Climate Change risk management in Peruvian Public investments

1
informative note
Climate Change Risk Management in
Peruvian Public Investment: Strengthening
Adaptation in Development Decision-Making
A
INFORMATIVE Note
Climate Change Risk Management in Peruvian Public Investment:
Strengthening Adaptation in Development Decision-Making
Public Investment and Climate Change Adaptation Project
Jr. Los Manzanos 119,, San Isidro, Lima, Peru
http://ipacc.pe/
Author
Michael Scholze (GIZ)
Editorial coordination
Andrea Staudhammer and Karen Kraft (IPACC BMUB/GIZ)
Technical assessment
IPACC project team (BMUB/GIZ))
Proofreading
GIZ Sprachendienst
Design and layout
Renzo Rabanal
Photographs
GIZ Photo Archive, PREDES, Thomas J. Müller / El Taller.pe
Printing
GAMA GRAFICA S.R.L.
Jr. Risso 560 Lince
Legal deposit in the Biblioteca Nacional del Perú (National Library of Peru) N� 2015-07931
First edition, Lima, Peru, June 2015
German Development Cooperation - GIZ agency in Peru
Av. Prolongación Arenales 801, Miraflores, Lima, Peru
Reproduction of all or part of this publication is only permitted subject to the condition that the
source is acknowledged.
Please cite as: Scholze, Michael. (2015). Climate Change Risk Management in Peruvian Public Investment: Strengthening Adaptation in Development Decision-Making. Informative note. Lima: Public Investment and Adaptation to Climate Change (IPACC) project.
Index
Presentation
Impact of climate change in Peru
Public investments and climate change
The IPACC project approach
Project impacts
Lessons learned so far
The way forward
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5
6
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13
14
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Presentation
According to the Sendai Framework for Disaster Risk Reduction 2015-2030, during the last decade more than 1.5 billion people worldwide have been affected by disasters in different ways.
Hazard exposure and the generation of new risks are increasing, as are the economic, environmental and social losses caused by disasters. Climate-related disasters, according to the UNISDR,
currently account for more than 80% of the world´s disaster events and these are expected to
be more frequent and intense in the future due to the process of change climate. For the first
time, climate change is part of the post-2015 proposal for Sustainable Development Goals to
“end poverty in all its forms everywhere” by 2030. The call to “take urgent action to combat
climate change and its impacts” highlights the importance of climate as a determining factor of
sustainable development. This Objective 13 proposes strategic actions, including: 13.1 “Strengthen
resilience and adaptive capacity to climate-related hazards” and 13.2 “Integrate climate change
measures into national policies, strategies and planning”.
Anticipating this international call to integrate climate change measures in development policy, planning and practice, Peru began in 2011 incorporating climate change adaptation by
linking it to existing disaster risk management practice, in the National Public Investment System (SNIP). This initiative of the Ministry of Economy and Finance (MEF), the Ministry of Environment (Minam) and the German Cooperation (GIZ), funded by the Federal Ministry for the
Environment, Nature Conservation, Building and Nuclear Safety (BMUB) through its International Climate Protection Initiative (IKI), aims to support the knowledge concerning the potential costs and benefits of climate change of decision makers at political and operative levels,
and to guide public investment using criteria for climate change adaptation and the reduction
of risk associated with climate.
In this context we are very pleased to present the Informative Note, Climate Change Risk Management in Peruvian Public Investment: Strengthening adaptation in development decision-making, a
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document in the project series Public Investment and Adaptation to Climate Change (IPACC)
that contains analysis by an international expert of the Peruvian experience integrating climate
change adaptation in the public investment system and, thereby, in all public investment projects in Peru. Our thanks to the author, Michael Scholze of the GIZ, for his reflections and analysis that highlight project achievements in putting climate change adaptation into practice
through tangible criteria and guidelines (national, sectorial and regional) and their application
during the formulation and evaluation of public investment projects.
We thank all the national and regional partners for their collaboration in constructing a conceptual, normative and methodological framework for public investment project design and
implementation that manages risk in a context of climate change and for the implementation
that turned theory into practice with the objective of rendering development in Peru more
sustainable and resilient to weather and to climate change.
Eloy Durán Cervantes
Director General
DGIP-MEF
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Eduardo Durand López-Hurtado
Director General
DGCCDRH-Minam Alberto Aquino Ruiz
Asesor Principal
Proyecto IPACC (BMUB/GIZ)
Impact of climate change in Peru
Peru is impacted by climate change in several ways. Observable phenomena such as the rapid
retreat of its glaciers suggest that changes are already taking place. Water stress, which already
affects some of the 70% of the population that lives along the arid coast, is expected to increase.
