Darren Swanson, iisd Presentation to UNIVERSIDAD DEL PACIFICO Facultad de Economía November 25 th 2008

1. POLICYMAKING IN A CHANGING CLIMATE Building the Adaptive Capacity of People and Policies Darren Swanson, iisd Presentation to UNIVERSIDAD DEL PACIFICOFacultad de Economía November 25th 2008

3. “for the first time in history, humankind has the capacity to create far more information than anyone can absorb, to foster far greater interdependency than anyone can manage, and to accelerate change far faster than anyone’s ability to keep pace.” Peter Senge on creating a learning organization (1990)

4. Source: http://www.wtrg.com/daily/crudeoilprice.html

5. Source: IPCC Fourth Assessment Report, http://www.ipcc.ch/ipccreports/ar4-syr.htm

6. Projected surface temperature change ( C) Source: IPCC, 2007

7. Climate Change Mitigation and Adaptation [Government of Canada 2007]

8. Policymaking in a Changing Climate

9. Focus of this presentation • The capacity of people to adapt; AND • The capacity of policy to be adaptive

10. Canada and IndiaAgriculture and Water Resources Management Source: Millennium Ecosystem Assessment, 2005

11. Canada and IndiaAgriculture and Water Resources Management Source: IWMI, 2004

12. Adaptive Capacity of People and Policies Is Vulnerability reduced and Resilience enhanced or Maintained? Adaptive Capacity of People Adaptive Capacity of Policy Economic Resources Information & Skills Technology Infrastructure Institutions Equity Smit et al. 2001 Policy Instruments Economic Regulatory Direct Expenditures Institutional Adaptive Policy Mechanisms For anticipated conditions For unanticipated conditions Short-term Coping Measures Long-term Adaptation Measures Exposure (weather and non-weather related) Shocks Stresses

13. I. Adaptive Capacity of People

14. Canadian Prairies: A long history of drought • 1906 • 1936-38 • Quarter million people displaced • 1961 • 1976-77 • 1980 • 1984-85 • 1988 • 2001-2003 • “the worst ever?” • $3.6 B Ag /$5.8 B GDP • 41,000 jobs lost

15. Potential Impacts on Agriculture in Canada • Benefits: • warmer and longer growing seasons and a warmer winter • Increasing temperature will be positive for crop growth and yield, up to certain thresholds. • Negative impacts: • from changes in timing of precipitation • Increased risk of droughts and associated pests • Increased risk of excessive moisture

16. IndiaVulnerability to Climate Change • Climate change is expected to disproportionately impact developing countrieswhose economies are closely tied to climate-sensitive sectors, like agriculture and which are already facing multiple stresses due to population growth, urbanization, industrialization, and globalization. • In the tropics and subtropics, where some crops are near their maximum temperature tolerance and where rain-fed agriculture dominates, yields are likely to decrease for even small changes in climate, which could lead to an increased risk of inadequate food supply. Source: Kelkar (2006), http://www.iisd.org/pdf/2006/climate_designing_policies_chap3.pdf

17. IndiaVulnerability to Climate Change Districts in western Rajasthan, southern Gujarat, Madhya Pradesh, Maharashtra, northern Karnataka, northern Andhra Pradesh, and southern Bihar are highly vulnerable to climate change in the context of economic globalization. Numerous physical and socio-economic factors come into play in enhancing or constraining the current capacity of farmers to cope with adverse changes. e.g. cropping patterns, crop diversification, and shifts to drought-/salt-resistant varieties e.g. ownership of assets, access to services, and infrastructural support Figure 3.4 Vulnerability of Indian agriculture to climate change Source TERI (2003): In Kelkar (2006)

18. Determinants of adaptive capacity (from Smit et al., 2001). Smit, B., Pilifosova, O., Burton I., Challenger B., Huq S., Klein R.J.T. and Yohe, G. (2001): Adaptation to climate change in the context of sustainable development and equity; in Climate Change 2001: Impacts, Adaptation and Vulnerability, (ed.) J.J. McCarthy, O.F. Canziani, N.A.

19. Assessing Adaptive Capacity: Canada Source: http://www.iisd.org/climate/vulnerability/resilience.asp

21. II. The Capacity of Policies to be Adaptive

22. From the Summary: “When situations are characterized by variability, uncertainty and change, conventional planning scenarios provide little guidance regarding future needs and conditions.” “…clear need for frameworks that are "adaptive" - that reflect uncertainties and can respond and adapt as contexts change or unforeseen problems emerge.” “Specific solutions are less important than the existence of processes and frameworks that enable solutions to be identified and implemented as specific constraints and contexts change.”

