Climate-proof investing - international exchange of experience

Two workers at an artificial water channel

Picture: GIZ Peru

The Peruvian Ministry of Economy and Finance (MEF) invests over USD 10 billion in infrastructure and services annually. Many of these investments are threatened by climate change: bridges are damaged by extreme rainfall, the water supply for hydropower plants is declining permanently and rising sea levels are destroying tourist infrastructure on beaches. MEF has been working together with the Peruvian Ministry of the Environment (MINAM) since 2011 to adapt public investment to climate change in order to reduce climate-related economic, social and environmental damage. In this work, the ministries are supported by an International Climate Initiative (IKI) project, which is being implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Throughout the project, participants acquired comprehensive experience in climate-proof investment policy. This experience formed the basis for an international workshop, which took place from 15 to 18 July 2014 in Lima. Participants were representatives of ministries of economy, finance, planning and environment from other Latin American countries, representatives of international organisations, and experts from projects in various regions in Peru. They held intense discussions on how strategies for climate change adaptation can be integrated into public investment schemes, which success factors play a role, which lessons have been learned and the extent to which they are transferrable to other regions and countries. 'Climate change is not just an environmental issue. It is also and especially an issue relevant to the economy', said Javier Roca, General Director of the Department of International Economic Affairs, Competition and Productivity at MEF.

Three key processes form the core of the event: (1) the strategy for the management of catastrophe risks while taking climate change into account and its use for planning and evaluating public investments; (2) the development of a method for climate risk analysis and the identification of suitable adaptation measures in pilot projects; and (3) cost-benefit analyses for the economic evaluation of these adaptation measures. 'The methods are essential to the work of the project planners. What is now needed are programmes to strengthen implementation capacities so that we can go beyond case studies and ensure that the new criteria do not make project planning more complicated', noted Jaime Saavedra, Director of the Unit for Planning Public Investment Projects in Infrastructure of the regional government of Piura. Further topics included financing mechanisms to promote investment in adaptation to climate change; information systems with cartographic material on risks and future climate scenarios; and the development of expert networks at national and international level. Other Latin American countries and international organisations such as the United Nations Development Programme (UNDP) and the Inter-American Development Bank (IDB) supplemented the Peruvian experiences with their own perspectives. At the closing of the event, MEF encouraged the establishment of a Latin American network of ministers in order to coordinate activities in the area of climate change adaptation in public investment and budgeting systems. An action plan is now being developed to operationalise this network with clear steps and responsibilities for the coming months.