be in the region of 12:1, consisting of
public sector, private sector and municipal investments. No investment mobilisation
is assumed for knowledge or planning activities;

A review of the global literature on city-level climate impacts is undertaken to
identify the scale of likely costs associated with flood and drought events. Limited
studies have been undertaken, but case studies for Bangkok (flood) and Barcelona
(drought) are identified as potentially useful. Estimates for annualised impact costs
are identified for these 2 cities based on the likelihood and scale of event.

Recognising the differences between Bangkok, Barcelona and the medium-sized
cities targeted under the programme in 6 Asian countries, these annualised damage
costs are adjusted to reflect differences in population size, economic development
(GDP per capita) and vulnerability (using the GAIN country level vulnerability index).
The appraisal assumes 75% of damages are expected to be flood-related and 25%
drought-related, reflecting the prevalence of low lying coastal cities in the region.

These impact damage costs are modelled over a 50 year period to 2012-2062,
increasing annually in line with OECD estimates of increases in asset exposure to
climatic events (climate change + urban growth) in the given countries, assuming no
action.

To create a lower estimate of the potential socio-economic benefits, an estimate is
made of the potential of programme to help avoid the damages of these climatic
events, based on the expected scale of investment programme finance directly
leveraged. This draws upon estimates of residual damages after adaptation
investments are made in the World Bank Bangkok study, with adjustments to the
scale of investment under the programme in relation to the potential damages. In
Bangkok, it is estimated that investment of £860m (representing 28% of total
damage costs of £3.1bn) would help avoid 52% of total damages of a 1 in 30 year
event in the city. For the purposes of the appraisal, we calculate the programme
avoided damages on the same basis (ratio of investment to overall projected
damages). Our estimate is that the programme leveraged investment of $1.1bn
34
under Option 2 (ADB Scenario) will be the equivalent of 7% of the total damage
costs expected in the 25 cities. Using the derived ratios, we estimate that this
investment will result in avoided damage costs of 14% of total damages expected
under a business as usual scenario. Under Option 1 (DFID Scenario), the avoided
damage costs fall to 7% reflecting the lower level of expected leveraged investment
(£590m)

To create an upper estimate of the potential socio-economic benefits, an estimate is
made of the likely benefit cost ratios for individual city level climate change
adaptation and DRR activities (not solely avoided damages), based on the
literature. A ratio of 2.5:1 is assumed for investment activities, with additional
benefits accruing from an assumed 10% of activities delivering GHG mitigation cobenefits. Planning activities themselves are assumed to provide 1:1 returns, with no
returns from knowledge activities. Investment derived benefits are also assumed to
experience an additional assumed 10% uplift in the quality of outcomes arising from
improved planning, coordination and knowledge activities.

For both the lower and upper boundaries, a counterfactual assumption is made
about prevailing investment rates and the level of additionality that might be
attributed to the programme. The level of additionality is presumed to be high
(80%), due to the fact that most climate change adaptation programmes and
investments are focussed upon metro cities in more developed Asian countries, with
limited climate change adaptation and DRR planning flowing into medium-sized
cities in the countries concerned.

The city level impacts and benefits are scaled up to assume a portfolio of 25 cities
across the 6 countries. The distribution of programme activities is assumed to be
split evenly between countries.

Based on the above – a classical cost –benefit analysis is undertaken, providing a
range of likely BCRs and NPV for the programme. Costs and benefits are
discounted at 10% pa with the exception of CO2 benefits which are discounted at
3.5% declining as per DFID guidance.

Additional sensitivity analysis is undertaken for optimistic and pessimistic scenarios.
Parameters included in the sensitivity are recurrence interval and scale of natural
disasters, direct leverage ratios, additionality of finance, % of avoided costs, likely
benefit cost ratios, and planning benefits.
3.5.1 Approach and assumptions guiding options appraisal
99. Costs: Costs in all three options are represented by programme costs at outset set over
five years of investments. The costs include DFID’s contribution of £85m, and other
donor funds (Rockefeller and USAID) of £3.33m. They also include the likely effects of
investment co-financing from ADB and other public and private investors.
100. Overheads are assumed at 7% for DFID (Option 1), 5% for Option 2 ADB (5% for TA and
5% for Investment grants below $5m or minimum $250k, 2% above $5m), and 7% for
option 3 (higher share of overheads for a much smaller programme). Costs of a
programme funded post and independent evaluation and management of the programme
will be deducted up front. After programme management overheads, costs are
attributed to one of three activities: project investment, planning capacity development
35
and knowledge sharing. A split of public funds is set out below:
Table 2: Assumed split of investment Option 2: ADB (£000)
Option 2: ADB managed FFC programme
Planning and soft investments
Investments (Public/private/domestic)
Knowledge
Programme M&E
Total (including overhead)
Charges
Total with charges (including RF contrib)
Year 1
2,599
1,891
395
181
4,885
244
5,129
Year 2
6,250
12,286
1,638
641
20,174
1,009
21,183
Year 3
5,724
20,789
2,543
1,382
29,056
1,453
30,509
Year 4
2,039
15,362
1,503
592
18,905
945
19,850
Year 5
395
7,237
1,602
822
9,234
462
9,695
Total
17,007
57,566
7,862
3,618
82,434
4,122
86,556
101. For option 3 (Planning), it is assumed that only the planning component (as represented
under DFID option 1) is financed to a total of £17m.
102. Leverage assumptions are based on work undertaken by the ADB design team. They
have prepared a paper1 (Annex 1) setting out some of the public and private sector direct
leverage assumptions. The existing UFPF facility provided by Sweden has a direct
leverage ratio of over 1:40 for public sector leveraging with $15 million dollars of Swedish
grant being used to shape the development of approximately $700 million dollars of ADB
sovereign lending. Based on the ADB analysis, their estimate is that $91m of grant
funding would directly leverage in public and private sector financing of $1.1bn
(discounted) including mobilised private and local finance. Derived from their analysis,
we estimate the project component to leverage investment and project finance at a rate
of 19:1, which is consistent with other similar investment enabling programmes run by
ADB.2 The planning component is estimated to mobilise investment at a rate of 10:1.
For the preferred ADB option (Option 2), in terms of public vs. private leverage, the
appraisal assumes that 78% of leveraged funds (£800m) are from the public sector and
27% from the private sector (£300m). This reflects the central role of public capital in
creating capacity and demonstration effect, before private sector investors become more
comfortable with financing city level adaptation activities. Project spend on the
knowledge component is not expected to provide any direct leverage effects. The ability
of a DFID managed programme (Option 1) to attract similar levels of public and private
capital is considered to be more limited. For the purposes of the appraisal, we assume
that a DFID managed programme would leverage approximately 50% of those funds
leveraged by an ADB managed programme. This reflects the fact that DFID neither has
access to its own investment programme, nor credibility as a fundraiser among public
and private partners engaged in urban infrastructure renewal.
103. Benefits: The benefit appraisal assumptions were drawn from studies that included a
number of benefits of climate change adaptation projects (including avoided physical
losses, returns on projects, health and welfare benefits). Given the level of uncertainty
in modelling the costs of climate change at a city level and the potential benefits of
climate change adaptation approaches, two approaches are taken to provide a range of
potential outcomes.
1
Private Sector Engagement (2012)
Other combined research and investment enabling programmes have reported higher leverage
ratios. For example, the CTF reporting indicates a leverage ratio of 242:1, and the Sustainable Asia
Technology Programme (ASTAE) a leverage ratio of 160:1
2
36
104. Two approaches are taken to assess the benefits.

The first is a top down approach, measuring the potential for a DFID investment to
result in avoided costs. Annualised climate damages (defined as physical damage
and lost earnings) are estimated at a city level using ADB and other assessments.
The approach then assumes a reduction of damages, based on the level of
investment in relation to the level of envisaged damages. Two types of city are
appraised: flood and drought affected. The central scenario assumes a 1 in 20 year
event. Benefits are calculated at a city level and then scaled up to represent 25
cities in 6 countries.

The second is a bottom up approach, assuming a socio-economic return on
individual projects. DFID investment in urban climate change responses
(investment and planning only) is assumed to result in a range of socio-economic
benefits (health, infrastructure, economic) as identified in the literature as set out in
the full economic appraisal. Based on existing assessments of typical benefit-cost
ratios for these investments, a value can be calculated for the expected project
returns.
105. The approach does not include:




Appraising of indirect benefits, such as employment and welfare creation through
investing in hard projects was not included in the appraisal, due to lack of data. This
would have appraised the amount of additional jobs created in the cities, depending on
the amounts of unemployment in the different cities. Some of these aspects are captured
in the estimates from Dedeurwaerdene and others, but are not appraised separately from
avoided losses.
Other externalities such as the health benefits are not analysed in a disaggregated
manner beyond their inclusion in the overall benefits
Total deaths caused by climate change are not assessed due to varying evidence
around the impacts of floods and droughts on numbers who die.
Knowledge benefits are not included in the model due to lack of evidence and lack of
information around how they will diffuse and spread to other cities in the six countries
and the region.
Top Down Avoided damages
106. The first is a top down approach, measuring the potential for investment directly
leveraged by the intervention options to result in reduced damage costs incurred under
extreme climate events. Annualised climate damages (defined as physical damage and
lost earnings) are estimated at a city level drawing upon existing (limited) data.
107. Firstly, for flood and sea damage, data is taken from a joint World Bank, ADB, JICA
report, which studies 3 cities in the Asian coastal region71. For the purposes of this
appraisal, the data for Bangkok is used as a proxy. City level damage data is provided
for 1 in 10 to 1 in 100 year events. The annualised cost of for Bangkok of a 1 in 20 year
event by 2050 assuming a high emissions scenario is estimated to be 6,165m Baht (USD
$128m pa). The study also provides some data on the potential for avoided costs based
on levels of investment and likely residual damages. It is estimated that approximately
52% of these damages could be avoided by investing in infrastructure to protect against
37
an event of this frequency and magnitude.
108. Secondly for drought, data is taken from impacts on Barcelona set out in 2 studies by
Markandya72. These estimated annual damages at approximately 1.6bn Euros for a 1 in
100 drought event for a city region. The ratio of impacts based on return period is
assumed the same as for the flood impact data in the absence of better data.
Table 3: Annualised cost impacts of climate events at a city level assumed for
appraisal
Low 30 yr
Central (20 year)
High (10 year)
100 year (reference)
Disaster cost 1: Flood
Disaster cost 2 Drought
30
£103,062,500
£28,074,918
20
£128,437,500
£34,987,239
10
£189,895,833
£51,728,902
100
£50,812,500
£13,841,667
However, Bangkok and Barcelona are not representative of medium-sized cities in the
6 Asian countries where the preferred programme will operate. Both are likely to have
larger populations, higher asset value levels at risk, and higher levels of climate
change and DRR from an economic and planning perspective. The appraisal therefore
rebases the above damage costs using 3 parameters:

Firstly, the damages are reweighted on the basis of population for average mediumsized cities in the countries involved. We define medium-sized cities as those with
population between 1-5m.

Secondly, the damages are reweighted on the basis of per capita GDP PPP
(reflecting the lower value of losses based on valuation of assets and livelihoods).

Thirdly, the damages are reweighted based on the vulnerability of the respective
countries. Vulnerability is a construct of exposure to climate change and the social
and economic capacity to adapt or protect.
These damages are then projected over a 50 year period to 2062, adjusted for
increasing exposure due to population growth, greater asset exposure and more
severe climate events73 (OECD projections). The exposure growth rates are derived
from a basket of 17 cities in the 6 countries examined in an OECD analysis and are set
out below
109. Baseline damage estimates are provided for a central scenario of 1 in 20 year event.
Sensitivity analysis is provided for 1 in 30 year (more severe event, but with lower
annualised costs due to reduced frequency), and 1 in 10 year (less severe event, but
with higher annualised costs due to higher frequency).
110. Avoided costs are calculated on the basis of a percentage of projected damage costs
being avoided by programme investments. The Bangkok study indicates that 52% of
total damage costs might be avoided by climate change adaptation and DRR
investments equivalent to 28% of damage costs on the basis of 1 in 30 year insurance
investments. However, the ratio of leveraged finance under this project to the potential
damage costs is much lower. A central scenario for the preferred option assumes
therefore that 14% of damage costs might be avoided on the basis of envisaged project
leverage and planning mobilisation. Option 1 (DFID) avoided costs are lower (7%), in
proportion to the smaller amount of mobilised finance. Option 3 avoided costs are
38
limited, due to the small amount of mobilisation associated with planning activities. The
diagram below highlights the difference between baseline damage costs and avoided
damages through the various options over time.
Figure 3: Annual climate change damage costs and avoided impacts from options
Annual climate change damage costs (25 cities) and avoided
impacts resulting from UCCRP options
Central Scenario - $bn USD discounted
111. While the
programme is climate
change adaptation and
DRR focussed, there is
a reasonable
expectation that there
may be some cobenefits in terms of
climate change
mitigation (primarily from
improved building
insulation and urban
planning). The
approach therefore also
assumes that 10% of
leveraged investment
also results in CO2
abatement co-benefits. Benefits are calculated at a city level and then scaled up to
represent 25 cities in 6 countries.
0.60
0.50
$Bn USD Discounted
0.40
Baseline Damage Costs: 25 cities
Option 1 - DFID: Avoided damages
0.30
Option 2 - ADB: Avoided damages
0.20
0.10
0.00
2012 2013 2014 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
Year
Bottom up: Typical climate change adaptation projects
112. The second is a bottom up approach, assuming a socio-economic return on individual
projects. DFID investment which leverages other finance into urban climate change
adaptation and DRR (investment and planning only) is assumed to result in a range of
socio-economic benefits beyond the ability to reduce damages from extreme events.
The benefit appraisal assumptions were drawn from studies that have undertaken
economic appraisal on climate change adaptation type projects (including avoided
physical losses, returns on projects, health, employment, and welfare and investment
return benefits). These are set out in Annex 5-Economic Appraisal. The disaggregation
of these benefits is not possible due to lack of available data. The review of the literature
offers a range of returns ranging from 3:1 to 40:1. The analysis assumes a conservative
2.5:1 for returns on project investment activities. The returns include avoided losses in
terms of death and loss of earnings but also returns in indirect forms from returns on the
investments. Planning returns are only assumed at 1:1 (i.e. costs are equal to benefits),
and no returns are assumed from knowledge activities.
113. The outputs of these two approaches create a range (avoided damages only and full
socio- economic benefits). This range reflects the uncertainty involved in measuring
adaptation benefits at a city level. All benefits are pro-rated to DFID’s share of
contribution to overall costs (including any direct leveraged finance) for the purposes of
calculating an overall benefit cost ratio.
114. The following additional assumptions are made:
39

Discount Rate: A 10% developing country discount rate is assumed, with the
exception of mitigation (CO2 abatement) benefits, where a declining 3.5% rate is
used as per DFID and DECC guidance

Timing of benefits: It is assumed that the benefit returns from investments and
planning activities begin to occur 2 years after the investment is made.