23. Lessons from Canada’s Historic ‘Crow Rate’ Grain Transport Rate • a regulated tariff that subsidized transportation of grain from the Canadian prairies to ports for export. • engraved into the Railway Act in 1925, and did not change for the next 60 years.

24. Lessons • A largely unanticipated outcome of the Crow Rate’s persistence was serious under-investment in grain handling and rail transportation infrastructure • Shortcomings brought into stark view when major grain sales to Russia and China in the 1960s almost caused the system to collapse. • The near-failure of the grain transportation system catalyzed a flurry of public commissions and inquiries during the period 1960-82 to investigate and reform the system. • The failure to consider the effects of rising inflation on the performance of the fixe Crow Rate would prove to be one of the main culprits.

25. Policy Failures • Externalities (market failure mechanisms from micro-economic theory) • Implementation failures (insufficient resources, legitimacy) • Inaccurate diagnosis of the problem • Others…… • Experience demonstrates that policies crafted to operate within a certain range of conditions are often faced with unexpected challenges outside of that range. The result is that many policies have unintended impacts and don’t accomplish their goals.

26. Complexity, dynamics, uncertainty, surprise, ….. • Today’s policy-maker has a tough job. • Reality …. world is more complex than ever—highly interconnected, owing to advances in communication and transportation; and highly dynamic, owing to the scale of impact of our collective actions. • Policies that cannot perform effectively under dynamic and uncertain conditions run the risk of not achieving their intended purpose, and becoming a hindrance to the ability of individuals, communities and businesses to cope with—and adapt to—change. • Far from serving the public good, such policies may actually get in the way

27. Towards smarter policy:Leverage Complex Adaptive Systems Thinking http://www.iisd.org/climate/vulnerability/policy_insights.asp

28. Adaptive Policies Adaptive Policy Ability of policy to adapt to unanticipated conditions Ability of policy to adapt to anticipated conditions (based on a good understanding of cause and effect) (based on a good understanding of system dynamics and complexity) http://www.iisd.org/climate/vulnerability/policy_insights.asp

29. Dealing With Anticipated Conditions

30. Minimum Support Price Policy in India Integrated and forward-looking analysis • Commission for Agricultural Costs and Prices (CACP) • takes into account important factors, such as cost of production, changes in input prices, and trends in market prices, in announcing the MSP each year. • carries out state-specific analyses for the cost of production in respect of various commodities. • This is done through consultations with the state governments. • After a meeting of the state Chief Ministers, the MSP/procurement prices are declared. • Cost of production for the same crops varies between regions, across farms within the same region, and for different producers.

31. Weather-Indexed Insurance in India Automatic policy adjustment • quick payouts triggered by independently-monitored weather indices (rather than farm loss sampling) • can improve recovery times, thereby enhancing coping capacity. • The automatic adjustment feature provides a simple mechanism for managing insurer risk and determining farmer eligibility for benefit payments, while also passing along incentives for farmers to adjust to long-term change by providing appropriate signals calculated on the basis of actuarial risk.

32. Dealing with Unanticipated Conditions What is self-organization and social networking?Ensuring that policies do not undermine existing social capital; creating forums that enable social networking; facilitating the sharing of good practices; and removing barriers to self-organization, all strengthen the ability of stakeholders to respond to unanticipated events in a variety of innovative ways. What is decentralization of decision-making?Decentralizing the authority and responsibility for decision-making to the lowest effective and accountable unit of governance, whether existing or newly created, can increase the capacity of a policy to perform successfully when confronted with unforeseen events. What is variation?Given the complexity of most policy settings, implementing a variety of policies to address the same issue increases the likelihood of achieving desired outcomes. Diversity of responses also forms a common risk-management approach, facilitating the ability to perform efficiently in the face of unanticipated conditions. What are formal policy review and continuous learning?Regular review, even when the policy is performing well, and the use of well-designed pilots throughout the life of the policy to test assumptions related to performance, can help address emerging issues and trigger important policy adjustments.

33. Manitoba Conservation Districts (CDs) Decentralization of decision-making: • CD boards comprise local stakeholders who are able to make spending and programming decisions based on local needs and changing circumstances. • While most CDs are based on municipal boundaries, one CD with watershed boundaries was particularly effective at managing the drain licensing process, at task normally managed at the provincial level.

35. Policymaking in a Changing Climate • The capacity of people to adapt; AND • The capacity of policy to be adaptive

36. For more information: Darren Swanson dswanson@iisd.ca http://www.iisd.org/climate/vulnerability/resilience.asp http://www.iisd.org/climate/vulnerability/policy.asp