Water availability is less consistent during the year, which has an impact on hydro-electricity
production, and low-lying areas and ecosystems along the country’s 3,000 km coastline are
threatened by rising sea levels. Agricultural productivity is expected to decline in most areas
of the county, due largely to the spread of crop pests and diseases. Higher altitudinal belts on
the other hand, may become suitable for marginal agricultural production as temperatures rise.
Current observations indicate that the fishing industry is being severely affected. The main climate
risks in terms of cost and lives threatened come from climate-related extreme weather events,
which are becoming more frequent and intense. Floods, landslides and extreme droughts are
already regularly impacting livelihoods and a wide range of sectors and public services, and have
increased over the last few decades in line with the global trend (Graph 1). According to official figures from INDECI, the impact of hydrometeorological events in Peru has also increased.
Graph 1: Weather-related
loss events
worldwide, 1980-2013
Weather-related
loss events worldwide
1980-2013
1 000
N U M B E R
800
600
400
200
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
© 2014 Münchener Rückversicherungs-Gesellscha, Geo Risks Research, NatCarSERVICE - As at February 2014.
Metereological events
(Tropical storm, extratropical storm,
convecve storm, local storm)
Hydrological events
(Flood, mass movements)
Climatological events
(Extreme temperature,
drought, forest fire)
Source: Münchener Rückversicherungs-Gesellschaft (Munich RE), February, 2014.
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Public investments and climate change
The Peruvian Government is taking concerted action
to reduce its multifaceted vulnerability to climate
change. A primary means of achieving this is to
integrate a systematic climate risk management
approach into the national public investment
system (Sistema Nacional de Inversión Pública
or SNIP).
The SNIP is a national system administered by
the Ministry of Economy and Finance; MEF
sets the principles, processes, methodologies
and norms for all public investment at national,
regional and local level. It covers investments both
in infrastructure and in service provision. In 2013,
over USD 11 billion (PEN 32 billion) were invested through
this system. As several analyses have shown, a significant proportion of these investments is subject to current and future climate change risks. Investments,
especially those in highly vulnerable sectors such as agriculture, transport, health, energy, housing, sanitation, and tourism must take future climate risks into account. Investments in these
sectors represent roughly 70% of overall public investment.
Graph 2: Evolution of public investment spending in peru (2009-2013)
Money spent through SNIP (USD million)
12,000
10,597
9,191
10,000
8,063
8,000
6,000
7,648
6,628
4,000
2,000
0
2009
2010
2011
2012
YEAR
Source: Based on data from the Ministry of Economy and Finance < http://ofi5.mef.gob.pe/wp/reporte/resumen.aspx>.
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2013
The IPACC project approach
The Public Investment and Adaptation to Climate Change
project (Inversión Pública y Adaptación al Cambio
Climático – IPACC) is implemented by the Deutsche
Gesellschaft für Internationale Zusammenarbeit
(GIZ) in cooperation with the Peruvian Ministry
of Economy and Finance (MEF) and Ministry of
Environment (MINAM), and the regional governments of Piura and Cusco. It is financed by
the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) through the International
Climate Initiative (ICI). The project has a financing volume of EUR 3.2 million and runs from November 2011 to April 2015.
The main entry points and change agents for incorporating disaster risk management in a climate change context into SNIP were analysed at the beginning of
the project. MEF, MINAM and GIZ then worked together on this basis to develop some key
project products for use in SNIP, as detailed below:
1. Conceptual Framework
Key public stakeholders have jointly agreed to the conceptual framework of climate
risks, which forms the conceptual basis for the integration of risk management in a climate
change context for public investment projects.
Its application in SNIP - risk management in a climate change context - was officially
approved by Peru’s Ministry of Economy and Finance.
www.mef. gob.pe
www.ipacc.pe
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SERIE: SISTEMA NACIONAL DE INVERSIÓN PÚBLICA Y LA GESTIÓN DEL RIESGO DE DESASTRES
Conceptos asociados a la gestión del
riesgo en un contexto de cambio climático:
aportes en apoyo de la inversión pública
para el desarrollo sostenible
An extensive, informed consultation process between project stakeholders and experts led to the
publication by MINAM, CENEPRED and FLACSO of
a conceptual framework that integrates disaster
risk management and climate change adaptation.
The application of this conceptual framework in
public investment projects was further developed
by MEF (N° 6, SNIP and DRM Series).