Additionality: On the basis of the above leverage assumptions, it is assumed that a
small proportion of the funds mobilised through the programme displace or represent
funds that may have been spent elsewhere on climate resilient type activities. We
estimate that the investments made under the programme will be highly additional
(80%), given the programme focus on Medium-sized cities unlikely to have access to
programmes or investments of this type.

Effectiveness of Management arrangements: DFID is currently only active in 4 of the
6 countries envisaged in the study and would struggle to replicate the same level of
oversight and quality control as the ADB in programme design and implementation.
For this reason, the benefits arising from a DFID managed programme are estimated
to be 70% of those from an ADB managed programme.

Planning and Knowledge Benefits: Investments in planning and knowledge are
expected to result in a qualitative improvement in city level planning, which in turn will
lead to more effective impacts and outcomes. This benefit is estimated at 10%,
based on work undertaken by the Global Water Partnership on the benefits of
improved governance structures in the water sector in developing countries. These
benefits are applied both to investments in the baseline, as well as those enabled by
the programme.
3.5.2 Counterfactual and Options appraisal
115. As set out above, the counterfactual sets out the impacts of climate change and spend
in the absence of an intervention. This includes the natural rate of climate change over
time and the natural rate of investment in this area. The counterfactual is based on:
116. The likelihood of climatological event occurring (flood and drought).
 The damage caused by a climatological event.
 The prevailing level of investment in resilient type activities.
 The actual number of people exposed
117. This is derived on the basis annual damage costs for two cities (Barcelona for drought
and Bangkok for Flood). As previously described, these impacts are then adjusted to
typical cities in the 6 countries involved weighted by population size for a typical city, the
relative national GDP/capita (PPP) and the GAIN vulnerability index (reflecting climate
exposure and climate change and DRR). These impacts are then projected forward to
2062, increasing annually to reflect the increase over time of asset exposure to climate
change for cities in the 6 countries concerned (see OECD 2008)74.
118. The counterfactual estimates that under a central scenario, up to £10 bn (discounted) of
climate damages might be incurred in the period to 2062 from flood and drought events
in the 25 cities targeted by the programme.
119. It also assumes a prevailing level of investment into projects and infrastructure with
40
climate change and DRR benefits in the absence of the programme, and the fact that the
programme might displace funds that would have been used for similar purposes
elsewhere. However, given the innovative nature of the programme, and its focus on
medium-sized cities, a high degree of additionality might be assumed. The central
scenario therefore assumes that 80% of funds directly leveraged may be considered
additional.
 Option 1: DFID managed programme: Programme management costs are assumed
to be 7% reflecting lower success rates and higher investment project preparation
costs.
 Option 2: ADB managed partnership (Preferred Option): Programme management
costs are assumed to be 4.5% (reflecting a mix of use of monies for 5% for TA, 5%
for investment grant below $5m, and 2% for investment grants over $5m with a
minimum of 250k, whichever is greater).
 Option 3: Planning only: Programme management costs are assumed to be 7%
reflecting a higher share of costs in relation to a smaller programme with the same
geographic coverage and stakeholder engagement.
Scenarios and Sensitivities
120. The appraisal includes the following 3 scenarios:

The central scenario sets out the design teams best estimate of assumptions, and
forms the basis of the expected socio-economic returns

The low scenario contains a set of pessimistic assumptions and aims to test the
programme’s ability to deliver positive economic returns

The high scenario represents a set of optimistic assumptions about the programme,
including higher direct leverage, better project returns and higher avoided damages.

Parameters such as recurrence of disaster, project and planning leverage ratios,
additionality of leveraged financed, annual city damage costs and percentage of
avoided costs at city level due to programmes were selected on the basis of their
ability to influence the overall results. The recurrence intervals of natural disasters
impacts significantly on the results. The Benefit Cost Ratios of project type
interventions are useful for benchmarking adaptation interventions but are flawed
because the data on cost benefit appraisals for most adaptation interventions
remains weak.
Uncertainty
121. The economic appraisal is subject to a number of elements of uncertainty as reflected in
the sensitivity analysis. The following elements will only be defined during project
implementation

The allocation of budget between cities and countries

The type of project and planning activities that will be undertaken – although
probable activities are emerging around early warning systems, integrated water,
sanitation and waste, drainage systems, institutional and coordination mechanisms,
41
community led and designed initiatives around land use, water and housing, land
use planning and regulatory reforms, and water conservation initiatives.

The sectors that will be supported include resilient housing, water, sanitation,
waste, drainage, and transport sectors. The implementation guidelines refer to
these in greater detail.
122. More generally, there are significant methodological issues in valuing climate impacts
and returns. Existing studies use a range of quantitative approaches (e.g. the choice of
market and non-market impacts included). The evidence base used for appraisal
focuses upon the avoidance of physical impacts, and other benefits such as health and
project returns. There may however be a broader range of indirect benefits (e.g. welfare,
productivity, economic development, eco-system benefits) that might be included with
better information.
123. There is also limited evidence base with which to construct valuation models (see a
review in Hunt and Watkiss, 2011). Despite the proliferation of city level research on
impacts, little of it quantifies. Most damage costs relate to global or regional models for
policy development purposes. Potential costs and benefits of climate change are
dependent upon a number of assumptions about the future, including economic
development, population growth, GHG mitigation pathways and the likelihood of extreme
events.
3.5.3 The Cost Benefit Analysis results
Low scenario
Option 1: DFID Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£172,277,158
-£154,736,902
0.43
0.49
£303,850,501
Option 2: ADB Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£245,425,514
-£196,815,643
0.56
0.64
£552,359,437
Option 3: Planning Only
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£8,361,308
-£4,943,205
0.38
0.63
£6,873,259
42
Central Scenario
Option 1: DFID Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£73,668,855
-£20,565,290
0.80
0.94
£363,070,580
Option 2: ADB Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
£50,728,410
£217,642,167
1.08
1.32
£673,346,695
Option 3: Planning Only
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£4,395,301
-£3,393,481
0.67
0.75
£6,873,259
High Scenario
Option 1: DFID Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
£50,938,204
£378,375,261
1.12
1.90
£422,290,659
Option 2: ADB Managed
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
£426,709,380
£1,419,795,132
1.54
2.79
£794,333,954
Option 3: Planning Only
Scenario
NPV
BCR
Leverage
Avoided Losses Only
Total Socio-Economic Benefits
-£925,045
-£2,231,189
0.93
0.83
£6,873,259
3.5.4 Recommended option
124. Option 2 (Programme Partnership managed by ADB) delivers the greatest socioeconomic benefits, recognising ADB’s established infrastructure in the region across all 6
target countries, its strong track record in infrastructure investment and its ability to bring
additional funds (including from private sector). At the lower bound, only an ADB
managed programme under the central scenario breaks even on avoided losses (BCR
1.08:1). Taking into account all potential economic benefits from adaptation
interventions the programme should deliver socio-economic return in excess of
1.3:1. Under more optimistic scenarios, returns may be upto 2.8:1. The diagram below
represents this in an alternative way across each of the scenarios. Sensitivity analysis
of the preferred option indicates that under the most pessimistic assumptions relating to
leverage, and potential project benefits, the option does not break even with a BCR.
43
Figure 4 – Benefit Cost ratios for Options
Benefit Cost Ratios - Options
Avoided damages vs. Socio-economic benefits
4
3.5
3
2.5
2
1.5
1
0.5
0
Avoided Losses Only
Total Socio-Economic Benefits
Low
Central
High
Option 1: DFID Managed
Low
Central
High
Option 2: ADB Managed
3.5.5 Theory of Change for proposed programme
125. The theory of change or conceptual framework for the preferred programme is attached
in Annex 4 has been developed over several months in discussions between DFID, the
Rockefeller Foundation and other partners, and validated through an external
consultancy which drew on an extensive literature review, semi-structured interviews with
65 country-level stakeholders across the Asia region, with relevant donors and technical
assistance providers, including a mapping of urban, and climate change adaptation
projects across the region. Consultations also suggested that such a program will be
pioneering and well-timed. It should be designed as an innovative and experimental
intervention that responds to demand.
126. This process has confirmed that there is strong demand and an opportunity to break new
ground in developing and deepening the understanding of and knowledge about “urban
climate change resilience (UCCR)”. Responding to this opportunity will require a
systems-centered approach, that moves away from investments that are opportunistic
to ones which have been identified through a process which looks at climate change and
disaster risks in city planning processes, prioritises soft and hard investments and how
they can be modified to target the vulnerable and make the investment more resilient.
Doing all this together, allows the impacts to be maximised and raises the potential of
reducing people’s vulnerability.
127. The systems-centred theory of change rests on three mutually reinforcing components:
Planning – Projects – Knowledge. Some of the critical assumptions underpinning the
theory of change are:
 The ADB can manage the 3 components in a way which is mutually reinforcing.

That target cities have sufficient capacity and prospects for development over the
project timeframe – in other words, that the preferred programme can pick some
winners to invest in.

That the preferred programme is able to align with systems and capabilities in
target cities and
44

That knowledge function can be embedded into the planning, investments and
capacity building processes in the 25 cities.

That financing for urban climate change adaptation needs to come from multiple
sources.

Returns to investment are sufficient initial incentives to attract investment.
3.6 Rationale underpinning theory of change
128. In developing the above options, the following were key design considerations:

The core strategy is to build capacity to deliver ‘UCCR’ urban planning and
regulation. The preferred partnership will provide funding and support to strengthen
city-level planning systems and processes and to strengthened multi-stakeholder
engagement in city-level planning – including engagement of the urban poor.

To build political will and interest in cities to engage with the vision

The designed programme will provide direct investment funding and technical
support for the development and implementation of UCCR-plans and investments.

The programme will seek to mobilise this investment and technical support by
encouraging other UCCR actors (development banks, existing programmes and
partnerships, the private sector) to mobilise funding and technical support and by
scaling up and scaling out to other cities.

Critically, sponsored projects will also provide a body of evidence that demonstrates
the benefits of UCCR and the multi-stakeholder model(s) by which the benefits to
vulnerable people and urban systems will be delivered.

The models and lessons that emerge as well as the lessons from capacity
development and projects will be captured and packaged and then disseminated
through a knowledge and learning platform to be coordinated by the programme.

Through these three components, the preferred option will contribute to the
establishment of partnership around UCCR where knowledge, monitoring and
evaluation play a key part.
3.6.1 How will the partnership lead to the desired impacts?
The programme is designed in a way to addresses these critical assumptions through the
following activities:





Using the Implementation Guidelines to incentivising ADB internally to invest in
resilient investments based on more robust stakeholder planning processes.
Technical support to build the capacity of medium-sized cities and relevant national
government agencies to integrate climate change and disaster risk and climate
change and DRR into city development planning;
Technical support to help city governments and urban communities to design and
implement climate resilient and low carbon softer measures;
Targeting poor and vulnerable urban groups both in planning, in design of
investments and in community led initiatives on water, housing, and land use
planning.
Directly leveraging additional public and private investment into climate45


resilient urban infrastructure from MDBs, national governments, and the private
sector. This will be done through funding project preparation, brokering financing
partnerships, and investment grants;
Contributing to global and local knowledge about urban climate change
resilience through the partnership where targeted learning around planning,
prioritisation & decision-making and public/private (PPP) models are tested.
Active expansion of membership of partners across the 5 partner types (see Point
185) working through partner relationships in cities where longer standing
engagements with local authorities exist.
3.6.2 Country and city selection
129. Six Asian countries have been selected for initial focus under the programme. These
are75: Bangladesh, India, Indonesia, Pakistan, Philippines and Vietnam. The selected
countries have particularly large and growing urban populations whose increasing
vulnerability to climate change and disasters poses a serious threat to sustained growth
and poverty reduction
130. A number of cities have already been part of inclusive urban planning processes through
Asian Cities Climate Change Resilience Network (ACCCRN), ADB Green Cities or
DFID’s own urban work including in Da Nang (Vietnam), Chittagong (Bangladesh),
Samarang (Indonesia), Can Tho (Vietnam), and Naga (Philippines). Cities will need to go
through gateway criteria for selection which demonstrate high levels of vulnerable poor
populations and systems, climate change and disaster impacts for a 1 in 20 year event,
enabling environment for decentralised planning, strong municipal governance, national
government policy and support and synergies with other initiatives for networking,
replication and shared learning. Self-selection processes should be encouraged on this
basis. This criteria is highlighted within the implementation guidelines. Cities may also be
de-selected after a period of little commitment or action and no further assistance will be
provided. City exit decisions should be part of the review of annual planning processes.
131. Non-priority DFID countries have also been included in this programme. Grant funding is
required to introduce innovative integrated planning and incentivise public private models
of investment in ways that cannot be supported through existing multilateral development
bank financing and project development systems. The financing thus mobilised for
investment in the middle income countries will be on non-concessional terms, since most
of the countries do not have access to concessional ADB resources.
132. Therefore, based on demographic and risk projections and an assessment of where
gaps in coverage of current initiatives are greatest, the programme will prioritise
approximately 25 medium-sized cities for direct support. Besides the focus on mediumsized cities and the requirement that there must be clear demand in the form of a formal
request for engagement from city authorities, a robust set of city-selection criteria have
been developed focusing on vulnuerability analysis, likely climate change and disaster
impacts, municipal governance and financing characteristics, and synergies with partner
planning processes. In the meantime, the programme will begin working in medium
cities where Rockefeller and ADB have been building integrated planning capacity and
where DFID regional/bilateral climate change programmes in country have synergies. A
communication strategy including the different partners of the programme will be
developed to provide information to potential cities. The wide range of partners that will
46
join the partnership will help generate city interest.
3.7 What does the proposed programme look like?
3.7.1 What will the programme do?
133. The partnership will have three components: integrated planning, investments and
knowledge management.
A Planning and soft interventions (policy, regulatory, and institutional)
134. At the heart of the theory of change, is an urban systems approach which relies on an
integrated planning process (See Box 2). This component will spend £17 m on:

supporting integrated planning processes across the 25 cities to incorporate
climate change and disaster risk and resillience thinking into their planning
processes. A key feature of this component will be to test different planning
models across cities (ACCCRN, ICLEI, ADB, Atkins, Arup etc). These
processes will be supported by vulnerability and risk analysis of vulnerable groups,
and how cities are affected by different types of disasters.

building coordination bodies in each city which includes urban poor groups
(especially women), civil society, local
Box 2 Urban systems approach is about
private sector, academia and local
getting climate change and disaster risk
incorporated in to city plans, investments and
government; Through studies and
workshops, the project will help identify budgets, looking at services together rather than
by sector, using spatial planning tools to
and define challenges posed by the
understand where the most vulnerable are and
interplay among climate change
how services can reach them. It also means
impacts, disasters, urbanisation, and
involving the poor (esp women) and private
sector in deciding what matters most to them
vulnerable people and systems. It will
also identify appropriate interventions
to strengthen the capacity of the city and its inhabitants to withstand impacts of
climate change.

