Local Costs and Global Benefits - Engaging Stakeholders in Climate Change Projects

IDG Research, Jennifer Obado-Joel, June 2014 -  Climate-change is regarded as a complicated subject and viewed with suspicion by many. It is however difficult to deny its impact on living conditions and livelihoods in cities of developing countries. Increasing urbanization growth rates in these countries makes cities an important partner in the climate change agenda. In these locales, urban local administrators face harsh climate realities amidst growing development needs. The 2014 IPCC report states that cities in developing countries would be the theatres for the worst impacts of climate change in coming decades. This poses a dilemma, to strive for economic development or ensure future generations can survive and thrive. Consequences of these climate impacts are fuelling several projects across the world. In developed nations where there is a cap on permissible greenhouse gas emissions, the carbon market is flourishing. Bloomberg predicted the growth of the market by 15% in 2014 . Development agencies such as the World Bank are also increasing funding commitments for climate related subject areas. It is incontrovertible that climate change is one the dominant topics in development in recent times.

The massive global interest in climate change has not translated to sufficient attention to the implementation process of climate change projects. Particularly in countries already besieged by frail regulatory and institutional frameworks. Climate mitigation and adaptation projects by nature are long term commitments. This makes the existence of a robust institutional and regulatory environment a necessary condition for its success. Already the carbon market in Europe is facing a crisis in its operations. For non-market climate change projects, there are important factors that should be considered in ensuring effective delivery of its objectives. In a review of 48 projects in 25 countries under the World Bank’s Emission Reductions Purchase Agreements (ERPAs), project documents reveals that about 65% of these projects scarcely reported detailed plans towards broad-based stakeholder engagement. This is despite the inclusion of ‘stakeholder engagement’ as a core requirement for approval of climate change projects by the United Nations*. This oversight stems from the conceptualization of project hosts as beneficiaries who must be aided and rescued from the vagaries of climate impacts rather than co-creators of the global climate salvation process. There is a repeat of the top-down approach to development planning in implementation of climate change projects.

The Disconnect

On development planning, there seems to be a need for a mechanism that effectively engages stakeholders, governments and at-risk communities within climate change projects in order to establish sustainable climate impacts and shared responsibility. Based on our research on the ERPA projects, the three projects below highlight this need.

Democratic Republic of the Congo (DRC): In several projects under the ERPA, stakeholders’ engagement was implemented as development or humanitarian programs. Within the Ibi Batéké Degraded Savannah Afforestation Project, the principal determinant of protection from human activity within the forest area which serves as the carbon sink was reported as the prohibitive cost of fertilizer. This is expected to be a limitation on acreage for tillage by local farmers. This assumption does not provide sufficient guarantee against incursion on the project area in the long run. In this example, the disconnect lies in the absence of a mechanism that ensures the sustainability of the carbon sink, continued engagement of the community that dwell in the region, and stakeholder development planning that encourages long-term climate sensitive behaviour. The presence of this mechanism would ensure protection of the carbon sink, community engagement and longevity of the project impact.

Kenya: In Kenya three of the funded projects implemented stakeholder engagement through the Kenya Electricity Generating Company Ltd.’s Corporate Social Responsibility (CSR) program. Provision of employment opportunities, schools and social infrastructure was offered as pacification for local communities’ dissent to the project. Would these development programs be sufficient to guarantee required climate sensitive behavioural change in the long term? Would supply of cooking stoves promise a change in the age old tradition of felling trees for fuel, housing and religious ceremonies? Engaging these communities requires an understanding of their relationship with the physical environment and the meanings it holds for them. In this example, the incentives do not necessarily address communities, government and stakeholders’ environmental, social and economic priorities. This disconnect, illustrates the need and potential benefits of a mechanism that advocates for stakeholder, community and government ownership of climate adaptation and mitigation.

Latin America: In South and Central America, similar challenges were uncovered. Project implementing firms in Brazil appear to thrive on the lax institutional framework in the country. For carbon sequestration projects in reforestation and bio-fuels, it was stated clearly ** that NGOs with dissenting views were excluded from the stakeholder engagement process. These firms appear to target the barest minimum requirements for engagement exemplified by the use of radio announcements in some instances. From the aforementioned, there are obvious disconnections between implementing organizations and stakeholders in participating regions. Therefore, more stringent application of institutional and regulatory frameworks need to be applied to implementation of climate change projects.

Engaging Stakeholders in Climate Change Projects

Different challenges occur in the implementation of a climate change project. Irrespective of the type of project or locale, informed engagement of stakeholders is essential. Projects under the ERPA focused more on informing and connecting with participating stakeholders. Input sourcing, partnership and empowerment of informal and formal stakeholder structures were reported to be weak. A successful climate change project would require effective institutional, regulatory and financial frameworks. Ideally, this should have predated immediate project needs. Sadly in many developing countries this is not so. The first step in improved broad-based stakeholder engagement in climate change projects is the design of a Benefit-Sharing Plan.

Hayden (2007) describes benefit sharing as ‘a commitment to channel some kind of returns to affected communities, source communities or source nations’. PROFOR referenced benefit sharing as a concept to outline socioeconomic costs and benefits of behavioural and institutional change for participating stakeholders in climate change projects. A benefit sharing plan serves two purposes. The first objective is to build trust and incentivize stakeholders to undertake required climate sensitive behavioural change. The second agenda is to build the necessary institutional and regulatory frameworks that guarantee resilience at the local government level. Crafting a benefit-sharing plan would require an assessment of climate risks and service sector vulnerabilities. This would enable local government administrators and other stakeholders to identify the most virulent climate impacts on their living conditions and livelihoods. This assessment would also detail current institutional and regulatory structures for preparedness and response to implications of climate risks on service sectors. The result would be an identification of capacity gaps and systemic issues which are to be considered in designing a benefit-sharing plan.

