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.