Implementing priority soft investments which will contribute to tackling risk factors
amongst poor people’s housing, and access to basic services and within urban
systems. These soft investments have been narrowed down from experiences
through ACCRN and other urban resilience emerging experiences. Probable
activities that programme will fund include:
i. early warning systems including multi-hazard warning systems which explore
health and other hazard risks.
ii. building codes and other regulatory reforms (energy efficiency regulation),
iii. land-use planning to ensuring that food systems, green spaces are
considered within overall planning.
iv. water conservation and demand models which might propose diversity of
options such as rainwater harvesting, storage facilities etc.
v. Spatial mapping – flood, vulnerability other spatial mapping tools
vi. Community driven initiatives around housing, water and land use planning.
135. The evidence for complementing hard and soft investments has been strong and
particularly where adaptation has been concerned. The soft investments proposed above
47
will help target investments to vulnerable groups and to vulnerable areas. So for
example, the fund for community driven initiatives could support community initiatives
such as:
a) awareness raising, education, and community preparedness projects
b) community based solid waste removal projects
c) microfinance / revolving loan fund for housing upgrades
d) community based disaster risk management projects such as upgrading latrines
before rainy season to prevent outbreak of diseases during periods of flooding.
e) citizen monitoring of climate related impacts (eg ground water salinity monitoring,
beach erosion monitoring)
136. The programme will bring existing partners within the UFPF and new partners with
experience in implementing urban resilience as implementing partners. The Cities
Development Initiative for Asia (CDIA) and the Rockefeller Foundation’s Asian Cities
Climate Change and Resilience Network (ACCCRN) both support demand-driven
planning processes which help with investment identification and development within
medium-sized cities, in order to bridge the urban planning and programming gap.
Projects developed by these and other such processes will supply the initial
programme’s pipeline of soft investments. The programme’s capacity building efforts will
also aim to support cities to absorb the predicted increased funding flows for climate
change and to access other domestic funding opportunities, such as the Jawaharlal
Nehru National Urban Renewal Mission (JNNURM) in India.
B. Investment
137. This component will allocate its £57m grant capital for technical assistance for project
preparation, incentive financing and viability gap funding to at least 25 climate resilient
integrated infrastructure projects across the 20 of the 25 cities with a view to making
them commercially viable and for attracting public, private and domestic financing. These
projects will be identified through the programme planning processes and through other
processes such as CDIA (project preparation
Principles of resilience include:
facility linked with the ADB), and ACCCRN
pipeline. Projects will be prioritised which offer:
Robustness: infrastructure
clear benefits in terms of targeting the urban
resistance to extreme events and
poor (especially women), have benefited from
other impacts;
multi stakeholder decision making,
Redundancy: urban systems that
demonstrate how the investment has built in
allow for alternative options in one
principles of resilience, and good potential for
element is impaired.
replication and scalability. The programme
Resourcefulness: capacity to
will ensure that funding provided complements
mobilize needed resources to
domestic financing and implementing
restore infrastructure functioning
arrangements. See Section 2.2.1 on private
Rapidity: speed with which
sector role in which clear institutional, regulatory
disruption can be overcome and
and market failures to private sector investments
infrastructure services restored.
are discussed.
Retrofitting-capacity: easiness
138. The Fund is also keen to attract new forms of
and cost of retrofitting
complementary action and financing such as
infrastructure when long-term
those from the private sector through publicconditions change significantly.
48
private partnerships. German KfW, European Investment Bank, Japanese JICA and the
World Bank have expressed interest in potentially providing parallel financing such as
loans in alignment with the city-level adaptation plan and investments. Through ADB’s
Urban Operational Plan and their PPP operational plans, the incentives for driving
forward private sector leveraging and engagement have increased. The programme will
seek to test output based aid and guarantees and other forms of public private models
across a range of cities.
139. Prioritised investments will be based on demonstrating how they are targeting vulnerable
people, and how the investment has changed to demonstrate principles of resilience or
changed location, targeting, flexibility due to the climate change scenario planning, or
vulnerability analysis or spatial mapping. The sectors for eligibility highlighted in the
implementation guidelines include:

Climate-resilient Urban Water Management Projects (demand management
and supply measures based on specific climate change assessments)
i. Climate-proofing water supply, storage and wastewater infrastructure
investments;
ii. Measures to build redundancy and increase availability of water supply at
household / community levels;
iii. Improved demand-side management and rainwater harvesting at residential,
commercial and industrial levels;
iv. Water quality and water source protection (e.g.
protection against
salinization, contamination from flooding events, leaching) including
investments in groundwater protection and recharge;
v. Improved water resources monitoring, coordination, and management
systems, including meters/information communication technology (ICT).

Retrofitted infrastructure
i. Retrofitting of critical infrastructure like schooling, hospitals etc
ii. New transportation infrastructure that is appropriately integrated into landuse and flood plans;

Urban Climate Change Resilient Housing and Transportation System Projects
i. Development, sensitization, and implementation of urban climate resilient
building codes and standards;
ii. Refurbishment, and improved maintenance of transport infrastructure
support
systems,
including
power
supplies,
signal/information
communication technology (ICT) systems, fuel storage and distribution
systems to enhance resilience capability for sustainable service delivery,
especially during emergency situations.

Flood protection/Storm projection infrastructure Projects
i. Storm and flood resilient housing;

Energy/waste management projects with strong low carbon co-benefits
i. Converting solid waste management to energy projects;
ii. Investments in low carbon and climate resilient public transport
transportation;
iii. Upgrading to Energy efficient and climate resilient buildings;
49
iv. Investments in resilient heating/cooling production and distribution networks;
v. Investments in decentralised, renewable energy production that increases
redundancy and resilience of energy provisioning systems.
C. Knowledge
140. In spite of growing attention to urban climate change and DRR, the field remains young
with a limited base of practice, case studies, and guidance. With the gap in mind, the
programme with the remaining £8m aims to include a strong focus on knowledge driven
by a knowledge management plan from the onset to capture, and analyse targeted
learning areas for this partnership such as on planning frameworks, decision making
tools, resilient development measures
Example of the Programme in action
and private sector engagement models.
Take Chittagong – 4 million, 2nd largest city in
Under this line of funding, monitoring and
Bangladesh. Experiences storm surges every 5
years. A high population density (15000 per sq
evaluation of the programme would be
km), 35% of population live in slums.
undertaken (up to 5%, including £850m for
Bangladesh population will increase by 50 million
independent monitoring by DFID) has been
by 2030, 40% of which will be urban areas,
set aside for the purposes of baseline
mainly in Dhaka and Chittagong. Half of
studies, results monitoring tools, different
municipal finances came from municipal taxes in
2006, the remaining from development financing
tracer studies etc) and deliberate
and relief aid.
investments to collate and harness
emerging knowledge into tools, guidelines
The partnership could help Chittagong citizens:
and production of analytical case studies
1. Develop could integrate climate change and
on UCCR would be supported, all of which
disaster risk reduction into urban planning
process. As part of the planning process set
are essential for accelerating harmonised
up:
and effective approaches in this emerging
 a spatial plan of vulnerability hot spots
field.
across multiple dimensions
141. This component will support essentially
three types of activities:

Activities which support knowledge
generation from 25 cities experiences:
Activities which collate, harness, and
disseminate emerging knowledge into
tools, guidelines and analytical case
studies on urban climate change
resilience. A knowledge plan will
underpin the work including lessons
from integrating climate change and
DRR into city planning processes,
stakeholder/coordination
mechanisms, costs and decision
making tools around climate resilient
infrastructure, decision making and
prioritisation tools, and the mix of
investments yielding highest returns
on resilience.

Capacity and training activities: The
programme Trust Fund thus aims to
support capacity development at local

a
multi
stakeholder
institutional
mechanism
2. The plan could then prioritise soft
investments such as:
 Supporting regulatory and/or building
standards reforms on resilient buildings
along lines of India’s new body.
 Could develop end to end early warning
systems (considering health, flood
warnings straight to the user).
 Plan to increase trees in cities to reduce
urban heat.
3. The programme would support prefeasibility
and feasibility of a number of hard
investments such as
 Design and close financing on local
infrastructure solutions which combine
waste water, sanitation, drainage and
water systems, with more assured
access for the poorest during disasters.
 Development
of
an
insurance
mechanism working with other private
sector insurance providers learning from
the Philippines experience.
4. Ensures learning is captured through M&E
and city planners peer to peer learning
networks
50
levels to national levels for city leaders, urban professionals and national decision
makers to support improved and accelerated ability to define, develop, and
implement resilience building measures.

Peer to peer learning: The programme will promote networking and knowledge
exchanges between a wide range of actors (city planners, mayors, urban poor) in
particular setting up peer to peer learning networks. Links with existing knowledge
networks such as the Climate & Development Knowledge Network, the Asian Cities
Climate Change Resilience Network and the Asia-Pacific Adaptation Network will
also be made to negate duplication and to maximise the global reach of its
learnings.

Programme monitoring and evaluation: Evidence has shown that linking monitoring
& evaluation with knowledge activities is key to embedding evaluations into design.
For this reason, the monitoring and evaluation work will be funded out of the
knowledge component. The detail of the monitoring and evaluation framework is
considered in the final section on monitoring. But impact evaluations on building
resilience of poor people will be set up, alongside one on impact on ADB
investments. Knowledge tracer studies, baseline studies for the logframe, and city
level deep dives are planned. The special reports to support donors’ annual reviews
will also help build the full story, examining decisions on resilient infrastructure
investments, use of TA and investments grants, and finally transformational impact
within the ADB. City studies (1 in each city) to explore how all the components of
the programme are fitting together.
Specific activities in this component which have been costed include:










Knowledge generation of sector papers, guides / tools, case studies, 5 signature
papers (including the theoretical framework) are produced.
Annual learning forums
Peer to peer/knowledge learning hub established linking up to all cities.
Cross city learning site visits.
Representation at international panels
Setup of a knowledge fund for each city to draw down on for local studies.
Curriculum development and training courses on UCCR developed for senior
government service, academic institutions.
High level convening workshops in each country to convince national and local
planners of importance.
Knowledge officers locally hired in each country coordinating with country/city
coordinators.
Training of city planners/capacity building workshops for urban poor groups.
D. Promoting a partnership
142. Underlying the core functions and the theory of change are a set of partnership principles
around harmonisation, coordination and alignment i.e. city level resilience to climate
change impacts can be maximised if donor, and city level resilience planning is
concentrated and coordinated. These principles can best be achieved recognising the
different types of partners. These are funding donors who provide strategic support and
financing support, to alignment donors who provide co-financing of projects, to advisory
partners who support the knowledge function and provide strategic advice, to
51
implementing partners who will benefit from the procurement of the core functions, and to
collaborating partners like private sector actors and groups whom we wish to influence.
3.7.2 How is ADB organising itself to improve poor people’s lives
143. ADB will ensure that poor and vulnerable people are targeted throughout the programme
implementation in the following ways:

Ensure that the implementation guidelines be explicit that city selection needs to be
based on vulnerability analysis and other criteria alongside any city application.
This allows for cities to be selected on the basis of exposure, sensitivity and
capacity.

Eligibility criteria for investments will also be based on demonstration of targeting of
vulnerable populations, and on how resilience will be built into infrastructure
investments.

Logframe includes several indicators which incentivise ADB to prioritise poor
people. The indicator on stakeholder participation, the indicators on numbers of
poor, the impact indicator on resilience of poor, and finally, an indicator on inclusive
access to basic infrastructure. These will need to be direct beneficiaries who are
targeted, and monitorable.

Within the probable set of soft investments, a fund for community led initiatives and
solutions will be set up for each city – strong evidence exists that these types of
infrastructure solutions promote innovation and community level action in building
resilience. 30 such investments will be targeted through this fund.

Numerous training and capacity building support is expected to support urban poor
groups in targeted vulnerable areas feeding into city level coordination bodies.