TECHNICAL NOTE
Climate change adaptation
and risk management:
reflections and implications
1
1
A
IPACC Technical note 1.indd 1
2/18/15 11:27 PM
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2. Information
Improved access to information and knowledge database of climate change scenarios,
hazard maps, and geo-referenced investments is used as an additional source for project
designers and evaluators in planning public investment projects.
A DVD of interactive maps with climate change scenarios, hazards, PIP description and land
use, climate and ecosystem information was created using the official data provided by
MINAM and MEF. The interactive maps and other data will soon be available online.
3. Case Studies
Pilot case studies which consider reducing risks from climate change were introduced into
the design of public investment projects, thus generating knowledge not only for those
PIP, but also for the overall methodology and for ministerial norms, guidelines and directives.
Climate risks were analised and adaptive measures were identified for several investment
projects under development.
Irrigation project: main canal is exposed and
vulnerable to extreme weather events.
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Tourism project: archaeological site is exposed to weather and climate events.
4. Cost-Benefit Analysis
Decision-making aids such as cost-benefit analyses of climate risk reduction measures
were developed and must be applied in the SNIP.
Methodologies for cost-benefit analysis of climate risk reduction measures were developed
and field tested in cooperation with the Institute of Peruvian Studies and other experts.
RISK IN A CLIMATE CHANGE CONTEXT
Benefit and social cost flows for a PIP w/o RR and CCA measures
Gradual change in climate averages
Benefit Loss (VC)
Benefit Loss (CC)
$
Time
I
O&M
O&M
CERR
CAU
Cost for emergency responses, rehabilitation and reconstruction
Operation and
Investment
maintenance
cost
cost
Extra cost to users who cannot
access service
CV: Climate variability
CC: Climate change
C/B ANALYSIS: RISK MANAGEMENT IN A CLIMATE CHANGE CONTEXT
Benefit and social cost flows for a PIP with RR and CCA measures
User and ERR costs avoided (CV)
$
Benefits
not lost (CV)
Benefits not lost (CC)
O&M
I
Time
Additional Operation and maintenance costs for RM and CCA
Investment cost
Source: MEF, 2015
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5. Public Investment Guidelines AND INSTRUMENTS
Official guidelines for project design in SNIP have been revised to ensure that heightened risks are considered at national and sector levels in a climate change context.
The knowledge generated by the pilots (case studies) was used for mainstreaming climate risk
considerations in public investment guidelines for the tourism sector and in the general guidelines which apply to all public investment projects during the pre-feasibility (viability) stage.
ANEXO SNIP 05
CONTENIDOS MÍNIMOS GENERALES DEL ESTUDIO DE
PREINVERSIÓN A NIVEL DE PERFIL DE UN
PROYECTO DE INVERSIÓN PÚBLICA
SNIP general directive
“The Minimum general content
for preinvestment studies of a
public investment project profile”,
published in July 7, 2013 states that
those who formulate the project
profile should consider:
«(v) the probable impacts
of climate change on the
sustainability of the project.»
The formulating unit (UF) should
draft the profile considering this
analysis of probable climate change
impacts and the OPI evaluators
should verify compliance.
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Los presentes contenidos mínimos generales serán aplicables
a los estudios de preinversión a nivel de perfil1 de los Proyectos de
Inversión Pública (PIP). No sólo se considerará la estructura que se
plantea para la organización del estudio, sino
fundamentalmente, las indicaciones y orientaciones que se
detallan en cada uno de los temas que tienen que ser desarrollados en este.
La elaboración del perfil se basará en información primaria
complementada con información secundaria2; en el estudio se
incluirá material fotográfico y gráfico que respalde el diagnóstico y el planteamiento del proyecto.
Estará a cargo de un equipo profesional ad-hoc a la tipología
del PIP. En el proceso de aprobación de los términos de referencia
o planes de trabajo para la elaboración del estudio, la UF y la OPI,
acordarán la información complementaria que sea necesaria para
el perfil de un PIP específico, la que corresponderá a este nivel de
estudio.
Para la elaboración del perfil se deberá considerar, entre
otros: (i) las normas técnicas que los sectores hayan emitido en
relación con la tipología3 del proyecto; (ii) las normas y regulaciones que sobre la inversión pública se considere en otros Sistemas
Administrativos o Funcionales, tales como el Sistema Nacional de
Gestión del Riesgo de Desastres (SINAGERD), Sistema Nacional de
Evaluación de Impactos Ambientales (SEIA, Directiva de Concordancia entre el SEIA y el SNIP); (iii) los procedimientos de Contrataciones y Adquisiciones del Estado; (iv) los permisos, autorizaciones,
licencias, certificaciones, que se requieran; y, (v) los probables impactos del Cambio Climático en la sostenibilidad del proyecto.
