Vulnerability Reduction Credits
A VRC™ is a Vulnerability Reduction Credit with a nominal value of EUR50. Issuance of the number of VRCs for a particular project is a function of the avoided impact cost (vulnerability) of such project. Hence, efficient vulnerability reduction projects are characterized by a market value of the VRC™ of below EUR50, matching the return expectations of a project developer/investor in the vulnerability reduction project.
Development aid donors, corporations, local and national governments, and others in the climate community are devoting significant resources to projects that identify appropriate indicators for adaptation. It seems that the terrain of climate adaptation isblighted because there is no consensus on what should count. We believe some universal approach (where one can consider outputs for different project types), however imperfect, is critical in order that the future anticipated resources for adaptation are properly prioritized towards funding projects with greater impact on reducing vulnerability to climate change.
Delivering Measurable Adaptation
A VRC™ is the monetised cost of the estimated impact of climate change, adjusted for the income level of the community, that will be avoided as a result of the project. In brief, it is a credit for work done to avoid damages or losses owing to climate change - a vulnerability reduction credit.
- VRCs are output based and issued periodically, post hoc, after validation of vulnerability reduction measures that have been and are being implemented.
- Each VRC is denominated in units of €50
- The number of VRCs issued to a particular project is a function of the VRC’s nominal value, the project’s Avoided Impact Cost (AIC) and an Income Equalization Factor (IEF), where:
The relationship between VRCs, AIC, and IEF stems from the three basic components of vulnerability as articulated in the literature: exposure, sensitivity, and adaptive capacity.
Projects must meet strict registration and monitoring and verification standards as outlined in a standard framework under development.