Author Topic: Mainstreaming Climate Finance  (Read 675 times)

Kit Nicholson

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Mainstreaming Climate Finance
« on: October 23, 2012, 20:58:20 GMT »
The Copenhagen Accord announced an international initiative to mobilise US$ 100bn a year in climate finance by 2020. That would be only just short of the current levels of Official Development Assistance. The UN appointed a High Level Advisory Group to assess whether it would be possible to achieve this aspiration and the group's report concluded that it should be possible, with a mix of private and public sector funding. The Copenhagen Accord also announced that a total of US$ 30bn of 'fast track financing' would be made available for the period 2010-12. A wide variety of funds ha ve been set up and new mechanisms are being established. However, to date, the experience with actually spending the funds has been limited. Some conventional project funding has taken place, but only with modest levels of expenditure. Attention has turned to 'mainstreaming' as a possible means of accelerating disbursement. This has the attraction of supporting the aid effectiveness agenda of utilising government planning and financing mechanisms.

These are some of the issues that have been explored in a new series of Climate Public Expenditure and Institutional Reviews (CPEIRs) being undertaken by UNDP and the World Bank. They have been done so far in Nepal, Bangladesh, Thailand, Cambodia and Samoa and are ongoing in Indonesia and the Philippines. There are also plans to do CPEIRs in Vietnam and in some South American countries.

One of the main challenges with mainstreaming climate finance is that but both mitigation and adaptation are minority concerns for the wide range of line ministries cross-sectoral involved. This raises the challenge of how to recognise contributions to mitigation and adaptation in budget systems. Some countries have experimented with marking budget codes for relevance to cross sectoral themes. For example, there is some relevant experience with 'gender budgets'. Ideally, these markers should be used to give a commentary on the extent to which budget trends involve an increase or reduction in resources assigned to the cross sectoral themes. This should be reported in the Budget Strategy Paper and the Medium Term Expenditure Framework.

Existing budget marker systems have mostly involved a Yes/No marker. This might seem the most pragmatic approach, but, for mitigation and adaptation a Yes/No marker is of limited value because there is such a wide range of relevance. It would be more interesting to give a budget score, than a budget marker. Assessing the score involves a significant investment of scarce skills and effort. But it also forces transparency over definitions, which is sorely needed in climate finance, especially concerning adaptation, which can be interpreted in hugely varying ways. The score would reflect the proportion of benefits attributed to mitigation and adaptation, compared to economic and other benefits. Initially the scores would be indicative, but they would become gradually founded on evidence from cost benefit analysis, using an approach similar to that used for recording IRR in Public Investment Programmes.

Anyone any experience of doing anything like this? It may be a long haul to establish the capacity to make it workable, but it seems like a useful objective.

John Short

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Re: Mainstreaming Climate Finance
« Reply #1 on: October 24, 2012, 08:13:38 GMT »
I think the key will be specifying the (past/present/future) influences on climate change that emerge through public expenditure.  This will allow historical tracking, but also provide for a climate change code in any IFMIS for future tracking.  In this regard, the PER should not be any different from any cross cutting PER such as HIV/AIDs, but it also needs to incorporate donor expenditure which might be higher than in other areas, given the existing climate for climate change and the background you have given.  The one difference may be the amount of tax expenditures as there is a lot of climate change taxation (whether real or just an excuse to raise revenue) and ignoring this would mean that any PER relating to climate change would not be comprehensive.

I stumbled upon this while looking for something else which may be useful/of interest.

MAINSTREAMING ENVIRONMENTAL PROGRAMMES INTO PUBLIC BUDGETS:
Survey on medium-term expenditure frameworks and the environment
in the countries of Eastern Europe, Caucasus and Central Asia
http://search.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ENV/EPOC/EAP(2011)2&docLanguage=En
« Last Edit: October 25, 2012, 15:03:06 GMT by John Short »

John Short

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Re: Mainstreaming Climate Finance update
« Reply #2 on: January 14, 2024, 13:06:08 GMT »
Searching randomly again I came across Kit's post back in 2012 on Climate Change which may have been ahead of its time!

In 2020 the PEFA Secretariat piloted a Climate PEFA and there have been quite a few assessments since.

Climate Related Public Financial Management (PEFA Climate) provides a standard methodology for assessing how well PFM systems can support the implementation of government climate change policies. PEFA Climate builds on the PEFA Framework.

CRPFM–1 Budget alignment with climate change strategies
CRPFM–2 Tracking climate related expenditure   
CRPFM–3 Budget circular
CRPFM–4 Legislative scrutiny
4.1 Legislative scrutiny of budget
4.2 Legislative scrutiny of audit and evaluation reports
CRPFM–5 Climate responsive public investment management
5.1 Climate related provisions in regulatory framework for public investment management
5.2 Climate related project prioritization
5.3 Climate related provisions for project appraisal
5.4 Reporting from entities in charge of implementation   
CRPFM–6 Climate responsive non-financial asset management   
CRPFM–7 Climate related liabilities
7.1 Climate related fiscal risks
7.2 Climate related debt and guarantees
CRPFM–8 Climate responsive procurement
8.1 Climate responsive procurement framework
8.2 Climate responsive public procurement operations
8.3 Climate responsive public procurement monitoring
8.4 Climate responsive public procurement reporting
CRPFM-9 Climate responsive revenue administration
9.1 Climate related tax management, audit and investigation
9.2 Climate related tax arrears
CRPFM–10 Compliance of climate related expenditure   
10.1 Effectiveness of the systems of controls
10.2 Compliance of transactions
CRPFM–11 Climate responsive fiscal decentralization framework
11.1 Climate responsive fiscal decentralization arrangements
11.2 Climate responsive fiscal transfers
11.3 Climate responsive PFM arrangements applied by subnational governments
CRPFM–12 Climate related performance information
12.1 Climate related information in performance plans
12.2 Climate related information in performance reports
CRPFM-13 Climate related evaluation
13.1 Climate related evaluation of expenditure
13.2 Climate related evaluation of taxes
CRPFM–14 Expenditure outturn for climate activities
14.1 Aggregate climate related expenditure outturn
14.2 Climate related expenditure composition outturn

Much more on PEFA.org website

 

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