A benefits-sharing plan presents a schema for understanding trade-offs between economic growth and environmental protection. The second step in its design is the conduct of a regulatory impact assessment (RIA) of existing policies and financial regulations on delivery of climate sensitive urban services. Results of the RIA would help identify necessary adjustments to existing institutional and regulatory frameworks. Building resilience at the local government level might require adjustments in existing governance relationships. It is unlikely to upturn the governance structure as it currently exists. Requirements for effective utilization of a benefit–sharing plan include education of participating communities. This must go beyond information sharing as large populations of citizens in developing countries who face the most risk of climate impacts have low literacy levels and high poverty rates (Adger 1999) . This necessitates creative engagement approaches that build up trust with participating local communities and administrators. The process of designing a benefit-sharing plan would benefit from contributions of project operators, specialized government agencies and multilateral development/investment partners. An extensive capacity-building program for communities would enable them make informed contribution to the plan. Governments and service delivery agencies should also be prepared to commit to required changes in national and regional infrastructural, regulatory and financial frameworks.

These assessments would provide a framework by which to draft a benefit-sharing plan. The final product of which would be a detailed behavioural, regulatory and institutional change incentive strategy. The plan becomes a charter that bridges the disparity between local costs and global benefits of climate change projects. The objective of a benefit sharing plan is to outline roles, responsibilities, agendas, incentives, expectations and aspirations that govern successful implementation of climate change projects.

A Shift in Engagement

Moldova: The Moldova soil conservation project (BioCF) shows how a climate change project can reference stakeholders’ needs and aspirations in its implementation. It involved broad-based stakeholder interactions across counties in different regions. Under this project, a socioeconomic and environmental assessment was also conducted for each county. Decision making on transfer of lands to the project was vested in local municipal councils. This provided a background for incentive plans to motivate climate sensitive behaviour in participating regions. The Moldovan BioCF project provides an interesting case of efforts made at engaging stakeholders in a climate change projects. This case underscores the viability of a mechanism that encourages shared responsibility among project development planners, stakeholders, government and communities.

The Crafting Process

Designing a benefit-sharing plan that addresses the potential costs and benefits of climate change project is a daunting task. Project developers face the challenge of delineating required incentives to provoke a change in behavior that guarantee success of these projects. Sequestration projects in the energy and manufacturing sectors usually escape this scrutiny, as mitigation efforts are included in production processes. In different forms of sequestrations, the balance of project collaboration with hosts tilts. A benefit-sharing plan requires partnership between technical specialists, development and government agencies, funding groups, host communities and NGOs. The composition of these stakeholders’ groups would expectedly be different across project types.

Process leaders should include project operators, government, urban service delivery agencies and multilateral/investment partners. These leaders serve as brokers between hosts and the carbon market; act as development assistants and technical advisors for the regulatory environment. The task of crafting a benefit-sharing plan will require collaboration between the aforementioned groups. The first responsibility belongs to municipal local administrators who hold primary information on development needs of the constituency they serve. Design of the assessment matrix linking climate vulnerabilities to urban services is a major component of the benefit-sharing plan that would require technical assistantships. This should be in a supportive capacity and not a prescriptive engagement. Organizations capable of delivering this expertise include domestic and international think-tanks, research institutions and development agencies. An important factor in selecting a technical assistantship for a benefit-sharing plan should be technical know-how and knowledge transmission capacity. It is important that skills utilized in the process are invested within the local urban administration structures.

Conducting a regulatory impact assessment for a climate benefit-sharing plan would require extensive institutional, political and financial regulatory reviews. This would be best achieved by a synergy between national and local level urban administrators depending on the governance system of the country. A major goal under the RIA is to stress test the inter-governmental relationship for climate risk preparedness and response, particularly for at-risk regions and cities. This would help inform needed adjustments under the current governance setting. The process of crafting a benefit-sharing plan is in itself a stakeholder engagement as it demands broad-based participation. Another important aspect of a benefit-sharing plan is discovering incentive mechanisms for all identified stakeholders: national and city governments, participating communities, as well as financial and technical investors. It is within the interchange of ideas, development needs, economic and social aspirations that a coherent benefit-sharing plan can be designed.

The most important element in the design of a benefit-sharing plan is in proactive engagement of host communities. The primary goal of this process is to create a sense of ownership of the project. This is a necessary condition for sustainable climate sensitive behavioural change. Achieving this would involve in-depth discussions with host communities (broadly defined) on the perceived social and economic costs of the required behavioural change and their relationship to the physical environment. It is important that informal institutional structures within each hosting local be understood to ensure effective targeting of influencers in such communities. There is no better process by which to do this than in personalized engagements through town-hall meetings, focus group discussions and inclusion of hosts in the project design, implementation and monitoring process. A sense of ownership of a climate change project by hosts’ communities is probably the most important factor in ensuring its success. The climate mitigation and adaptation process is a long-term endeavor. The success of these projects depends on building strong formal and informal institutional structures and regulatory relationships that can survive through the long run. Changing political, economic and demographic realities would however require periodic adjustments of benefits. Fulfillment of the overarching objectives of the benefit plan lies in the recognition of rights and interests at the national, regional and municipal levels.