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For the last decade donor technical and financial
support remains a primary source of funding for
climate change activities (e.g. the Adaptation Fund,
Global Environment Facility (GEF), European
Union (EU), European Bank for Reconstruction
and Development (EBRD), The World Bank, United
States Agency for International Development
(USAID), The Federal Ministry for the
Environment, Nature Conservation, Building and
Nuclear Safety (BMUB) & The Federal Ministry for
Economic Cooperation and Development (BMZ),
KfW Development Bank (KfW), United Nations
Development Programme (UNDP), United Nations
Environmental Programme (UNEP), Austrian
Development Agency (ADA), etc.) (see the case
study on Georgia above). However, the situation
on the ground is slowly beginning to change as
governments increase their expenditure on climate
change related actions. The pace of this trend is
a factor of the different emerging development
trends (along with the ratio of frequency of natural
disasters) across the counties.
The last few years has seen an increase in the frequency
of extreme climate events in all the South Caucasus
countries, and also in the amounts spent on dealing
with their consequences. For example, in Azerbaijan
it is estimated that natural disasters (flooding,
mudflows, etc. triggered by heavy rainfalls and
other exposures to climate change) cost Azerbaijan
US$ 70–80 million annually (WWF 2008). It should
be assumed that losses in the other two countries are
Financial mechanisms
also significant. For example, a recent natural disaster
in Georgia’s capital, Tbilisi, which was caused by
unusually heavy rainfall in 2015, claimed the lives of
more than 20 inhabitants and significantly damaged
the city’s physical infrastructure. It resulted in pay-
outs from private insurance companies of up to
2.5 million euros to those affected, not to mention
tens of millions of euros required for compensation
of losses and rehabilitation works from municipal
and state budgets.
Given these economic costs governments are slowly
adjusting their expenditure planning. In Georgia,
for example, under the Regional Development
Programme (Government of Georgia 2014b), two
government agencies – the National Environmental
Agency and the Ministry of Regional Development
and Infrastructure have been tasked with providing
more than US$ 30 million over a three-year period
for natural disaster prevention. In Azerbaijan, in
2010 alone, and following the Kura river floods,
the country spent more than 400 million AZN
(approximately US$ 500 million according to
historical exchange rates) to tackle disaster-related
problems and to take adaptive/prevention measures
to reduce future flooding risks. In Armenia, as early
as 2013, the government created an environmental
fund to establish the relevant financial mechanism
for climate change mitigation (GHG emissions
reduction and carbon sink development) and
adaptation (combating climate change impact)
measures (see Armenian case study).
View on mountain Ararat