Frequently Asked Questions
What is the Higher Ground Foundation?
We are a team of volunteers interested in developing and promoting a system of VRCs to encourage adaptation to climate change. Currently Higher Ground Foundation operates as an initiative of Climate Mitigation Works Ltd. (CMW), and all contracts and agreements with counter parties are signed with CMW. CMW intends to spin off HGF as an independent entity at the end of our Pilot Implementation and Partnership Phase, upon release of a new, official draft of the VRC Standard Framework.
What are the potential benefits of VRCs?
VRCs are an instrument that offers to make identifying and then addressing the greatest climate vulnerabilities into an inherently valuable activity; it is in fact a system where the best responses to climate change will be the choices the world wants to make at all levels. The specific uses and benefits include to:
Better prioritise projects, and encouraging efficiencies to stretch the utility of our limited resources
Leverage finance from the revenue streams created, by setting a price on a quantified level of vulnerability reduction
Allow for more transparent, “bottom-up” decision-making in adaptation investment
Employ VRCs to create positive feedbacks for improved adaptation, as the “market” for adaptation technologies and effective project investment and operations develops and grows with a clear incentive to optimise project vulnerability reduction
Create incentives for more self-sustaining adaptation measures, as credits are issued only if projects can prove that vulnerability reduction has been ensured for a (past) period of time.
Where is the demand for VRC?
Any party that is interested in independent certification that well-defined actions have been taken to reduce vulnerability to climate change. Donors and host governments are motivated to direct their resources to VRC Funds to confirm adaptation results and expand investment by encouraging private leveraging. VRC buyers sought by the funds might be governments or corporate entities seeking to finance adaptation projects that meet their adaptation priorities (which could be social, environmental, or business-related).
The status quo of sectoral based finance is reaching its limitation, but as governments, communities and the international community recognise further the need to allocate resources effectively and efficiently for adaptation, these existing investors and new ones are currently exploring how metrics can support decision making. While VRCs do not have to be used as a market-based instrument, when a price is placed on them, it may offer considerable benefits in encouraging improved prioritisation of projects, increasing adaptation effectiveness and efficiencies.
How do VRCs help increase finance directed towards climate adaptation?
Public funding for adaptation, especially as the costs for adaptation increase, is unlikely to be sufficient. Nor is it by itself the optimal way to fund many asset classes of adaptation, considering who owns vulnerable assets, the related need for mainstreaming adaptation into conventional investment decisions throughout economies, and the fact that private financing is in aggregate much larger, and offers more financing options, flexibility, and timely responsiveness than the average public funding.
There are a variety of possible financing structures that VRC generating projects could lend themselves to, with perhaps the simplest being a conventional project finance model. In this scenario, a community (perhaps aided by a project developer with technical, financial, and project development resources) would offer a donor (which could be any public or private body with an interest in reducing the community’s vulnerability) to transfer some or all of its VRCs generated in return for a price per VRC. With a signed purchase agreement, the project could then go to a bank or other investor (public or private or PPP) that could then assess the project risks (noting that the community has a direct stake and incentive to reduce its own vulnerability) and offer finance.
How can VRCs be employed for "Pathways Approaches" to adaptation planning?
The VRC™ may be deployed in a variety of ways, including in pathways approaches. HGF acknowledges the dynamic nature of vulnerable systems and adaptation responses, and embraces the reality that VRCs need to be a dynamic instrument. This means that Real Options Analysis, among other approaches to understanding impact costs and avoided impacts, may be employed in calculating project VRCs.
It is important to understand what the VRC is: it is a metric, not a planning process. Clearly, there is a process for establishing VRCs (baseline setting from impact costs assessments, project potential to change the baseline through avoided impacts, monitoring and periodic renewal of the baseline, etc.) that has implications on the planning process, but, just as we hope you would agree that climate change impacts assessments are a useful tool for planning under multiple regimes, including pathways approaches, so is the VRC.
Does Higher Ground believe that VRCs may be applied for all projects and project types?
No. We understand that the data and tools available to meet VRC Standard Framework requirements simply is not available for all sectors, project types, and projects. However, we do believe that an ever growing number of projects may become eligible as our understanding of climate vulnerabilities, impact costs, and how different adaptation measures reduce these improves.
How can VRCs accurately "predict" climate changes, impact costs, and how projects reduce these costs?
Our Standard Framework sets statistical confidence requirements for the impacts and avoided impacts projects need to meet in order to be registered. During the PIPP phase we are working with experts and project developers to understand and adjust as necessary these requirements prior to our full implementation phase. We do not expect perfect predictions, and we do expect that over time VRC projects and VRC methodologies shall improve. Projects need to revisit the baseline and be revalidated every ten years. We want the VRC instrument to be a useful and dynamic planning instrument, and it is over the PIPP phase we shall discover ways of improving it so that all the parties involved in climate adaptation design, planning, investment, and implementation can make better decisions.
What requirements does the Standard Framework cover?
The Framework provides the requirements for developing projects and methodologies, including clear baseline regimes, as well as the requirements for validation and monitoring, of projects and verification of the project outputs. The Framework is supported by other documents that give requirements specific to interventions in areas such as human health, infrastructure, water supply, agriculture, and coastal zones. The Framework will also be supported by documents outlining integration of VRCs with other ecosystem metrics, standards, and programs.
Does Higher Ground Foundation give out grants?
No. The HGF may however work with partners to secure grant or other funding during the Pilot Implementation and Partnerships Phase, to support testing of the VRC Instrument for different projects or sectors.