Side Event on Climate Change Finance and Aid for Trade
Maximizing Benefits for LDCs and SIDS
2nd November 2009
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Least Developed Countries (LDCs) and Small Islands Developing States (SIDS) are especially vulnerable to climate change physical impacts, including floods, storms, and droughts. Key economic sectors in these countries like agriculture, fisheries, etc. will also be exposed to such exogenous shocks. Building economic resilience –understood as the ability of an economy to recover from or adjust to the negative impacts of adverse external shocks and benefit from positive shocks – will be crucial to face these challenges.
New and effective financing mechanisms will be required to address such challenges. Indeed, ensuring a useful financial architecture to address climate change will be a structural component to a Post-Kyoto Climate regime. Moreover, trade financing mechanisms like Aid for Trade can play an important role in building economic resilience and addressing climate change mitigation and adaptation objectives in LDCs and SIDS. Indeed, both aid for trade and climate change funds could be used in a complementary and reinforcing manner. However, any new purpose of these financial mechanisms would require additional funding in order to avoid diversion from current objectives and needs.
This meeting aims to explore possible synergies and complementarities between Aid for Trade and climate change funds, as well as absorptive and institutional capacities needed to build such synergies in LDCs and SIDS in the context of climate change.
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