ADB will also partner with organisations with networks within the informal sector like
the Asian Coalition for Housing Rights.
3.7.3 How will the investment component be deployed?
144. The following describes the kinds of activities deployed under this component in order to
achieve the total leveraging/mobilisation (in case of planning) targets summarised above.
The programme will deploy a few ways to increase the scope for private provision of
goods and services of potential viable climate change and DRR activity such as new
forms of property development, designs of infrastructure, and investments in climate
change and DRR by business and households (particularly poor households).
145. Increasing the scope for the provision of private sector finance and risk mitigation
products directly involved through:
 Extending appropriate project preparation activities and incentive finance/ risk
reduction measures, for example; through CDIA structuring projects for private
finance and if required, including incentive payments such as Output Based Aid;
 Piloting insurance products appropriate to the poor, for example extending the
concept of the CLIMBS in the Philippines76 project and the Community insurance in
the Philippines;
146. Increasing the provision of private sector finance indirectly by:
52
 Conducting roundtable discussions with the private sector and the
insurance/reinsurance market to understand how risk premiums would reduce for
assets in certain cities and urban areas prone to severe climate risks (floods,
typhoons, etc.);
 Better understanding of risk/ reward trade off in climate change and DRR investments
through knowledge partnerships (e.g. with Chambers of Commerce) enabling
investment in new markets or financing private climate change and DRR investments,
for example, in micro insurance and companies putting in better drainage; and
 Demonstration of the potential of the private sector to national and local governments,
stimulating them to provide appropriate incentive finance for such investments.
Total additional investments leveraging from the programme
147. The lack of viability gap funding is identified as a key barrier to leveraging additional
private sector financing as is project preparation and project identification and
structuring. For this reason, the investments component of the programme is structured
to provide grant financing to help with project feasibility, project preparation as well as
direct public sector, and private sector investment leverage. The table below
summarises the potential for public and private sector leveraging under the programme –
the total $91 m equivalent for the investment component will leverage/influence $1.1
billion of public, private, parallel and local government financing at an overall leverage of
1 to 12 which is comparable with other infrastructure facilities being developed. A
proportion of this will come from other parallel financiers.
148. Project feasibility studies will be
Table 4: Summary Table of Direct Leverage and
conducted for 40 projects across the
Influence ($m)
spectrum of public, public/private and
municipally funded projects. ¼ of these
25/40 projects
bankable
will be for developing projects which
1.
Total
attract private sector financing. A further
1.
Public
¼ will be to ensure that municipalities
250
(16/20
will finance project preparation and
bankable)
Public
2. Local
potentially viability gap financing where
government
municipal financing is being allocated. It
50
initiatives (5/10
is envisaged that 2/3 of pre-feasibility
projects)
Municipal
3. Public/Private
projects will reach financial closure and
or private
be implemented. The existing UFPF
800
financed (6/10
facility provided by Sweden has a
projects)
Private sources
$ 1100m
public sector leverage ratio of 1:40
Total
with $15 million dollars of Swedish grant
Source: ADB Private sector paper for the programme, 2012
being used to shape the development of
approximately $700 million dollars of
ADB sovereign lending. However, this
leverage ratio underplays project preparation costs that ADB incurs in bringing these
projects to closure. Investments intended to support adaptation and disaster risk
reduction activities identified through an integrated planning process, will be much more
resource, time and financing intensive, a 1 to 12 leverage ratio was proposed amounting
to $91m grant finance leveraging $1.1 billion.

On direct investments which leverage public sector loan funding ADB/other
sources, taking a 1 to 19 ratio after project feasibility, project preparation and
53
investment finance, $800m could be leveraged.

On direct investments which leverage in private sector funding, the ADB’s own
experience on infrastructure projects is typically averages about 8 times with a
longer elapsed time (slum upgrading to toll highways). We would envisage a 1 to 6
ratio for resilient investments which would mean a total of $250m leveraging. As a
reference Green Africa Power is project to attract renewable investments from the
private sector with a 1 to 2 leverage ratio but this is for projects in Africa.

Project preparation for municipally funded projects where local government
resources are mobilised could result in a further round of investments influenced
through programme activities. Support on project preparation could leverage $50m
domestic financing with a 1 to 3 leveraging ratio. (See Annex 1 Private sector
paper).
149. The ADB has a number of established mechanisms through which it can deliver these
core elements of the partnership relevant to private sector involvement. Specifically:







Strengthening Cities Development Initiative Asia (CDIA) expertise in, and
systems for, fostering private sector and community participation in climate change
and DRR investments – already included in the new CDIA Strategy and Business
Plan for the period 2013-17. CDIA has already commenced formulation of PPP
projects potentially suitable for funding under the programme designed to leverage
in additional private sector finance.
Developing community of practices within ADB to help integrate across the
disciplines including on climate change with urban development.
Adoption of planning processes capable of including private sector and poor people
within its city assessment toolkits internally and linking to Rockefeller
Foundation/ICLEI planning processes in order to strengthen these aspects
externally.
The use of the existing Urban Financing Partnership Facility guarantee
mechanism funded by Sweden for a provincial investment fund is being discussed
with the Vietnamese government and projects funded under this fund could be
made climate change and disaster risk reduction projects.
Use of the programme to provide targeted incentives to support, and demonstrate
the viability of, private sector finance of climate change and DRR investments
(eg PPP investment in infrastructure such as water supply infrastructure in drought
stricken areas). This may include potentially synergies with the CP3 Fund77. The
programme can utilise its grant financing to prepare climate change and DRRlinked adaptation projects which would not get initial attention from the CP3 general
partners. Therefore, the two facilities can be complementary, although ADB will
ensure that the outcomes from such investments will not be double counted. There
are also potential synergies with other DfID-supported agencies such as GuarantCo
which is engaged in ongoing discussions with CDIA staff on how CDIA-supported
projects can be formulated to take advantage of GuarantCo support.
The adaptation of its UrbInfo knowledge networks to help structure knowledge
acquisition and dissemination internally and linking peer to peer networks with other
knowledge hub.
Use of the programme to provide targeted incentives to the private sector to
deliver appropriate support at the community level (eg insurance) and
54
potentially linking to other agencies such as GuarantCo.
150. ADB has a range of investment tools which it is developing that can be deployed to test
private sector participation models. Through the programme, the ADB could explore a
few of these options in selected cities. ADB could provide:


targeted grants structured as availability payments, viability gap payments or other
risk reduction mechanisms to cover the incremental climate change costs and
provide targeted incentives to support, and demonstrate the viability of PPP and/or
private sector investment in climate change and DRR infrastructure.
targeted grants structured as Output Based Aid or other viability gap or credit
enhancement (guarantee) structures as incentives to private sector provision of
climate change enhancing services, such as micro-insurance,78 or guarantees
which enhance the provision of small scale finance of community infrastructure discussions have commenced with the Rural Banking Association of the Philippines
(community-scale banks which actually have much of their business in urban
areas).
3.7.4 Why should DFID fund this intervention?
151. We have brought strategic leadership and expertise alongside the Rockefeller
Foundation and Asian Development Bank to the development of this partnership. This
programme takes a systems approach to building city resilience drawing from evidence
on the need for integrated planning, on stakeholder involvement and complementary soft
and hard investments. No other city resilience initiative combines efforts in this way.
152. The programme is innovative and potentially very transformative. If we succeed in getting
a number of cities where combined efforts lead to measurement in terms of avoided
damages, lives saved, and improved resilience of infrastructure – this becomes a model
for climate compatible development.
153. We are working with very experienced partners both on city resilience and on
infrastructure investments. The ADB themselves are giving this programme a high
priority in terms of driving forward their new urban development and public private
partnerships strategies. If it influences ADB’s operations as a new business area then it
would likely be transformational on future infrastructure projects in priority countries
($2bn p.a.)
154. Private sector and develop loan financing will both be needed to build the capacity of
urban areas to withstand climate impacts. But in the short term, public grant funding is
needed to demonstrate (1) novel approaches to planning (2) to help develop projects
which are bankable, and (3) to help broker public private financing mechanisms. The
ADB are already considering how to make stronger linkages between Climate Public
Private Partnership and this programme.
155. The programme will help deliver the objectives of the International Climate Fund finance
on reducing the vulnerability of poor people, directly leveraging in private finance,
improving energy access and demonstrating climate compatible development. This
programme would also take forward the Future Fit strategy and the Cities workstream.
The programme focuses on scale working with partners who have a long standing
reputation in urban work and in a region where the numbers of exposed people to the
impacts of climate change in rising alongside population and urbanisation.
55
Donor
Contribution
Burden share
Rockefeller Foundation
$5m + $30m through
ACCCRN
21%
DFID
£85m ($130m)
79%
ADB
Minimum $7m (towards
Project preparation TA)
--
Other potential
(USAID/AusAID)
$5m
RF share falls to 20.5%, DFID to
76.5%.
Including existing and new
partner contributions to the
UFPF
$130m
Reduces DFID burden share to 43%,
RF to 11.5%
156. This programme has already attracted other potential grant (USAID, AUSAID) and
parallel donors (EIB, JICA, KFW). This trust fund is part of a wider initiative on Urban
Financing partnerships – getting additional donors to focus on urban climate change
resilience in this way will be transformative. But synergies exist with UFPF work and that
of CDIA. Our burden share is 79% if one considers Rockefeller Foundation’s ACCCRN
contributions which will directly support the programme objectives, this will reduce further
if others such as USAID and AusAID join in the coming months and if we consider the
existing donor commitments to the ADB’s Urban Financing Partnership Facility (Spanish,
Swedish, French and Austrian support).
3.7.5 Links to HMG/DFID and ICF Strategic Priorities
157. The programme will deliver on ICF climate objectives and in particular the Future Fit
Cities workstream: Urban sector is a priority in both the low carbon development and
adaptation thematic papers79 of the International Climate Fund. Future Fit initiative will
help prioritise actions in 4 areas including on cities.
158. The programme will deliver on improving knowledge around private sector delivery
models: A key objective of the ICF is catalysing private sector investment and action on
climate change (ICF Implementation plan).
159. The programme can be part of the UK’s response to the Humanitarian Emergency
Response Review HERR: The HERR and subsequent policy on humanitarian policy, the
emerging work on broader climate change and DRR is a key input into both the strategic
case and the functions of the partnership.
160. The programme delivers on the emerging urbanisation agenda within DFID: The UK’s
recent horizon scan, recent endorsement of the next Foresight report on urbanisation
and the rise of the virtual network demonstrates how timely this programme is.
161. DFID’s urban work is currently getting evaluated. Experience is growing within DFID
consolidating existing urban experience and designing new infrastructure and future fit
initiatives. Learning and evidence from the programme will improve practice in this
emerging area.
3.8 What measures can be used to assess Value for Money for the
intervention?

Value for money through our investments in this programme can be measured on 4
56
levels: in terms of the economic rate of return (ERR) on investments in city-wide
planning and infrastructure. Data will be generated as part of the planning or project
preparation process in order to enable ERRs or BCRs to be reported; such indicators
will be integrated into the decision making process and prioritisation criteria for
programme investments. Equivalent data will then be collected during and after
implementation as part of the programme M&E framework, so that ex-post estimates will
be available for some investments. This analysis will be a key feature of the anticipated
contribution of the programme to the global knowledge base, in demonstrating to
policymakers and the private sector that investments in climate change and DRR are an
economically viable proposition. Reflecting the approach in the economic appraisal
above, it will include not only estimates of projected avoided loss and damage due to
climate-induced events where these are feasible, but a wider range of socioeconomic
benefits.

We will also be monitoring the ratio of investment financed per unit of donor grant
provided, including both public sources of finance (i.e. from multilateral and bilateral
lending agencies) and private sector finance. This will be relatively straightforward to
monitor, and will be a key performance indicator for the programme. Tracking this ratio
over time will help to reveal the extent to which the programme is creating positive
demonstration effects, thus reducing the amount of subsidy required by financing
agencies and increasing value for money.

Appropriate unit cost indicators will be tracked in order to ensure that results are being
delivered in the most efficient manner. Relevant indicators will be agreed and finalised
by the programme Council and monitored by the Secretariat, and may include the
following: (i) TA cost per city climate change and DRR plan and soft investment
supported (early warning systems); (ii) TA cost per investment project from feasibility
through to tender or financial close; (iii) training cost per participant for different
categories of training.

