Asian Development Bank Opens New Climate Fund With $40 Million

The bank will provide an initial $40 million to the Climate Change Fund, which will be open for further contributions from countries, other development organizations, foundations, the private sector and other sources.

"The purpose of the fund is to facilitate greater investments in developing countries in Asia and the Pacific to address the causes and consequences of global warming," said Werner Liepach, principal director of the Asian Development Bank's Office of Cofinancing Operations.

"Money from the fund will be used to provide grant financing for technical assistance, investment projects, research and other activities, and we welcome interested parties to participate in the fund," he said.

King Don Juan Carlos I of Spain, right, joins ADB President Haruhiko Kuroda onstage at the opening of bank's 41st Annual Meeting. (Photo courtesy ADB)

The Asian Development Bank is set for a change in the way it serves its developing member countries in a rapidly evolving and dynamic Asia-Pacific region, ADB President Haruhiko Kuroda said at the bank's annual meeting today.

Kuroda said the bank is ready to help countries overcome the new challenge of rising food prices, which are threatening more than one billion people in the Asia-Pacific region alone.

Kuroda said high food prices could "seriously undermine the global fight against poverty and erode the gains of the past decades."

Despite the troubling times for the world economy, there is reason to be optimistic about the future with many Asia-Pacific countries' economies more dynamic and resilient than ever, Kuroda told about 3,000 leaders of government, the private sector, academe and civil society from around the world attending the meeting.

"Even in today's uncertain global economic environment, Asia remains a strong and stable contributor to global growth, and a leader in poverty reduction," he said.

The Climate Change Fund expands the resources available to address global warming from solely mitigation activities, such as clean energy and carbon financing, to a more holistic program that includes activities in mitigation and adaptation as well as financing projects.

"In addition to supporting transition to low-carbon economies and establishing climate resilient infrastructure, this fund will allow ADB to address the cross-cutting social vulnerability issues related to climate change such as changes in livelihood, resettlement, and health impacts," said WooChong Um, director of the bank's Energy, Transport and Water Division.

"Asian developing countries are now the fastest growing source of new greenhouse gas emissions and they will soon be the largest absolute source. This new fund will help us pool resources from around the world to invest here in Asia to help deal with this problem," Um said.

The bank acknowledges scientific projections warning that some 1.2 billion people in the Asia-Pacific region could experience freshwater shortages by 2020, while crop yields in Central and South Asia could drop by half between now and 2050.

Rajendra Pachauri, chair of the UN Intergovernmental Panel on Climate Change (left), and ADB Managing Director General Rajat Nag launch "Development Asia" magazine today at the bank's annual meeting. (Photo courtesy ADB)

Asia's major coastal cities, including Bangkok, Thailand; Jakarta, Indonesia; Karachi, Pakistan; Manila, Philippines; Mumbai, India; and Shanghai, China are vulnerable to flooding.

Within this century, residents of the small island states of Tuvalu and the Maldives as well as costal Bangladesh may become "climate refugees."

The Asian Development Bank has been working on climate change for more than a decade and bank officials say access to new investment financing mechanisms in energy efficiency, renewable energy, and other low-carbon infrastructure is already available.

In addition, ADB officials announced Saturday that the bank has secured US$11.3 billion for the next four-year phase of its concessional development fund to fight poverty in the region.

The new contributions covering the period of 2009 to 2012 are 60 percent higher than donations to the Asian Development Fund in the previous period, bank officials said. The last replenishment of the fund, which covered 2005 to 2008, totaled $7 billion.

"The generous contribution of donor nations will help developing Asia-Pacific countries meet Millennium Development Goal targets, and bring better opportunities and a brighter future to people living in the region's poorest nations," said Kuroda.

The eight UN Millennium Development Goals, which range from halving extreme poverty to ensuring environmental sustainability by the target date of 2015, form a blueprint agreed to by all the world's countries and all the world's leading development institutions.

The Asian Development Fund, ADF, provides grants and low-interest loans to the Asia and Pacific's poorest countries, which are home to some 400 million people living on less than $2 a day.

Roads, clean water and sanitation, electricity networks and other essential infrastructure are typical investments for the Asian Development Fund. The fund will continue to support the agriculture sector through the funding of irrigation systems, rural roads and rural finance mechanisms.

"ADF support is a major source of assistance for countries like Nepal, who are in urgent need of resources to help our poorest citizens," said Nepal Finance Secretary Vidyadhar Mallik. "We appreciate the generosity of the international donor community in significantly increasing ADF resources, and successfully completing ADF negotiations."

ADB President Haruhiko Kuroda opens the bank's annual meeting. (Photo courtesy ADB)

"With child malnutrition still widespread in Asia, and the global food crisis threatening to reverse the gains nations have achieved in reducing poverty, support for rural infrastructure and rural finance is critically important," Kuroda said.

A significant proportion of future ADF resources also is expected to provide support for climate change mitigation and other environmental measures.

Yet the performance of the Asian Development Bank is not perfect, as a recent audit of its operations in Afghanistan reveals.

An independent performance and financial audit of four technical assistance projects in Afghanistan conducted by A. F. Ferguson & Co. Chartered Accountants of Pakistan for the Integrity Division of the Office of the Auditor General of the Asian Development Bank and released in March shows four problems.

Eight, out of 10 wind monitoring towers procured, were not installed and water availability was not appropriately assessed at the feasibility stage for drip irrigation system at Wazir Akbar Khan Hills project, leading to failure of this project.

Showcase solar powered fountains at three roundabouts were not installed as part of another project.

Feasibility studies for three micro-hydro power units were supposed to be conducted as part of a third project. But two are still in the process of completion, whereas work on the third unit was never initiated and the microfinance component was not implemented, according to the audit.

Planned infrastructure including entry gates, guest house, health clinics and camp sites were not developed at Band-de-Amir National Park and the microfinance component was not implemented as part of a fourth project, the auditors found.

Copyright Environment News Service (ENS) 2008. All rights reserved.