The decision to operationalize the Climate Change Adaptation Fund, taken in Bali last year, was of historic importance. It acknowledged the urgent need to address the vivid adverse impacts of climate change - already being felt by developing countries, in particular the poorest and most vulnerable – through predictable and sustainable sources of funding.

The Adaptation Fund under the Kyoto Protocol is unique in the way its revenue is generated, namely through a two per cent levy on the emission permits known as Certified Emission Reductions (CERs) that are generated by emission reduction projects under the Kyoto Protocol’s Clean Development Mechanism (CDM). This unique source of funding makes it predictable and reliable. The Adaptation Fund’s other two sister funds under the Convention - the Special Climate Change Fund and the Least Developed Countries Fund, on the other hand, are both reliant upon voluntary contributions from developed country  parties to the Convention. The Adaptation Fund also has the potential to grow exponentially, depending on the agreed outcome next year in Copenhagen on a strengthened international climate change agreement.

The Adaptation Fund indeed represents a significant step forward in delivering funding for developing countries to deal with the impacts of climate change. It also marks the beginning of a true international commitment to address the adaptation needs of those developing countries that are suffering most from the impacts of climate change particularly African countries, Least Developed Countries and Small Island Developing States.  Rising sea levels, coastal inundation and shortages of water and food are putting billions of people in developing countries at risk. These impacts are set to worsen in the future, making adaptation inevitable.

Within the Adaptation Fund Board, we are taking every effort to accelerate the financing of  adaptation projects in order to strengthen the resilience of the most vulnerable countries. The Board faces the formidable task of ensuring that this unique Fund lives up to the expectations of developing countries, and that mechanisms are put in place as soon as possible to allow direct and quick access to the available resources.

The estimated $400 million USD that the Fund is expected to contain by 2012 may seem trivial compared to the projected annual costs for adaptation of tens of billions of dollars, as estimated last year by the UNFCCC secretariat. The Fund is nevertheless an important source for addressing the most pressing adaptation needs in the most vulnerable poor developing countries.

It is clear that current resources are insufficient to meet the adaptation needs of developing countries. While adaptation support can, and is being undertaken through other financial channels, to remain truly committed to the multilateralism envisaged within the UNFCCC in addressing the impacts of climate change, the Adaptation Fund needs to remain the principal channel for adaptation support to developing countries. This Fund needs to grow in accordance with the expanding adaptation needs of developing countries. It is my belief that the international community will help enable this by agreeing on additional carbon market sources for the Fund as part of a strengthened international climate change agreement, hopefully by the end of next year.