Management fees and overheads, both of the ADB Trust Fund management function
and of contracted service providers, will be monitored and discussed during
partnership meetings to ensure an on-going focus on economy. The aim will be to
ensure that institutional overheads are minimised in the delivery of all three
components of the programme. The above indicators will be a key focus of the
programme Council, which will ensure they are monitored and discussed to ensure an
on-going focus on value-for-money. In particular, ADB will be part sharing the costs of
project preparation resulting in close to $6m grant contribution on their part. This
would easily offset the 5% charge on TA. Relevant data and evidence will be
collected by the Secretariat and by the independent Monitoring and Evaluation function
where appropriate.
3.8.1 Summary Value for Money statement for the preferred option
162. Given the innovative nature of the programme and the need to demonstrate practically
the concept of urban climate change and DRR planning, the approach to VFM needs to
focus on how effectively it will deliver transformational impacts, e.g. by developing
strong, replicable PPP models, planning models, decision making tools, practical
examples of investments and policies from participating cities, and through directly
leveraging of additional official and private sector financing. While the returns to
individual investments financed by the programme at city level are important, overall
57
VFM will be greatly multiplied through these wider catalytic effects, without which the
programme will not have achieved its higher level strategic objectives.
163. Option 2 offers the best value for money among the alternative options, and is most likely
to be justified on VfM grounds under a central and high scenario. The ADB was rated in
the strongest category of multilaterals in the 2010 DFID Multilateral Aid Review (MAR),
scoring a maximum 4 on a scale of 1-4. The partnership benefits and expected catalytic
impacts are a key aspect of the value for money for the programme. The potential for
scale across the results spectrum is enormous, even taking into account the risks that go
with a complex and innovative programme of this nature. Key points are as follows:

The inclusion of a specific investment component, along with the fact that the
programme will be managed by ADB and explicitly involve other financing agencies
through the partnership model, means that Option 2 will offer far greater VfM in
terms of the ratio of financing leveraged, which will translate directly into higher
investment and avoided damages;

The integration of capacity building, investment, policy influencing and knowledge
will allow for synergy between these activities in ways that are mutually reinforcing
and will support the replication and scaling up of climate change and DRR
interventions. For example, the planning-led approach will ensure higher returns to
programme investments as a result of projects being identified and prioritised
through a city-wide, participatory climate change and DRR planning process. It will
also help to identify and support implementation of “softer” investments, such as
regulatory measures and community-based disaster risk reduction, which typically
offer higher returns than structural investments and may reduce the need for such
“hard” investment;

The knowledge component will proactively seek to ensure that the learning from
planning and investment work will be shared as widely as possible to spread
knowledge and action outside the participating cities and internationally. Even if the
programme succeeds in building resilience to climate change impacts in a minority
of its direct partner cities, the benefits to poor and vulnerable people, highly
exposed to climate events in these cities, and the knowledge benefits from these
successes, being grounded in practical experience will provide important gains in
understanding of urban climate change and DRR issues.
164. The strong focus within Option 2 on partnership between multiple agencies offers much
stronger potential for wider impacts through alignment and harmonisation with other
urban climate change and DRR partners. Most directly, the programme will influence the
way climate change and DRR is incorporated into ADB’s urban lending operations
across its whole portfolio. This spillover effect does not exist with any of the other
options.
165. These advantages of Option 2 are reflected in the economic appraisal above. Compared
to the other options, this option offers both a higher Benefit Cost Ratio (BCR) and Net
Present Value overall. At the level of individual investments, literature review indicates a
range of BCRs between 3:1 and 40:1. In practice, these will vary depending on the cities
that are selected, the likelihood of disasters hitting many of these cities, and the extent to
which there are strong cities with good municipal governance to support their planning
58
processes. However, the likelihood of achieving these returns is greatest where the
partnership has long sustained dialogue with governments, which is another advantage
offered by working through ADB with its range of urban partners and relationships
across Asian cities and national governments. Although the benefits are sensitive to the
cost drivers such as damage costs, frequency of extreme events, and leveraging ratios,
Option 2 remains positive in the central and high case scenarios.
166. Option 2 also offers good VfM in terms of economy at the level of inputs. On a scale of 14, ADB’s strategic and performance management, financial management, and cost/value
consciousness were all rated as either 3 or 4 in the 2010 MAR. Administration costs
charged by ADB for management of the Trust Fund will be 5% for TA, no cost for the
setup of the Trust Fund (unlike recent negotiations on World Bank Trust Fund
administration). This is highly competitive compared to other institutional rates. Under
new procurement guidelines approved in 2010, ADB has an obligation to ensure that the
proceeds of its financing are used with due attention to considerations of economy and
efficiency. If ADB also cost share to the tune of $6m towards project preparation
technical assistance, then much of these will be reimbursed. Further details on the
approach to procurement under the different components of the programme are set out
below in the Commercial Case.
59
4 Commercial Case
4.1 Indirect procurement
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
167. DFID will channel our funds to the ADB through a multi-donor Trust Fund arrangement.
The Trust Fund arrangement is well established as a modality under ADB’s Urban
Financing Partnership Facility, under which ADB is managing grant resources from a
number of bilateral donors.
168. The ADB is a credible development partner to deliver this intervention for a number of
reasons. ADB support for sustainable urban development is guided by its long-term
strategic framework, Strategy 2020. ADB’s renewed assistance to the urban sector is
grounded in a comprehensive assessment of its Development Member Countries’
(DMCs) urban issues and their fiscal and institutional structures. ADB’s New Urban
Operational Plan covers clean water, sustainable transport, energy, solid waste
management, urban planning and financing. The plan fosters Competitive, Inclusive, and
Green Cities to improve the performance of cities on the Economic, Equity, and
Environment (3Es) fronts.
169. The Cities Development Initiative for Asia (CDIA), supported by ADB and the
governments of Germany, Sweden, the People’s Republic of China, and Austria, help
cities shape and prioritise their infrastructure development plans and assess priority
projects at a pre-feasibility stage. To June 2011, 31 cities in 13 countries have
participated in the initiative and approximately $11.3 million of core resources have
generated an investment pipeline of approximately $5 billion.
170. ADB’s Urban Financing Partnership Facility (UFPF) also supports innovative urban
environmental, pro-poor projects and provides investment co-financing, technical
assistance and guarantee support for urban infrastructure development. With the private
sector currently accounting for only about 20% of infrastructure spending in Asia, ADB is
scaling up efforts towards private sector development and private sector operations,
guided by the new Urban Operations Plan.
171. ADB’s key reform areas include climate change and the private sector agenda, which are
at the heart of the programme. These reform areas were also highlighted in the recent
Asian Development Fund (ADF), the concessional lending arm of ADB, replenishment
submission.
172. The ADB was rated in the strongest category of multilaterals in the 2010 DFID
Multilateral Aid Review, scoring a maximum 4 on a scale of 1-4. Within the overall
assessment its leadership in promoting private finance for climate change, strategic and
performance management, financial management, and cost/value consciousness were
all rated as either 3 or 4.The MAR commended the ADB’s leadership on climate change,
citing the fact that it has already exceeded its target of $1bn lending for climate change
by 2012, and has now increased this target to $2bn.
173. As a key partner in the Climate Investment Funds, the ADB plays an important role in
60
knowledge provision and capacity building on climate change. In terms of development in
Asia, no other institution can provide the same depth of knowledge of the region. The
ADB has particular strengths in infrastructure financing, but the MAR noted that its
provision of technical assistance and expertise to governments has been less successful.
As noted above, the procurement and management arrangements under the programme,
especially for the planning and knowledge components, have been designed to allow
greater flexibility to identify and deploy a range of institutions with capacity and a
reputation for innovative and high quality work with cities. These arrangements are set
out in more detail in the following sections.
174. The alternative procurement routes are for DFID to contract the planning and knowledge
functions directly through a competitive approach, and either offer direct financial
assistance to the cities selected or channel investments through another development
partner institution. We have considered these options during the appraisal, and our
judgement is that these are not feasible. Whilst these options offer some advantages of
allowing DFID to directly engage, the down-sides are the significantly increased
transaction costs, and the risk of a fragmented agenda / approach with other donors.
B. Value for money through procurement
175. The umbrella Urban Financing Partnership Facility has some established procurement
modalities in place that offer flexibility for the components within the programme
partnership. Each of the three functions (planning, knowledge and investments) have
distinct procurement modalities for implementation. To support these activity streams,
different procurement modalities will be deployed. Under ADB processes, a Regional
Technical Assistance (RETA) is the mechanism by which funds (grants) are allocated to
non-investment related activities such as knowledge, capacity building, project
preparation, demand studies, pre-feasibility studies, stakeholder assessments.
Investments are done through loans and grants.
176. The potential procurement (implementation) modalities under RETA are: sole source
procurement of agencies; sole source procurement of individuals; and limited tender of
qualified consortia (Indefinite Delivery Contract or IDC). To ensure competition,
innovation and learning, and recognising the fact that limited experience exists within
individual consultants, we would expect that the knowledge, and planning functions of
the programme will be procured through either agencies or as an IDC in order for
implementation to maintain pace across all the cities.
177. ADB have also agreed to cost-share the preparation of Project Preparation Technical
Assistance (PPTA). The procurement of all PPTAs therefore Under ADB procurement,
existing processes enable the funding of Project Preparation Technical Assistance or
PPTAs (feasibility studies) and standard Grant Agreements channel investment funds.
ADB has agreed to cost-share the preparation costs of the PPTAs (contributing
$375k per project) across all the public and private sector PPTAs, amounting to
nearly $6m grant contribution into the programme.
Planning Activities
178. ADB would manage procurement under the existing Managing Asian Cities (MAC)
RETA, both the individual consulting and panel (IDC) modalities are established
and the firms on the IDC have the capacity to undertake the activities envisaged. In the
61
case of planning activities, planning interventions may range from ‘validation’ of an
existing plan by one or two senior consultants to an engagement of two years seeing
through an entire planning and design cycle. The MAC RETA is effectively a framework
agreement which would be used to procure the services efficiently.
Project Development Activities:
179. In this case, project development interventions may range from prefeasibility or
feasibility studies with a small team of consultants to six month engagement to prepare
and structure priority projects to a short, but expensive, intervention by project advisors
structuring a PPP deal. In the former and latter cases, the procurement of individual
consultants would be most efficient. In the other, more common, case a limited tender
from a panel of pre-qualified consortia would be more appropriate.
180. In addition, Cities Development Initiative for Asia (CDIA) is established as a mechanism
for managing the project feasibility processes and linking projects to investments – from
ADB, other development financing institutions or private sector, as appropriate for the city
context and project. Once investments have been agreed, the process of funding
feasibility studies and the actual investment is bifurcated according to whether the
procurement is by ADB or another financing entity.
181. ADB charges a 5% fee for management of any technical assistance disbursed from the
trust fund and 5% for grant components of investment projects that are up to $5m or 2%
with a minimum of US$250,000 (whichever is greater) for grants above US$ 5 million.
Again, these charges should be considered in light of ADB cost-sharing for project
preparation technical assistance to the tune of $6m.
ADB’s procurement guidelines and Value for money
182. New procurement guidelines were approved in 2010. They state that ADB, for its part,
has the obligation to ensure that the proceeds of its financing are used with due attention
to considerations of economy and efficiency. While in practice the specific procurement
rules and procedures to be followed in the implementation of a project depend on the
circumstances of the particular case. In the recent Update of the ADB MAR, value for
money was again highlighted as an area for further work within the ADB. This will be
followed closely both at the project level as well at the shareholding level. One of the
special annual reports for this programme will include value for money through
procurement.
5 Financial Case
A. What are the costs, how are they profiled and how will you ensure accurate
forecasting?
183. The costs of the programme are split between the costs of the 3 components, planning and
capacity building, knowledge and learning and finally grant catalytic funding for project
investments. The total contribution to the programme is £88.2mn with Rockefeller
Foundation’s £3.2m and DFID’s £85m. Of this, the Trust Fund will receive £86.6m as £1.7m
is set aside for DFID programme management costs. Table 5 breaks down the use of funds
over the 5 years of the combined contribution using an agreed share of 70% for project
62
investments, a 20% for planning and soft investments and 10% for the knowledge
components. The 5% charge on Technical Assistance has been separated and there is no
upfront charge for the setup of Trust Fund by ADB unlike for other MDBs.
Table 5: Profile of costs across components and across years
Project Budget
Y1
Total contributions (RF/DFID)
Y2
Y3
Downward Split of FCF Funds
5,339,112 21,413,059 30,928,717
Y4
Y5
Total
20,269,836
10,115,230
88,246,875
Programme Funded post (A2
FTE, including travel)
DFID M&E & Programme
Management
170,000
170,000
170,000
170,000
170,000
850,000
40,000
60,000
250,000
250,000
250,000
850,000
Sub total (DFID managed)
Balance less DFID managed
funds
210,000
230,000
420,000
420,000
420,000
1,700,000
5,129,112
21,183,059
30,508,717
19,849,836
2,598,684
6,250,000
5,723,684
2,039,474
394,737
17,006,579
394,737
1,638,158
2,542,763
1,503,289
1,601,974
7,861,842
180,921
641,447
1,381,579
592,105
822,368
3,618,421
1,891,447
12,286,184
20,789,474
15,361,842
7,236,842
57,565,789
244,243
1,008,717
1,452,796
945,230
461,678
4,112,664
5,129,112
21,183,059
30,508,717
19,849,836
9,695,230 86,546,875
4,936,770
20,388,694
29,364,640
19,105,467
9,331,659
Planning & Soft investments
(RDEL) (20%)
Knowledge Learning and
M&E (RDEL) (5%)
Programme M & E (5%)
Public and private
Investments (project
preparation and investment
finance) (CDEL) (70%)
Charges (maximum of 5%)
Total contributions (RF/DFID)
of which DFID
9,695,230 86,546,875
83,301,367
* Note: In addition to the M&E work to be contracted and managed by the ADB, DFID will separately undertake
independent evaluation at mid year and at end of year of the programme. Other special reports may also be
required on specific risk areas.
184. The following is a breakdown of ADB’s use of the 5% use of TA from the recent paper on
Commercial arrangements for MDBs80. The £1.7m set aside will be used for the costs of
travel, relocation of the DFID funded programme funded post, for mid year and end year
reviews of the programme as well as programme funded travel for DFID project team leader
and 1 person.
185. In the first year, DFID’s £5m spend plus other commitments will be spent upon:


Setting up 6 integrated planning processes
Identifying 5-6 soft investments which can be implemented through cities where
planning processes have already begun within the ACCCRN, and ADB Green Cities
63



work.
preparing project feasibility for 5 hard investments, project feasibility for a few projects
for domestic financing and project preparation for 1 private sector project. These
projects would be identified through existing processes, CDIA facility and pipeline.
Baseline studies and MIS System upgrade
stakeholder and urban poor workshops in prioritised cities.
186. Forecasting for costs will be dependent on 6 monthly reporting provided by the programme
Secretariat (usually 3 months in advance of DFID financial reporting to ensure forecasting
DFID quarterly targets. Approval of these
Breakdown of Administrative Cost
reports will also allow for trigger for follow on
Category
% Share of £ 4 Amount
payments. It is envisaged that in the first
Maintenance and Running
year, there will be significant set up RDEL
5%
200000
costs
investments on M&E, on planning, and on
Salaries and Benefits
63%
2520000 project feasibility costs for the first round of
investments identified. CDEL spend will
Professional fees and
6%
240000
ramp up in later years.
This budget is
Consultation
Office Management
4%
160000 based on projected annual action plans, but
Travel
6%
240000 will be revisited during annual reviews. We
Boards
6%
240000 do not anticipate cost overruns. DFID will
Training
1%
40000 closely track disbursement as 5% charges
Legal/insurance
5%
200000 are based on disbursements of TA and future
Miscellaneous
4%
160000 instalments payments will be made on the
Total
100%
4000000 basis of need, spending performance, and
progress against results.
Table 6: Pipeline of ADB projects relevant for the programme including proportion of leveraged
funds, and expected development impacts
Good Governance
Climate Change ²
Environment
Energy Efficiency
Slum Upgrading
Water Supply
Solid Waste
Wastewater
Urban Renewal
Counterpart
co-financing
(US$)
Flood and Drainage
CDIA
Funding
(US$)
Urban Transport
Country/City
Poverty Reduction
Expected
Development
Impacts
Intervention Sector
Leverage
Infrastructure
Investment
Value
(US$ million)
Bangladesh
Khulna
483,000
90,000
31.3
Cambodia
Battambang
424,600
90,000
14.0
Chennai
423,000
84,700
259.9
Cochin
370,000
78,000
49.5
Pimpri
577,000
106,000
51.4
Rajkot
360,600
72,000
15.7
Banda Aceh
327,500
44,000
22.6
Palembang
398,000
75,000
175.0
Surakarta
360,000
80,000
49.0
Yogyakarta
420,000
80,000
62.8
530,000
106,000
725.0
Cebu
623,360
104,000
23.1
Iloilo
150,000
37,750
39.0
Naga
415,600
105,830
66.2
Can Tho
200,000
40,000
34.0
Danang (1)
410,000
75,700
29.0
Thanh Hoa
371,000
87,500
6,843,660
1,356,480
India
Indonesia
Pakistan
Faisalabad
Philippines
Vietnam
T OT ALS
¹
38.9
13
7
8
4
5
4
−
1
14
24
9
3
1,686.5
Medium Term Infrastructure Investment Plan
² Climate Change Mitigation and Adaptation
64
187. An initial pipeline of projects by the ADB is shown below. It highlights the types of projects
within cities that could be supported through the programme to build more resilient
investments. So in the case of the Khulna, Bangladesh project ADB is looking to attract
CDIA funding of $453,000 grant catalytic funding with $31.5 million project financing with a
strong focus on poverty and environment. CDIA is currently partnering with ACCCRN cities
to identify early pipeline projects for the programme. These will need to meet eligibility
requirements within the Implementation Guidelines.
B. How will it be funded: capital/programme/admin?
This programme will be funded through International Climate Fund as 70% CDEL funding, 30%
RDEL funding and will be fully programme funded.
C. How will funds be paid out?
188. DFID and other donors will provide an initial grant contribution for the Fund in the amount of
£4m at the inception followed by a £3m contribution 6 months later. Year 1 of the project
will be from Sept.2013 to Sept.2014 spanning DFID 2013/14 and 2014/15 financial years.
According to Table 5, Year 2 and Year 3 costs breakdown will be £20m and £29m.
Subsequent instalments therefore will be based on need across the 3 components,
projected commitments across 25 cities, annual reviews and progress against results and
outputs.
189. DFID will be expected to transfer the Grant to a United States dollar denominated interestbearing account to be specified by ADB (the "ADB Account") in currencies, amounts and
indicative instalments as detailed in the following schedule. The proceeds of the Grant will
be converted by ADB's depository bank upon receipt into United States Dollars at the
exchange rate prevailing on the same day of the transfer.
Indicative Installment Schedule (Year 1)
Within two weeks from signing of this Memorandum: £ 4 million
A further payment in 6 months of:
£ 3 million
190. Notwithstanding the above instalment schedule, DFID and ADB may adjust the timing of the
disbursements upon mutual agreement between DFID and ADB. The Grant will be held,
administered and invested at the discretion of ADB and will be held by ADB separately from
ADB’s other resources.
191. The Mid Term Review of the programme in mid-2016 will consider future contributions to the
programme based on outputs and results delivered to date.
D. What is the assessment of financial risk and fraud?
192. The financial, corruption and fraud risks have been assessed as low as UK funds will be
managed by the ADB. The activities funded or supported by the Trust Fund will be subject
to ADB's Anticorruption Policy (1998, as amended from time to time) and Integrity Principles
and Guidelines (2010, as amended from time to time). ADB's Anticorruption Policy requires
staff, the recipient(s) of the Grant, beneficiaries, consultants, bidders, suppliers and
contractors involved in the Grant or any activity financed by the Grant to observe the highest
standards of ethics and personal integrity. Any participant found in breach of ADB's
65
Anticorruption Policy may be subject to sanctions and remedial actions in accordance with
ADB's Integrity Principles and Guidelines. Any legal entity or individual debarred or crossdebarred in accordance with the Integrity Principles and Guidelines will be ineligible to
participate in activities financed or supported in whole or in part by the Grant. ADB have
generally good audit procedures. The 2010 Multilateral Organisation Performance Network
(MOPAN) report rated ADB as strong on internal audits, organisation-wide external audits
and its anti-corruption policy. It did find that country and project level audits were more of a
concern.
193. DFID and the ADB will also discuss and review fiduciary risk at 6 monthly and annual
reviews, and take appropriate and timely action as required.
E. How will expenditure be monitored, reported, and accounted for?
194. A MOU has been agreed across the donors for the development of this multi-donor trust
fund. The MOU is identical across all partners to ensure consistency of reporting and
accountability. The MOU is underpinned by more detailed implementation arrangements
which highlight the arrangements for the day to day operations of the Trust Fund within the
Urban Financing Partnership Facility.
195. As a multi-donor fund, the programme Trust Fund will co-mingle all contributions into a
common pool, the ADB Account. ADB will maintain records and accounts, in accordance
with its standard procedures, that identify the contributions made, and the commitments to
be financed out of the available funds, including eligible activities and administrative
expenses.
196. ADB will provide the Donor with six-monthly progress reports and annual financial
statements of the Fund, in accordance with generally accepted accounting principles. The
programme is audited annually by external auditors, with the cost of these audits to be
charged to the Fund. The ADB will also provide details of actual and forecasted expenditure
for the Arrangement on a six-monthly basis in June and December of each year to match
with DFID tranches in October and April. ADB will submit annual progress reports to DFID
and other Donors on the performance of the Fund within 30 days of the period they cover.
The reports will be consolidated and prepared in accordance with ADB’s normal reporting
standards and annual work programs. ADB will also provide DFID and other Donors such
reports and information, as appropriate, concerning the progress of activities under the
Fund.
197. In addition, ADB shall provide, within 6 months from the end of the Guarantee Availability
Period, a terminal financial statement showing the receipts, income and expenditures under
the Grant Account and the remaining balance, if any. DFID reserves the right to appoint its
own auditors, if deemed necessary. The activities funded under this Arrangement will be
subject to ADB’s Anti-Corruption Policy and Integrity Guidelines and Principles. ADB state
that they may, from time to time, adopt additional rules for administering the Fund that are
substantially based upon the terms and conditions of the Urban Financing Partnership
Facility (where the programme Trust Fund is housed) outlined in their 2008 Board Paper
and, if necessary, such additional rules will be incorporated into the Fund’s implementation
guidelines accordingly.
66
6 Management Case
6.1.1 Overall governance structure for the programme – The programme
Partnership Council
198. The proposal is to establish a multi-donor trust fund which is to be managed by the Asian
Development Bank (ADB) under the umbrella of the existing ADB’s Urban Financing
Partnership Facility (UFPF). DFID is planning to contribute £85 m ($135m) and Rockefeller
Foundation $5 m to the programme (and parallel financing of $30m committed under
ACCCRN which contributes to programme objectives). ADB will also be contributing $6m for
cost-sharing of project preparation activities. A programme secretariat will provide oversight
and coordination.
199. The TF will support activities under 3 areas: planning & soft investments, public, private and
domestic investments via investment grant funds and technical assistance support and
technical assistance for knowledge activities. Activities will be supported in 6 countries
(Pakistan, Bangladesh, India, Vietnam, Indonesia, Phillipines) identified as having high
incidence of disasters, better municipal governance, and institutional capacity81. The program
will be demand-responsive in that cities must formally request support but partners would
help generate interest and political will for the support based on city selection criteria. The
grant financing would directly attract in multilateral and bilateral loan financing, and other
private sector financing. Initial contributing donors to the TF will be DFID and the Rockefeller
Foundation (RF). Other financing partners are currently supporting ADB’s Urban Financing
Partnership Facility (an umbrella facility within ADB).
Trust Fund
(TF)
I
Programme Council
Donors to TF / ADB
Secretariat
(ADB)
II
III
IV
V
Doners aligned
with partnership
Advisory Board
Partners
Implementing
Partners
Collaboration
Partners
Cofinancing
Support
Advice
Output and
Implementation
support
Support and
Extended
Influence
200. A Partnership Council will guide the activities of the programme. These meetings will be
organised annually to coincide with the Annual Consultation Meetings of the Urban Financing
Partnership Facility. The Council will meet once a year to present and discuss on issues of
policy direction, reports of the TF, resource mobilisation, and knowledge generation,
management and dissemination. The Council will meet once a year and be chaired in yearly
67
rotations by core partners contribution more than 1 million dollars per year to the programme.
DFID and the Rockefeller Foundation are expected to be permanent members of the
Partnership Council as core financing partners.
201. A Technical advisory board will also be set up which will meet twice yearly to coincide where
possible with Council meetings and/or DFID Annual Review meetings. Members of the
technical board will be invited based on their global reputation on urban resilience, climate
change and urban poverty reduction. They will play a useful part in uptake of knowledge
generated within the programme. Experience with other Technical Boards has shown they
are most useful when they are involved in decision making around individual policy areas.
202. The linkage between programme Council and the programme governance structure will be
through the Umbrella Urban Financing Partnership Facility Annual Consultation Meetings.
The Council will not adopt decisions on the approval of funding allocations from the
programme. Such functions will be delegated to ADB and subject to the logframe,
implementation guidelines, proposals to the Rockefeller Foundation and business case of
DFID. The Council will be established in parallel to the existing ADB’s UFPF governance
structure as, shown below:
Party
Responsibilities
Financing Partners
Members: UFPF contributors
(i) Provide strategic direction to UFPF
(ii) Meet with ADB for Annual
Consultation
(iii) Review
progress
and
administration and Annual Work
Program
Urban Infrastructure Steering Committee (UISC) within ADB
Chair: DG, RSDD
(i) Provide strategic direction to UFPF
Secretariat: RSID
(ii) DG, RSDD approves UFPF policy
Members: DGs of UDs
and procedures
(iii) Approves allocation of funds to
applications for TAs and grant
components of investments
Urban Infrastructure Working Group (UIWG) within ADB
Chair: DG, RSDD or Designate or
(i) Review and endorse proposals for
Chair of Urban Community of
UFPF support
Practice (CoP)
(ii) Recommend policy & procedures
Secretariat: RSID
of UFPF to UISC
Members: Urban Development
Specialists nominated by Urban
Division Directors as members
Facility Manager (RSID)
Manager: Director RSID or
(i) Serve as Secretariat and oversee
Designate
UFPF day-to-day operations
Assistant: A team of consultants
(ii) Oversee review process for
applications
(iii) Review applications for compliance
with Implementation Guidelines for
use of funds
(iv) Prepare Annual Work Program and
progress reports
(v) Serve as focal point for UFPF
partners for technical matters
(vi) Manage planning, implementation
Partnership UCCRP
Council
(Financing partners –DFID,
RF, and ADB- and other
contributors to the TF)
Thematic areas:
-
-
Planning
Project
development and
implementation
Knowledge and
Capacity Building
68
and knowledge leads
Contact: Designate by Head, OCO
OCO
(i) Facilitate partner contributions to
UFPF
(ii) Communicate on financial issues
among the partners
(iii) Lead negotiations with partners on
financial and procedural
agreements for UFPF contributions
and framework agreement
ADB=Asian Development Bank; DG=Director General (ADB); DFID=Department for International Development; OCO=Office of
Cofinancing Operations (ADB); RF=Rockefeller Foundation; RSDD=Regional and Sustainable Development Department (ADB);
RSID= Regional and Sustainable Infrastructure Division (ADB); UD=User Departments (ADB); UFPF=Urban Financing Partnership
Facility.
203. The Council would be serviced by the programme secretariat – initially requiring one local
(Philippine) consultant with administrative support. Terms of Reference (ToRs) for the
Council, Technical Boards and Secretariat functions have been developed. To allow for
greater scrutiny in in the initial months, the programme donors have requested to meet the
Secretariat every 6 months more informally to discuss issues preparation of risk
management, special reports for DFID Annual Reviews and key initial policy decisions (city
selection, implementation guidelines). Although more informal, this will help provide
reassurances for the implementation of this innovative programme. That is:



City selection, investment eligibility criteria, initial project feasibility of projects selected
through previous planning processes.
Providing inputs into and monitoring the Fund’s 6 monthly work plan;
M&E set up.
ADB plans for staffing and internal governance to support the programme
204. The Urban Infrastructure Steering Committee (UISC), which will comprise the directors
general of the operational departments82 and Regional and Sustainable Development
Department (RSDD), will provide strategic direction for the programme and approve
allocations. An Urban Infrastructure Working Group (UIWG) made up of representatives
from the operational departments and sectoral units within RSDD and chaired by the director
general of RSDD (or designate) will be constituted to oversee, review, and make
recommendations on project proposals for programme assistance. It will also make policy
and procedural recommendations to the UISC regarding Fund operations.
205. The Office of Cofinancing Operations will facilitate contributions to the programme, and act
as the official channel of communication for financial issues between ADB and Financing
Partners. The Controller's Department will provide accounting functions for the programme
and prepare financial statements.
206. ADB will put in place a Program Management Unit comprising a full time Fund Manager, a
national staff member, 3 consultants for each of the workstreams, and an M&E expert. The
69
Fund Manager will be responsible for the day-to-day management of the programme. S/He
will prepare an Annual Work Program in consultation with the operational departments and
the UIWG. The Annual Work Program will consider the prevailing and predicted conditions
that can affect the demand side (need for additional resources) and the supply side
(contributions) of the Fund and its component funds and framework agreements and set
realistic objectives and targets (on contributions as well as on additional resource
requirements) with specific time frames. The UISC will meet once a year to discuss and
approve the Annual Work Program, and from time to time if needed.
Workplan for first 3 months
207. On confirmation of commitment and during processing of Board Paper, ADB, through the
Urban Community of Practice will:










a Fund Manager and national officer will be appointed by ADB staff leads for project
(1.5 on total FTE) to oversee the Fund Secretariat. The manager along with ADB staff
leads would have oversight of the procurement for the 3 components.
DFID will ensure that the DFID programme funded post will be advertised and in place
within 3 months of approval. In total, at least 2 consultants should be in place and the
DFID programme funded expert identified.
The team will be responsible for the procurement arrangements for each of the
components(i.e., knowledge, planning, and project development/investment)
Begin MOUs with different partners to ensure that there is a strong partnership buy in.
Hire an M&E expert and country coordination/knowledge managers
Setup the advisory board
Develop the monitoring evaluation framework
Organise the first partnership council meeting
Setup of RETA for planning and hire IDCs to get early spend moving
Conduct city mapping exercise using vulnerability criteria, overlaps with other
initiatives, with ACCCRN cities, Green Cities and DFID Regional work for early
selection of first 10 cities.
How will cities get involved and projects identified?
208. Planning processes in each country will be primary channel for project identification. The
Urban Community of Practice consists of representatives of all ADB’s regional department
(RDs) and its Private Sector Operations Department (PSOD). It also serves as the focal
coordination platform for urban sector directors of the RDs which control the resident
missions (RMs). While ADB’s Country Strategy and Partnership (CPS) agreements are multiyear, there is usually considerable flexibility in pipeline preparation, particularly in regard of
technical assistance (TA) projects. Urban sector directors are in constant touch with RM
heads. After discussion at the CoP and agreement on priorities, directors liaise with RM
heads to include new projects in the CPS. In addition, the CDIA organisation and network of
cities can be mobilised to provide projects and CDIA mobilisation can be done even more
quickly (1 month, if funds are in the facilitating regional technical assistance project – which is
already established).
209. Selection of project proposals will be undertaken using criteria provided in the programme
implementation guidelines including how investment is incorporating resilience principles,
70
proactive targeting of poor and vulnerable people, demonstration value in the sector, drawing
from inclusive integrated planning processes, and having high potential for replication.
Resilient principles and investment selection might be one of the first areas for the technical
advisory board to discuss.
6.1.2 Our approach to managing the programme within DFID
210. The management of the programme within DFID will be led by the designated Lead Adviser
in Asia Regional Team (30% FTE at A2 and 10% of A1 grade time) for the first year of
implementation and then gradually reducing to 20% by Year 3. This will be complemented by
a similar input by the Rockefeller Foundation who are aligned with us on management
issues. Although ADB will require flexibility in managing the programme, the complexity of the
programme, the fact that it is a medium risk programme, aimed at demonstration, learning
and testing means that active DFID engagement will be important. We will also be having
internal advisory support provided on the programme through the Asia Regional Board and a
Climate change regional advisory board tasked with steering programmes across the
regional portfolio.
211. The programme will also benefit from a full time programme funded post based in Manila
within the ADB who will be responsible for embedding in elements of the theory of change
complementary to the other team members. The draft TORs for this post currently propose
individuals with strong city resilience experience. The Monitoring and Evaluation of this
programme will form a key oversight role for this individual and DFID have retained funds for
independent evaluation of the programme. In addition, Climate and Environment Department
(CED) has maintained a keen interest in the knowledge and learning for this programme so
10% of a climate adviser in CED will also be involved in the knowledge aspects of the
programme both in terms of disseminating within DFID.
6.1.3 Special reports and Deep dives
212. Special annual reports will be prepared by the Secretariat (funded by the knowledge
component) to feed into DFID annual review process covering in Year 1 Monitoring and
evaluation framework and city selection, Year 2 project selection decisions for value added
resilience investments, Year 3 will involve the mid year review of the programme, Year 3/
Year 4 use of TA and VfM in procurement, and Year 5 transformational impact from the
programme. Whilst not part of the formal management and governance of the programme,
this will allow DFID to manage the risks of the programme.
213. In addition, for learning purposes, the Secretariat will organise deep dives into cities will take
place to understand how the 3 components are working together. These will be organised
alongside other learning workshops in selected cities.
Reporting
214. Progress against the strategic objectives of the overall programme will be subject to joint
oversight by the ADB and donor partners (DFID, Rockefeller) on a six-monthly basis aligned
with DFID results and financial reporting through the Secretariat. ADB will provide DFID with
annual workplans that map against the logframe, and with six-monthly progress updates
against these. The annual reviews will take stock of overall progress, agree forward strategic
priorities and workplans, and identify key lessons and risks.
71
B. What are the risks and how these will be managed?
Probability of
risk occurring
215. A Risk Assessment conducted through an independent assessment of the programme and
subsequently validated by the partners identified 16 risks of which 3 are seen as high
probability of occurrence and high impact and a
Impact on programme's ability
further 3 as high impact, medium probability. Most of
to deliver against its objectives
the risks identified here in respect of the programme
RISK
can be categorised as relating to either, capacity
MATRIX
L
M
H
issues, operational constraints, the economics of
UCCR, the governance and politics of climate
L
,11
4,1
12
financing and responses to climate change, political
leadership or drivers for uptake of UCCR and scaling
M
2, 5
8,10,13
5, 15
processes.
H
9
3, 8, 7, 15
216. The mitigation strategies and actions are mainly
to be undertaken by the programme donors and the programme itself, once established.
Many of the actions relate to design parameters for the programme, and some have been
addressed in the development of the formal DFID Business Case. Others however, are
operational, and are areas which will need to be addressed by programme managers to
reduce residual risk. A number of measures have been put in place to manage this risk,
enhanced governance, DFID programme funded expert, increased DFID involvement and
ADB senior management involvement. The 6 monthly meetings with the Secretariat will
consider these risks. It is judged that DFID’s investment in the programme will be at
least a medium risk investment.
Risk
1
The national enabling
environment does not support
city-level planning, regulation
and investments
2
Lead-in times to get
submission of investable
project concepts is long
3
Programme becomes too
complex for ADB to manage
well.
4
Programme success does not
catalyse alignment and
harmonisation within countries
5
Catalysed portfolio remains
pilots-scale and does not
generate new models of UCCR
practice and financing,
Probability
Impact
H/M/L
H/M/L
L
M
M
L
H
H
M
L
M
L
Mitigation Strategy
The programme selects cities on the basis of
vulnerability, strong national enabling
environments and good city municipal governance.
The programme engages in policy- dialogue, as do
donors at the national and international levels.
Risk Owner: ADB, DFID
Timeframes for the programme need to be
realistic and based on experience of other funds
(CDIA). Support/facilitation is provided through the
programme to develop suitable funding proposals.
Risk Owner: ADB
DFID programme funded post, special reports
and deep dives. More strategic engagement with
ADB.
Risk Owner: ADB and DFID
ADB and partners promote programme
partnership benefits heavily within the offer.
Ensure incentives to do so are included in MEF
Risk Owner: ADB
The programme manages its knowledge
component well. Monitoring framework pushes for
peer to peer learning and global, national uptake of
practices.
Risk Owner: ADB
72
6
Sovereign lending
requirements prevents funds
reaching cities effectively
7
Programme remains focused
on city governments, and do
not bring in the private sector
or vulnerable groups.
8
Lack of consistent Mayoral
leadership in supporting UCCR
planning processes (ie
municipal governance is so
poor that process cannot be
sustained)
Returns to Investment in
emerging UCCR markets,
products and services do not
provide sufficient incentive to
attract private sector
investment
9
10
Extreme climate events occur
during implementation, before
cities are able to respond,
denting confidence in the
approach
11
Programme is undercapitalised and does not reach
a critical mass
12
Investments are not balanced
between soft and hard
investments to support a
resilient planning framework
13
Cities focus climate funds on
climate proofing infrastructure
investment without adopting a
climate change and DRR
planning approach
14
UCCR projects fail to address
the concern of, and risks
specific to, poor urban
communities
M
H
M
H
M
M
H
M
M
M
L
L
L
H
M
M
H
H
Funds guidelines and regulations established
based on lessons from other funds. ADB already
have established practices of working and lending
sub nationally. Funding structures to be accessible
to non-government entities.
Risk Owner: ADB
Stakeholder participation in planning and
regulation ensures involvement of other actors.
MEF includes indicators to measure this.
Risk Owner: ADB
Programme to work closely within network of
partners to select cities where there is strong
municipal governance and leadership. Ensure
there are partners within the planning processes
which can carry activities forward.
Risk Owner: ADB
Programme is designed so that it can work on
and offer incentives to invest in markets created
by climate change impacts. CDIA and other
support/facilitation are provided through the
programme to develop suitable project funding
proposals.
Risk Owner: ADB
Planning processes need to take into account
this probability in planning phases, especially in
terms of increasing awareness of decision making in
uncertainty.
Risk Owner: ADB
Programme partners lever-in additional donors
through good marketing (more likely if
programme has a clear value proposition and
starts to show success). Potential for significant
leveraging in amongst partners already exists.
Risk Owner: ADB, donor partners
Implementation guidelines for the programme
specify the nature of the investments, the
notional share of investments between planning,
softer capacity building investments, knowledge and
large scale investments.
Risk Owner: ADB
Knowledge component focuses cities to make
journey from UCCR has climate smart to climate
resilient investments. Learning from CDKN,
Rockefeller, IIED and RED programmes to be
shared.
Risk Owner: ADB, Donor partners
Monitoring framework has clear indicators and
targets on poorest and vulnerable, and on
stakeholder participation. In inception, strong urging
to include partners with a special focus on working
with urban poor and urban slums.
Risk Owner: ADB, Donor partners
73
15
Integrated UCCR and Climate
change is not mainstreamed
across AsDB
M
H
Use ADB replenishments to further this
objective. ADB senior management continue to
stay engaged in the programme. Involve
shareholding team on changes to operational
guidelines.
Risk Owner: ADB, Donor partners
C. What conditions apply (for financial aid only)? Not Applicable
D. How will progress and results be monitored, measured and evaluated?
217. Monitoring and evaluation of the programme will take place at 3 levels: (1) within the
programme every 6 months through a rigorous monitoring and evaluation framework focused
on results tracking and learning through evaluations 2) at the level of the partnership through
the annual UFPF umbrella partnership meetings and Partnership Board meetings will review
the performance of the Trust Fund and the progress against spending expectations (3) at the
level of the ICF in which independent evaluations of the programme will be conducted.
Rockefeller Foundation is also likely to have an independent evaluation of the programme.
Programme level monitoring
218. As the programme is primarily about learning, demonstration and transformational impacts,
the monitoring requirements are greater than those required within ADB’s own corporate
M&E framework. During its inception period, the programme will engage a consortium of
partners to manage the knowledge management component under which M&E will be
spearheaded. It is envisaged that knowledge, M&E experts will be embedded throughout
each component to ensure cross fertilisation. It is envisaged that up to 5% of the total value
of the trust fund will be set aside for M&E activities (including for independent evaluations by
DFID at mid-term and of programme). This is separate funding from any independent
evaluation that will be conducted by DFID as part of the evaluation of its climate programmes
under the International Climate Fund.
219. The results framework and logframe of the programme will be tracked, monitored and
reported on a 6 monthly basis to ensure that the entire donor reporting requirements in
particular those of Rockefellers’ and DFID’s corporate and International Climate Fund
requirements are met. DFID Annual reviews will include a special report prepared by the
Secretariat. Monitoring of progress and impact will be done with reference to the log frame
and the theory of change. The current results framework with 17 indicators monitors the
direct results from investments and each of the components. This information will be
aggregated across the components (knowledge, planning, investments) and across the
potential 25 cities.
220. A first task of the M&E experts hired under the knowledge component of the programme will
be to finalise the Monitoring and Evaluation Framework (MEF) which will provide the basis for
implementation of the M&E system. The working members of the Partnership Council (DFID,
ADB, RF staff leads) will also set the framework in place shortly after the setup of the fund.
The MEF will set out the core activities, methodologies, and baseline data sources through
which the programme will monitor the results and evaluate the implementation of the
partnership programme from the level of the target cities to the programme as whole. The
M&E framework will serve the three objectives of accountability to programme partners,
74
quality assurance to component managers, and knowledge management on programme
experiences. For DFID, this will also include reporting for the Annual Reviews, Mid Term
Review and end of project reviews.
221. Part of the MEF will include the tools that will be deployed at different levels. The M&E
framework will include what is effectively an M&E matrix which will identify for the whole
results chain the data sources, data collection methods, frequency of collection,
responsibilities and likely use of information. The M&E matrix is essentially an annotated
excerpt of the logframe. This will be underpinned by a Management information system
which records and documents the different programme components held by the different
managing agents. Much of the data on progress and results will be held at city-level. The
programme will establish a Management Information System or portal through which data
and information can be compiled. This will also be linked to a knowledge management
system. Following this, early baseline studies for all the indicators will begin for reporting
within 6 months of start of the programme.
Partnership level and trust fund level management of the TF
222. Programme performance of the trust fund will be tracked at semi-annual Council meetings
and at the annual UFPF meetings. The key portfolio trust fund metrics that will be monitored
will be:
a) Progress against programme deliverables, against 6 monthly workplan milestones
and deliverables.
b) Disbursements: by component in the trust funds against financial profile of donors.
c) Matching of funding tranches linked to results milestones and activity milestones.
d) Dashboards set up across components including cities to include spend,
investments, activity follow up and risks. This could be a communications tool for
monitoring at the programme Partnership Council.
Mid-term review and end of project evaluation
223. DFID will also separately commission and manage an independent mid-term (Year 2.5
years) and end of project evaluation (and Project Completion Report) in the final year to
assess outcomes and impact, and generate lessons. The approach and methodology will be
developed leading up to the mid-term review and will be discussed with the ADB and donor
partners.
Evaluation of the programme
224. Medium term and long term objectives for evaluations identified through the partnership
discussions will test the outcome and impact indicators included in the logframe:


To what extent has the programme helped build the climate change and DRR of the
poorest people in medium-sized cities and what factors contribute or deterred that from
happening?
Testing the extent to which the programme has delivered transformational change through
the partnership i.e has partnership yielded alignment, harmonisation, collaboration and
scale up of UCCR.
75

Testing some key assumptions of the theory of change including (a) whether integrated
planning combined with capacity building and a project preparation facility brings about
greater integration of climate change into urban investments leading to greater urban
climate change and DRR of the poorest (b) to what extent has the planning processes been
the catalyst for investments, for the partnership benefits?
 Ability of the partnership to influence an MDB to mainstream climate change into its
operations.
225. The following tools are being considered to help monitor and evaluate the impacts of the
programme. These include:
(a) For the Planning component:
 Quality assessments of city-wide UCCR plans –a key tool in monitoring quality of planning
processes will be annual assessments of the coverage and quality of city-wide UCCR plans
and regulations.
 Annual joint capacity assessments – to understand how, why and with what likely effects,
capacity for urban planning has been strengthened in a select number of cities. These will be
carried out by stakeholders from each city, programme reps and will involve cross-city peer
review.
 Participatory evaluations – Target cities (including the voices of the poor and vulnerable) will
be supported to carry out regular participatory evaluations of the process and results of multistakeholder engagement in city-level planning and regulatory design. The findings will feed
directly back into regular monitoring, baselines, joint capacity assessments of the programme.
(b) For the Investments component
 A proactive knowledge management plan which will demonstrate how monitoring and
evaluation activities will contribute to knowledge obtained through projects implemented
through the programme.
 Project monitoring and reporting templates – A package of templates will be developed
that follows each project through the project cycle, from application through approval through
progress reporting to completion.
 Partnership survey – To assess the programme’s success in promoting and leveraging
partnership working and investment, the programme will design and conduct a six-monthly
survey of partners contacted.
(c) For the Knowledge component
 Knowledge, Attitudes and Practices (KAP) surveys – the programme’s support to
networking and knowledge exchange will be aimed at a wide range of stakeholders in target
cities and at wider audiences at national and international levels. The Partnership will develop
a KAP tool for assessing the extent to which these audiences access, understand and use
programme knowledge products and UCCR knowledge more generally.
 Bi-annual tracer study of knowledge network – In addition to the KAP survey, a sample of
‘key’ messages will be traced through institutional systems and knowledge networks with
which the programme interacts. These case studies will be synthesised to provide an overall
analysis of knowledge transfer.
Endnotes
76
1
World Bank based on EM-DAT/CRED data.
2 www.un.org/population/publications/sixbillion/sixbillion.htm
3 United Nations (2004) World Population Prospects: The 2004 Revision: United Nations.
4 Climate change, disaster risk and the urban poor, May 2011 World Bank
5 Cities Transformed: Demographic Change and Its Implications in the Developing World, U.S.
National Research Council issued, Mark R. Montgomery, Richard Stren, Barney Cohen, and Holly E.
Reed (eds.), Panel on Urban Population Dynamics, National Research Council, Washington DC:
National Academies Press. 2003
6
UN-Habitat, State of Asian Cities 2010/11, UN-HABITAT Foundation, UN-ESCAP 2010, p 60.
http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=3078
7
World Urbanisation Prospects, Revised 2011. http://esa.un.org/unup/Analytical-Figures/Fig_4.h
8 World Bank, From Growth to Inclusive Green growth: the economics of sustainable development.
2012
9
World Bank based on EM-DAT/CRED data.
10
Asian Disaster Reduction Center. 2007. Natural Disasters Data Book-2007. Kobe (p. 5).
11
With the exception of statistical information about ADB’s disaster and emergency assistance, all
other figures have been distilled from the global disaster database (EM-DAT) maintained by the
Centre for Research on the Epidemiology of Disasters (CRED), Universite Catholique de Louvain –
Brussels, Belgium.
12
Investing in Climate change and DRR, ADB report, January 2013
13
Swiss Re (2008, 2009, 2010) “Natural catastrophes and man-made disasters in 2007 (2008) and
(2009).” Sigma. Zurich, Switzerland.
14
Swiss Re.
http://www.swissre.com/media/news_releases/nr_20120328_sigma_disasters_2011.html
15 Kamal-Chaoui, Lamia and Alexis Robert (eds.) (2009), “Competitive Cities and Climate Change”,
OECD Regional Development Working Papers N° 2, 2009, OECD publishing, © OECD.
16 Centre for Global Development, Twenty cities most vulnerable to storm surges, and sea level
rises, 2009. http://www.preventionweb.net/english/professional/news/v.php?id=11240
17
Climate Risks and Adaptation in Asian Coastal Megacities, World Bank, SEPT 2010, pg. 13
18 The Economics of climate change in Southeast Asia, ADB April 2009
19 World Bank Economics of Adaptation to Climate Change, Global report 2009 Summary.
20
India infrastructure summit 2012, Ernst and Young.
www.ey.com/Publication/vwLUAssets/.../FICCI_Infra_report_final.pdf
21 Decoupling report, UNEP 2011
22 Moser, C. & Satterthwaite, D. 2008. Towards pro-poor adaptation to climate change in the urban
centres of low- and middle-income countries. Climate Change and Cities Discussion Paper 3, IIED.
October
23 Intergovernmental Panel on Climate Change (IPCC). ‘Climate Change 2007: Impacts, Adaptation
and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the IPCC’ in
Parry, M.L. et al. (eds.) Fourth Assessment Report of the IPCC. Cambridge: Cambridge University
Press, 2007.
24
Bartlett et al, Social aspects of climate change in urban areas in low and middle income nations,
Contribution to the World Bank Fifth Urban Research Symposium
25 World Bank 2011 (ibid)
77
26 Satterthwaite D., Huq S., Pelling M., Reid H., Romero Lankao P., Adapting to Climate Change in
Urban Areas, Working paper produced by IIED. 2007.
27
Gender, cities and climate, UNHabitat 2012.
www.unhabitat.org/downloads/docs/.../GRHS2011ThematicStudyGender.pdf
28 World Bank 2011 (Ibid)
29 Friend, R. & Moench, M. 2012, Perspectives on Poverty, Vulnerability and Climate change and
DRR, February, 2012 p. 15
30 World Disasters Report – Urban Risk, 2010, International Federation of Red Cross and Red
Crescent Societies, 2011
31 http://www.ipcc-wg2.gov/SREX/
3232
McKinsey Global Institute. 2010. India’s Urban Awakening: Building Inclusive cities,
Sustaining economic growth.
Ravallion M, Chen S, Sangraula P, ‘The Urbanisation of Global Poverty’, Feb 2007, Development
Research Group, The World Bank.
33
34
Courtenay Cabot Venton, Catherine Fitzgibbon, Tenna Shitarek, Lorraine Coulter, Olivia Dooley,
Economics of early response and disaster resilience – lessons from Kenya and Ethiopia, June 2012
35 WRI, http://insights.wri.org/news/2013/01/where-climate-adaptation-funding-going-new-projectaims-find-out
36
In 2010, the Climate Policy Initiative report suggested that assessed the sources of climate finance
globally, and found that of the $97 billion of observable flows, $55 billion came directly from the
private sector in form of market-based loans, mezzanine financing and common equity.
37
ADB Private sector note prepared for the business case. ADB
38 Future proofing cities, Joint report by Atkins Consulting, UCL – Draft report out November 2012
39 Atkins and UCL joint study, Ibid, 2012
40 Climate Change Disaster Risk and urban Poor, World Bank, 2011 (ibid)
41
Dodman & Satterthwaite, 2008, p69
42
Ibid, p70
Satterwaithwaite D. and Mitlin D, “A future that low-income urban dwellers want, and can help
secure”, March 2013 IIED.
43
44
Gender and climate change, WHIO report
www.who.int/globalchange/GenderClimateChangeHealthfinal.pdf
45
http://www.unisdr.org/campaign/resilientcities/toolkit/essentials
46
Visions of a resilient city, Arup International 2012
www.arup.com/~/media/Files/.../Resilient_Cities_Scoping_Study.ashx
47
Existing budgeting systems often discriminate against even highly effective less costly ‘soft’
investments such as early warning systems
48
Intellecap, Rockefeller Foundation, Opportunities for Private Sector Engagement in Urban Climate
Change Climate change and DRR Building, 2011
48
50
ISET 2012
UCCRTF Investments document
78
51
OECD (2009) Policy guidance on Integrating Climate Change Adaptation into Development
Cooperation. Energy Policy, doi:10.1016/j.enpol.2010.05.049
52
Hedger M, Moench M, Dixit A, Kaur N, and Anderson S, Approaches to Planning for Climate
Change, Bridging Paper 2011 Learning Hub, Brighton IDS.
53
Satterwaithe and Mitlin, A future that low-income urban dwellers want, and can help secture, March
2013
54
Brown A, Dayal A, Ruimbaitis C, From Practice to Theory: Emerging Lessons from Asia for Building
Urban Climate Change Climate change and DRR, Environment and Urbanization Vol 24 No 2
October 2012
55 Urban Climate Change Climate change and DRR Partnership – Validation and Design
Consultancy Report, November 2011, Commissioned by the Livelihoods Resource Centre (DFID),
Verulam Consultants.
56 Starting with 26 members in 1987, CITYNET has grown to become an international organisation of
more than 100 members in more than 20 countries, most of which are cities and local governments in
the Asia-Pacific region.
57 Planned investments in 24 countries valued at $65 million US in developing early warning systems
as “the most pressing” capacity needed in order to protect vulnerable communities from the effects of
climate change.
58
Validation report for UCCRP, Verulam Consultants December 2011.
59
Dodman D, Brown D, Francis K, Hardoy J, Johnson C, Satterthwaite D, Understanding the nature
and scale of urban risk in low and middle income countries and its implications for humanitarian
preparedness, planning and response, March 2013
60
Coulter, L., The Economics of Climate change and DRR: Lessons from Kenya and Ethiopia, Food
Economy Group, May 2012.
61
New Economics Foundation, Counting on Uncertainty, 2012.
www.neweconomics.org/publications/counting-on-uncertainty
62 Dodman, D. & Satterthwaite, D. 2008. Institutional Capacity, Climate Change Adaptation and the
Urban Poor. IDS Bulletin. Volume 39, Issue 4, pages 67–74, September.
63 Bartlett, S., Dodman, D., Hardoy J., Satterthwaite, D., & Tacoli, C. 2009. Social Aspects of Climate
Change in Urban Areas in Low- and Middle-Income Nations. International Institute for Environment
and Development (IIED) and Instituto Internacional de Medio Ambiente y Desarrollo (IIED-América
Latina).
64 Friend, R. & Moench, M. 2012. Perspectives on Poverty, Vulnerability, and Climate change and
DRR. February
65
Moser and Sattherwaite, p 19
This is discussed in the document ‘Overview of Social Issues Relating to Urban Climate Change
Climate change and DRR’ and the guide can be found at:
66
http://www.cdia.asia/knowledge-materials/pro-poor-urban-infrastructure-investments-a-guide-formunicipalities/
Again, this is further discussed in the document ‘Overview of Social Issues Relating to Urban
Climate Change Climate change and DRR’. Please also refer to the ACCCRN City Projects
Catalogue for details of how the poor and vulnerable are participating in specific projects:
67
http://www.acccrn.org/sites/default/files/documents/ACCCRN%20catalogue%20final%20300812.pdf
68
Conducted by Veralum Associates, July 2011.
69
2008 NGO Forum on ADB
79
Pelling, M. ‘Urban Governance and Disaster Risk reduction in the Caribbean: the experiences of
Oxfam GB’ Environment & Urbanization, 2011. International Institute for Environment and
Development (IIED). Vol 23(2): 383–400.
70
71
World Bank, JICA, ADB (2010), Climate Risks and Adaptation in Asian Coastal Megacities
72
Martín-Ortega J. and Markandya A., (2009). The costs of drought: The exceptional 2007-2008. BC3
Working Paper Series, Bilbao (Spain).
73
Based on OECD Data
Nicholls, R. J. et al. (2008), “Ranking Port Cities with High Exposure and Vulnerability to Climate
Extremes: Exposure Estimates”, OECD Environment Working Papers, No. 1, OECD Publishing.
http://dx.doi.org/10.1787/011766488208
75 Country classification based on World Bank, List of Economies, July 2012.
74
76 A disaster micro-insurance program utilizing the Cooperative Life Insurance and Mutual Benefit
Services (CLIMBS) as an aggregating insurer of other member cooperatives whose microloan
portfolios are at risk of major natural hazards. Based on a parametric trigger, a portion of member
coops loan portfolios are compensated with benefits shared with individual borrowers to rebuild
homes or replace livestock. CLIMBS reinsures the risk back to Munich Re.
77
Description of the types of climate change and DRR investments (as defined under the UCCRP ie
including mitigation-linked) that might be eligible under CP3 would include e.g., water supply and
wastewater projects, flood protection investments for green industrial parks, etc.
78 ADB is already supporting such a community based insurance scheme in the Philippines…..
79 Adaptation thematic paper, ICF, March 2010
80
Internal paper on Commercial Arrangements with the MDBs, 2012
81
Six Asian countries have been selected for initial focus under UCCRP: Bangladesh, India,
Indonesia, Pakistan, The Philippines, Vietnam
Operational departments include ADB’s Regional Departments as well as other departments with
operational capacity such as the Private Sector Operations Department (PSOD), and the Office of
Regional Economic Integration (OREI).
82
80