Outlook on Climate Change Adaptation in the South Caucasus Mountains

Financial mechanisms

For the last decade donor technical and financial support remains a primary source of funding for climate change activities (e.g. the Adaptation Fund, Global Environment Facility (GEF), European Union (EU), European Bank for Reconstruction and Development (EBRD), The World Bank, United States Agency for International Development (USAID), The Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) & The Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank (KfW), United Nations Development Programme (UNDP), United Nations Environmental Programme (UNEP), Austrian Development Agency (ADA), etc.) (see the case study on Georgia above). However, the situation on the ground is slowly beginning to change as governments increase their expenditure on climate change related actions. The pace of this trend is a factor of the different emerging development trends (along with the ratio of frequency of natural disasters) across the counties. The last few years has seen an increase in the frequency of extreme climate events in all the South Caucasus countries, and also in the amounts spent on dealing with their consequences. For example, in Azerbaijan it is estimated that natural disasters (flooding, mudflows, etc. triggered by heavy rainfalls and other exposures to climate change) cost Azerbaijan US$ 70–80 million annually (WWF 2008). It should be assumed that losses in the other two countries are

also significant. For example, a recent natural disaster in Georgia’s capital, Tbilisi, which was caused by unusually heavy rainfall in 2015, claimed the lives of more than 20 inhabitants and significantly damaged the city’s physical infrastructure. It resulted in pay- outs from private insurance companies of up to 2.5 million euros to those affected, not to mention tens of millions of euros required for compensation of losses and rehabilitation works from municipal and state budgets. Given these economic costs governments are slowly adjusting their expenditure planning. In Georgia, for example, under the Regional Development Programme (Government of Georgia 2014b), two government agencies – the National Environmental Agency and the Ministry of Regional Development and Infrastructure have been tasked with providing more than US$ 30 million over a three-year period for natural disaster prevention. In Azerbaijan, in 2010 alone, and following the Kura river floods, the country spent more than 400 million AZN (approximately US$ 500 million according to historical exchange rates) to tackle disaster-related problems and to take adaptive/prevention measures to reduce future flooding risks. In Armenia, as early as 2013, the government created an environmental fund to establish the relevant financial mechanism for climate change mitigation (GHG emissions reduction and carbon sink development) and adaptation (combating climate change impact) measures (see Armenian case study).

View on mountain Ararat

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