La UF, de acuerdo con lo establecido en la Directiva General
del SNIP, debe elaborar el perfil considerando el análisis que se
solicita en cada tema que se incluye en este contenido y la OPI
debe verificar su cumplimiento cuando evalúe el PIP.
6. Capacity Building
Building capacity of project designers and evaluators for taking climate change risks
into consideration in PIP.
CURSOS / ELABORACIÓN DEL PIP INCORPORANDO GORE EN CONTEXTO DE CC / CURSO-03GDRCC
Formulación de proyectos de inversión pública
FORO
NOTICIAS
FORO
FORO
CONSULTAS
SOCIAL
DESCRIPCIÓN
DEL PROGRAMA
Acvidades
Enlaces todas las acvidades que debe
realizar en la unidad
Repaso
Sección final
ACTIVIDADES
Unidad 4
DE LA UNIDAD
Contenido de la unidad
Conene la introducción a la unidad,
los objevos, así como el contenido
detallado que quiere ser revisado
CONTENIDO
Unidad 3
DE APRENDIZAJE
Ruta de aprendizaje
Resume todos los pasos principales
que debe realizar en la unidad
Unidad 2
RUTA
Training workshops were held, with a total attendance of
about 650 participants. Sixty SNIP operators underwent
training in an intensive six-month e-learning course
developed jointly with MEF, GIZ and UCI (University of International Cooperation) in Costa Rica. Course
materials are to be published for use by MEF in
their in-house training. A donor network scales up
these training efforts, using materials developed by
the project.
Lima, Nov. 2013 ❱
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7. Donor Network
MINAM and MEF have formed a network of international
donors that now coordinates the international cooperation efforts designed to support training in SNIP and
other activities relating to risk management in a climate
change context and public investment.
Donor activities supporting public investment were
jointly assessed during various meetings with key
stakeholders such as COSUDE, UNDP, IDB, USAID and
CARE, and a donor network facilitating coordinated action
was institutionalised.
Donor network meeting ❱
8. Peer Learning
Regional and international peer learning workshops on public investments and adaptation to climate change were held to facilitate dialogue and joint learning.
Experts from the finance, economy, planning and environment ministries of 11 countries participated in three international workshops. These dialogues enriched the Peruvian process.
Other countries in the region expressed a strong interest in the Peruvian model. A network
for systematic dialogue was established.
El
Salvador
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Colombia
Mexico
Brazil
Chile
Costa Rica
Guatemala
Nicaragua
Dominican
Republic
Ecuador
Peru
Project impacts
The project has had several impacts on disaster and climate change risk management in the
SNIP process as described above. Thanks to this, real adaptation impacts could be achieved, reducing climate vulnerability ‘on the ground’ through changes in project design, project activities
and project locations. This is illustrated by the examples below:
Redesign or re-dimensioning of the investment project infrastructure
In the case of an irrigation project in Piura in northern Peru, the climate risk analysis concluded
that water demand could be expected to rise due to a temperature-driven increase in evapotranspiration. Consequently, the irrigation delivery infrastructure was enlarged in the project
design, and a system was set up for monitoring water delivery.
The expectation is to ensure water delivery, especially at key points in the crop production cycle. Thus, production losses due to water shortage will be avoided, and the production and
income improvements expected as part of the project impacts are guaranteed.
Change in project approach / additional measures
The following potential climate change impacts and risks were identified in another irrigation
project in Cusco, loss of production due to: a) an increase in crop pests and diseases, and b) increased climate variability, including frost hazards and extreme rain events, and landslides caused
by the latter. Consequently, capacity-building measures for improving the agricultural management practices of farmers, to be delivered by farming experts, were included in the project design. Instead of traditional irrigation techniques, a ‘technical irrigation system’ has been chosen
as a more efficient and appropriate option.
The additional measures identified are designed to ensure the expected level of agricultural
productivity despite heightened hazards. As a result, positive income effects are more likely.
For example, risks from landslides are reduced through protective infrastructure such as stabilisation walls, and losses from crop pests and diseases are reduced by promoting new crop
management practices.
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Change in project location
A climate risk analysis of a tourism development project in Cusco concluded that landslides,
already common, are expected to increase and to threaten essential tourism infrastructure.
Consequently, planned tourist infrastructure was relocated to low risk zones. Hiking routes were
located according to spatial risk profiles and, in highly affected areas, at least one alternative
route was planned. This new type of climate risk analysis and the risk reduction measures were
made mandatory for all tourism development projects in the region through amendments to
relevant guidelines.
