Pion-pole contribution

Funding functions:

These are incentive programs or investment initiatives that provide subsidies or co-investment as a means of stimulating the uptake of particular actions.

As previously discussed, there is an inevitable inter-relationship between the different policy and institutional mechanisms of government, but perhaps none stronger than the link between the funding function and the information and analysis function. This may be particularly the case with climate change adaptation, where the identification of options for responses and the development of appropriate technologies associated with these are dominated by the paradigm of research methodologies, research management and research funding. This paradigm is reinforced by the risk assessment framing approach to adaptation planning advocated by government; an approach that demands the technical interpretation of projected impacts and their implications for adaptation. While the funding function of

government certainly goes beyond support for research, nearly all of the case studies found that most funding initiatives associated with the case study area were either directed towards research or towards projects involving advice from research professionals.

The importance of the link between the funding and information and analysis functions of government cannot be overstated because it affords the Commonwealth considerable influence in what research is undertaken, under what conditions and ultimately, by virtue of the dominant risk assessment framing approach, what adaptations occur. That said, the authors encourage caution be taken with this approach because it may reinforce an opportunistic project-based mind-set in dealing with adaptation at the cost of building longer-term personal, community, business, organisational and sectoral resilience in the face of climate change. This is not to suggest that the funding function should be downplayed in favour of other mechanisms, but rather that a different approach to funding management may be needed. One alternative approach, for example, is to not administer the funding of research (or other types of projects) but rather to administer the facilitation of adaptation collaborations. In other terms, to invest in adaptation collaborations rather than adaptation projects. Such an approach could go so far as to actively discourage opportunistic behaviour of research institutions that has been known to impede greater private sector engagement in collaborative ventures (Tripsas et al 1993).

There is currently a plethora of funding programs that in one way or another support climate change initiatives, including adaptation. Indeed, their number is too imposing to list here: many are described in the case studies, and most comprehensively in the information and analysis, primary industries and flooding case studies. These are variously administered at all three levels of government, and occasionally by agencies outside of government under formal agreements. Primarily, their mode of investment is project-based.

At the Australian Government level, the Clean Energy package has added a raft of funding packages, including the $1.7 billion Land Sector Package, which in turn supports the Carbon Farming Futures Program, Carbon Farming Initiative non-Kyoto Carbon Fund, Biodiversity Fund, Indigenous Carbon Farming Fund, Regional Natural Resource Management Planning for Climate Change Fund and the Carbon Farming Skills Program administered by DCEE. The Biodiversity Fund is notable as it is a repackaging of a range of previous native vegetation programs tweaked to make carbon sequestration a more prominent criterion for project selection.

Repackaging of funding programs can be an issue when it potentially leads to maladaptation, such as support for incremental change along a wrong trajectory where transformation is warranted. Here, the primary industries case study is significant. The agricultural sector is unquestionably the sector with the longest history of climate related adaptation in Australia. This has primarily been due to the innovation required to cope with Australia’s extreme climate variability. Much of the

agricultural research investment for the past few decades has involved a statutory-based model combining industry levy payments with matching government funds to create largely commodity based investment pools (Rural Industry Research Funds).

These funds in turn are managed largely by commodity specific R&D funding institutions (some run as statutory corporations, others as industry companies). The commodity focus of these institutions can be a strength from the perspective of stakeholder ownership, but also a potential weakness in that it potentially ties the investment mind-set to one of incrementalism built around improving the sustainability of particular commodities. While incremental improvements may be appropriate in some cases under projections of climate change impact, they may be inappropriate in other cases. An audit of R&D investments by these bodies as well as by national and state research agencies suggests that in the adaptation space, around 15% of research funding is directed towards transformative research (Price 2012). This may be appropriate, however, there was little evidence to show how investment decisions across incremental versus transformative were rigorously determined and justified. Indeed, it appears that many of the incremental adaptation investments were continuation of long-term research themes rebadged to suggest they were related to climate change.

Across its full portfolio of activities the CoM runs several different grant, sponsorship and investment financing programs. None of these relate directly to the implementation of its adaptation strategy, although some do have this potential. For example, the Council’s Sustainable Melbourne Fund “provides loans of up to

$500,000 for up to six (6) years for individual projects that minimise impact on the environment and deliver improved economic outcomes for the people of Melbourne (and since 2002) has invested $8.14 million in energy generation, water savings and energy efficiency” (CoM 2012a). The Council also runs an Environmental Upgrade Fund to support building upgrades and retrofits that, among other things, can include energy efficiency improvements, renewable energy systems and water conservation improvements. This Fund is based on an innovative financing arrangement that sees the CoM enter into partnerships with financial institutions and voluntary agreements with building owners to finance environmental upgrades for non-residential buildings.

With the tenant’s consent, part of the cost of any upgrade can be passed onto them.

The finance rate is lower than commercially available to property owners and by treating the repayments as levies to the CoM then passed on to the financial institution, the mechanism also reduces the risk to the institution (CoM 2012b). Such funding opportunities are further explored under the Market arrangements section below.

The CoM case study also provides a pertinent example of the limitations project-framed investments suffer. This Council was one of a small number to received first round funding under the Australian Government’s Local Adaptation Pathways Program to assist develop its Climate Change Adaptation Strategy. Discussion with some key informants within the CoM suggested that this form of funding, while

strategically useful for supporting specific tactics and actions, did not provide for long-term adaptation investment, including the kind that supports community and business resilience in addition to short-term risk management strategy development.

In the flood case study, discussion on the National Partnership Agreement on Natural Disaster Resilience suggests there may be a potential model here for broader adaptation funding. The amount allocated by the federal government to this agreement is approximately $100 million over four years (2009-10 to 2012-13), divided between all the States and Territories (COAG 2009). Under the terms of the agreement, recipients are required to match Commonwealth funding and state/territory annual implementation plans indicate that matching funds are also commonly required from local government or other agency beneficiaries, thus providing leverage opportunities (eg, see NSW Implementation Plan 2010/11). The Partnership Agreement is described as addressing climate change adaptation on websites and in annual reports, however the Partnership Agreement itself makes no mention of climate change. Wording relating to climate change is included in some of the Agreement’s State/Territory annual implementation plans. Generally this is in the form of acknowledgement of climate change rather than specific strategies to address it. A study of the eight implementation plans for 2011-12 found that six made no reference to climate change, one included climate change in its preamble and the remaining one included climate change in its performance measures.

Such a model is not unlike those that have been used for natural resource management, including the existence of multilevel agreements between tiers of government to pursue particular outcomes. Notwithstanding some of the weaknesses of this model pointed out by the Australian National Audit Office (ANOA 1997) and others (Roberts and Pannell 2010; Morrison et al 2010), including a diminished role for local government in the current Caring for Our Country program and that program’s fixation with opaque project-based funding decisions, some principles remain useful and transferable. In the context of climate change adaptation, it is not hard to see a process whereby multilevel agreements can be formed around collaborative actions to support the implementation of regional adaptation strategies. This would not simply be about funding, but also and possibly more importantly about aligning policies, building codes, development planning processes and other activities to be consistent with the outcomes sought by the strategies.