Most developing countries and least developed countries (LDCs) are in favor of financial mechanisms which pay them for conserving the environment while developed countries are held responsible for having developed at the cost of the same.
Such mechanisms like Clean Development Mechanism, Carbon Trading, Reduction of Emission from Deforestation and Degradation (REDD), REDD+ have also invited a lot of skepticism.
Amidst this, the Vulnerability Reduction Credits (VRCs) concept was published in a journal called Climate Policy by the Higher Ground Foundation. And communities in Bhutan can gain from it, say officials working to implement VRCs.
The basic aim is to work with a few very vulnerable communities to identify how they are vulnerable, establish a baseline for what climate change could do to damage them or their crops, for instance, and then come up with some project interventions that would reduce their vulnerabilities.
The Executive Chairman Karl Schultz of the Higher Ground Foundation which is looking at designing projects that can be incentivized through VRCs jointly with Tarayana Foundation told The Bhutanese that based on these, the expected amount of “vulnerability reduction” can be estimated and a number of credits could be established.
According to Karl Schultz, it was through lessons from other mechanisms that VRCs were established.
“I have to say however we are in the project design phase, and will need to secure funding first,” said Karl Schultz on the projects being identified in Bhutan that could potentially get funds under the VRCs mechanism.
“Then, we can find buyers of the VRCs and get the project funded with an agreed amount of VRCs sold. Then, as the project is implemented and maintained, the VRCs are awarded to pay back any loan that a project developer may have made,” he added.
An official with Tarayana Foundation said that the proposed sites for the project are in Mongar and Zhemgang. As of today, the project has not been finalized. Farmers in the two dzongkhags carry out farming activities on slopes so the project will in a way help in land management.
“The fund is based on the proposal content,” she said adding that the Foundation showed interest in the maintenance of farm roads but that it is beyond Tarayana Foundation’s scope which focuses mainly on farmers.
“Unlike other projects, this project needs a lot of approval from various authorities and that is why nothing much has been done on it,” she added.
As per an article on Higher Ground Foundation’s website, ‘Climate mitigation credits have mobilized considerable resources for projects in developing countries but similar funding to adapt to climate change has yet to emerge.’
The Copenhagen Accord targets up to USD 50bn every year in funding for adaptation. However, commitments have so far been insignificant compared to what is actually needed.
The challenges in implementing the VRCs include political resistance to historical responsibility-based obligations, skepticism of market instruments, and critically quantifying climate impact costs to verify investments for vulnerability reduction credits.