Given the scenario of increasing landslides, the expected result will ensure that income from
tourism in the region increases as expected, by reducing the number of days sites are closed
and by improving security for tourists.
Lessons learned so far
The approach of mainstreaming adaptation into existing
planning processes is a very promising one. Potential
future climate risks can be systematically reduced
by building their management into today’s decision-making procedures. It can be assumed
that it is possible to prevent any maladapted
investments or substantial losses in future.
The table on the following page shows some
general decision elements and success factors
in mainstreaming adaptation into the Peruvian
SNIP at different levels. Experience has shown that
it is important to work at all four levels: individual,
organisational, political and transversal. Furthermore,
within the project design process, it was decisive to conduct
a comprehensive ‘entry point’ analysis at the beginning, making it possible to focus on the
most important elements and key actors in the process. And finally, the constellation of project
stakeholders, currently a fairly rare one which combined the strength of the Ministry of
Economy and Finance and the Ministry of Environment with that of regional government entities, was one of the key prerequisites for the project’s success.
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Lessons learned from the IPACC project
Organisation
National political
(and scientific) system
Level
Success factors /
key decisions
Brief explanation
Political mandate and
support
• Prerequisite for stakeholders / change agents
to act.
Provision of financial
resources
• Costs from mainstreaming and from potential
additional adaptation have to be covered.
Provision of relevant
information about climate
change impacts / political
decisions, acceptable risks
• Localised information is often seen as a
bottleneck due to uncertainties and the lack of
information.
• In some cases, political decisions on acceptable
risk levels may be necessary.
Scope
• Decisions about the scope of approach. In Peru:
taking disaster risk management and climate
change adaptation into account throughout SNIP.
Entry points
• Decision about relevant entry points. In Peru,
for example, guidelines for SNIP, economic
assessments.
Process of analysis and
prioritisation
• Decision about analytical approach. In Peru:
conceptual framework of climate risks within
SNIP, inclusion of analytical steps in project
design and evaluation, specific tools for costbenefit analysis of adaptation measures.
Responsibilities
• Define responsibilities for application of new
procedures. In Peru: main responsibility for
application lies with project designers and
evaluators.
Monitoring and evaluation
• Guarantee relevant information about
application. In Peru: several approaches are
under discussion.
Evidence
• Provide evidence of added value. In Peru:
several pilot cases of public investment projects
in Piura and Cusco provide such evidence.
Incentives / barriers
• Reduce resistance within the organisation. In Peru:
key actors helped to promote the topic both within
the institution and with other organisations.
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Individual
Transversal
Capacity development
• Strengthen capacities of main target group.
In Peru: e-learning course for designers and
evaluators, and face-to-face training courses.
Support structures
• Provide support for main target group. In
Peru: methodological support via the ‘General
Guidelines’ (DGIP-MEF, 2014), DVD with hazard
maps and climate scenarios, and guidance from
MEF sector specialists.
Formal and informal
networks
• Sharing knowledge, raising awareness, building
confidence, facilitating change processes. In
Peru: formal cooperation between Ministry of
Economy and Finance, Ministry of Environment
and CENEPRED, regional governments, and
an informal network of experts with political,
technical, and academic backgrounds, including
donor network.
The way forward
Although the project has achieved many adaptation impacts, there is still a lot to be done. A key
bottleneck in the implementation of the new guidelines is the limited capacities of the project
designers and evaluators in particular 1. They must be trained in techniques for anticipating
climate change risk considerations in public investments. Furthermore, the structures that support
them in their work have to be improved (e.g. new sector-specific guidelines and support materials, or improved basic information about climate change impacts in Peru). There is more
potential to be unlocked within MEF for mainstreaming adaptation to climate change beyond
SNIP, for example, through the use of a results-based budgeting approach. Finally, the ministries of finance and economy, planning, and environment of other Latin American countries
expressed a strong desire during the regional workshops for dialogue on this very new topic
of climate change adaptation in public investment. Against this backdrop, the ‘Latin American
Network for Disaster and Climate Change Risk Management in Public Investment’ was created to facilitate joint learning among participants.
1.
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Currently, there are around 2,500 project planning units and 1,050 evaluation units registered under SNIP.
Further information
Alberto Aquino, GIZ Peru ([email protected])
Peruvian Ministry of Economy and Finance (www.mef.pe)
Eduardo Durand, Peruvian Ministry of Environment ([email protected])
Homepage: www.ipacc.pe / www.ipacc.pe/eacc
The IPACC project is implemented on behalf of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), with funds from the International Climate Initiative (ICI).
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