The Adaptation Benefit Mechanism                                                                      TITRE DE LA PRESENTATION
             •  AfDB with support from CIF is proposing an Adaptation Benefit 
                Mechanism (ABM) which would create Adaptation Benefit Units 
                (ABUs)
             •  An ABU is an output or outcome of an activity which makes 
                households, communities or economies economically stronger 
                and therefore more able to withstand climate-induced shocks 
                (hard and soft; concrete and human)
             •  For sale to donors, CSR buyers, philanthropists and anyone 
                currently buying CERs and VERs
             •  ABM is a results-based payment mechanism that uses CDM 
                infrastructure to deliver verified ABUs to buyers in an efficient 
                and transparent manner
             •  Main purpose is to create a price signal for private sector 
                investors                                                                        ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
             •  Price signal is monetized via an Adaptation Benefit Offtake 
                Agreement (ABOA) – a bankable instrument just like an ERPA
             Defining feature of the ABM #1                                                                        TITRE DE LA PRESENTATION
             •  ABUs are NOT compliance-based, fungible instruments
             •  There is no compliance obligation and no fundamental need to 
                be able to compare and standardize different kinds of adaptation 
                benefits
             •  Whilst economists would find it useful, commoditizing adaptation 
                suggests that we can create an algorithm that can quantify 
                human suffering
             •  There are at least three upsides to this approach:
                  – The units in which ABUs are denominated do not matter (very significant 
                     implications for the complexity and costs of monitoring and verification);
                  – The ABOA is a commercial transaction between a willing buyer and seller; 
                  – The mechanism escapes the major disadvantages of the CDM – the un-
                     even playing field, the impact of speculation, rewarding of poor 
                     performance and environmental liability                                     ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
             Defining and counting ABUs                                                                            TITRE DE LA PRESENTATION
             •  For example, anything which improves opportunities for 
                economic activities or protects assets from flood or drought, 
                makes household economically stronger and hence better able to 
                cope with shock
                  – Clean / efficient cookstove reduce time spent collecting firewood and 
                     improve indoor air quality = better health = more productive lives: HH 
                     using clean cookstoves per annum
                  – Flood protection for villages and agricultural land protects assets: 
                     Communities protected from flooding for a decade
                  – Connecting a household to an electric (mini) grid improves economic 
                     output, education, communication etc and makes households more 
                     resilient: HH connected to a grid
                  – Implementation of Climate Smart Agriculture make farming yields more 
                     resilient to climate shock: HH applying CSA per annum
             •  These are the units that would be offered to buyers for sale
                                                                                                 ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
             Defining feature of the ABM #2                                                                        TITRE DE LA PRESENTATION
             •  An ABM fits better under the Paris Agreement because the 
                principal unit – an Adaptation Benefit Unit – is relatively 
                independent of the primary accounting units of the Paris 
                Agreement
             •  i.e. in claiming credit for creating ABUs and “counting” them, the 
                mechanism is not interfering with the host country’s efforts to 
                achieve its NDC
             •  AND in addition, most adaptation benefit projects will have 
                mitigation co-benefits. Like Sustainable Development benefits 
                under the CDM, these are unquantified and are “left behind” in 
                the host country
             •  These un-quantified benefits will be detected in the national 
                inventory and will have the effect of helping the host country 
                                                                                                 ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
                achieve their Paris commitment (which is the objective of Art 
                6 of the PA)
                                                                                                                   TITRE DE LA PRESENTATION
                                    How does ABM work?
                                                                                                 ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT