Accessing Adaptation Finance
Problem Statement
Adaptation finance is essential for implementing projects that enhance resilience to climate impacts. However, accessing adaptation finance is challenging due to the need for evidence-based proposals that quantify risks, target finance, justify investments, and demonstrate economic and environmental benefits. As a result, projects often remain in the pipeline as major funds, such as the Global Environment Facility, Green Climate Fund and Adaptation Fund, require data-backed proposals. For projects that have been implemented, measuring successful adaptation during extreme weather events, like flooding, requires real-time data and counterfactual comparisons to accurately assess effectiveness. Traditional methods of data collection, such as field surveys, are often inadequate due to their time-consuming and costly nature. More broadly, many stakeholders lack the data, tools, and expertise to develop compelling proposals, leading to missed funding opportunities.
How EO Helps
Earth observation (EO) can bridge this gap by providing the necessary data and insights to strengthen adaptation finance in the following ways:
- Quantifying Climate Risks: EO technologies provide accurate, scalable data to assess climate risks and prioritize adaptation needs. For example, SAR data from Sentinel-1 maps flood extents and frequency, while Digital Elevation Models (e.g., SRTM, ASTER) identify low-lying, flood-prone areas. In this way, mapping urban flooding can help target finance and justify investments in improved drainage systems. Additionally, vegetation indices like NDVI from Sentinel-2 and soil moisture data from SMAP track drought impacts, supporting applications for water-saving irrigation systems. Lastly, altimetry data from Sentinel-6 monitors sea-level rise, while optical imagery maps erosion hotspots and mangrove degradation, informing coastal protection projects.
- Building Evidence for Benefits: EO-derived data helps quantify avoided damages. For instance, modeling flood risk reduction using Sentinel-1 data can showcase the economic value of investments in green infrastructure like wetlands or floodplains. Furthermore, historical and predictive climate data, such as ERA5 reanalysis datasets, allow stakeholders to model adaptation scenarios, enhancing project proposals with robust evidence.
- Tracking Impacts: Adaptation finance mechanisms require transparency in fund allocation and project outcomes. EO supports these needs by enabling digital monitoring, reporting, and verification (dMRV). Using optical imagery, project developers can establish pre-project conditions (baseline) while platforms like Global Forest Watch allow funders to track project outcomes remotely, such as increased vegetation cover after reforestation projects.
Economic and Financial Impacts | Environmental Impacts |
With EO data providing more accurate environmental risk assessments, investors gain confidence in the long-term viability of investments and reduced financial risk. A study by the European Investment Bank found that EO integration into climate risk assessments can reduce the risk premium for projects by up to 20%, thus lowering the cost of capital. | EO provides precise data on deforestation, reforestation, and land-use changes, which helps track emissions reductions and avoid leakage in REDD+ projects. A study by the UN-REDD Programme found that EO tools increased the detection of deforestation by up to 30%, allowing for more timely and effective intervention. |
By providing independent data on the environmental outcomes, EO helps attract high-quality investments in carbon and eco-credits, increasing transaction volumes. For instance, in the voluntary carbon market, projects using EO data for verification have seen a 12% higher average price per ton of CO2 reduced compared to those relying on ground-based monitoring. | Enhancing the monitoring of investments makes it easier to verify that nature-based solutions (NbS) survive and thrive. |
EO reduces the need for expensive, time-consuming ground surveys by automating environmental monitoring. This is especially beneficial for large-scale projects in remote areas. These savings can be reinvested, improving the financial viability of projects. | |
EO helps assess environmental risks, such as floods, droughts, and wildfires, by analyzing past and current environmental data to predict future events. This is valuable for assessing resilience in investment portfolios. |
Case Study: EBRD's Green Cities: Satellite Data Drives Sustainable Urban Planning
The EBRD’s Green Cities Program analysed the long-term environmental impacts of urban infrastructure investments in Sarajevo, Bosnia and Herzegovina. The EBRD Impact department used Earth Observation (EO) data, in partnership with the European Space Agency, to track air quality, vegetation, economic activity, and climate risks like heatwaves and flooding. This data helped them understand local vulnerabilities and make informed urban planning decisions. EO data was also combined with information on elevation, wind speed, and fire risk to identify areas for the best environmental performance gains.
The results, presented through an easy-to-use interactive dashboard, showed how seasonal weather patterns affect pollution levels. This analysis contributed to local capacity and the broader economic impact. Overall, the project enhanced the capabilities of local authorities in the Canton and the EBRD’s operational teams by providing stakeholders with EO-based decision-making tools and data management skills for continuous environmental monitoring and planning. It also served as a model for other cities in the EBRD’s Green Cities network, showcasing the benefits of using satellite data to monitor sustainability outcomes and ensure that climate-resilient infrastructure investments achieve their goals.
