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News / Comment

16MAR
2017
NEWS / IIED calls for G20 finance ministers to set targets for local-level climate adaptation finance
Category: Features, Financial Services, Government & Policy, International Development, Latest News

 

Image: Stilt houses in Yawnghwe, Burma: Credit: 3coma14, CC by 3.0

By Will Bugler

 
The International Institute for Environment and Development (IIED) has called on G20 finance ministers to set firm targets for getting climate finance to the local level. Speaking to Acclimatise ahead of the meeting of G20 finance ministers and central bank governors in Germany tomorrow, IIED’s Chief Economist, Paul Steele called on the international community to do more to ensure that international climate finance reached those who needed it most.
 
“The US has set a target of 30%, and the Nepal government… has set a target of 80% of its climate finance should reach the local level. It is possible to set these targets, and we think that the G20 should follow suit.” Paul said. 
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“IIED asks that the G20 finance ministers set targets for how much international public climate finance reaches the local level”

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Paul made the recommendation after an IIED report released last week estimated that just 10% of international public climate finance goes to the local level. This is particularly concerning for adaptation initiatives, which are heavily dependent on adaptation funding reaching the local-level programmes and projects.

Listen to the full interview with Paul Steele: 

The challenge of delivering climate finance to fund local-level adaptation is made more difficult, according to Paul, by the fact that there is currently a very poor level of good data available about how much climate finance makes it to the local level. “The bottom line is… we need more accountability and transparency around climate finance.” Paul said, “there is a lot of tracking about the amount of international public finance goes from North to South, but in terms of how much of that money is reaching the local level, there’s no clear data.

This picture is made more complicated by the fact that international public finance is only a part of the overall picture of climate finance. In fact, this type of finance may only make up a relatively small part of total climate finance flows. “If you look at the numbers, you see that in many developing countries domestic finance is often larger than the international finance coming in” Paul said, “what many developing countries are realising is that they have to primarily rely on their own resources [to fund climate adaptation]”.

To demonstrate the extent of this disparity, Paul gives the example of Bangladesh – a climate-vulnerable country where you would expect to see high levels of international climate finance flows. However, of the public adaptation finance in the country “three quarters was actually from the government’s own budget”.

Paul also identifies several challenges that are currently preventing climate finance from reaching the local level including the perceived financial risks; aggregation and transaction costs for large numbers of relatively small projects; capacity and capabilities of local institutions and a lack of forums for financiers and local-level practitioners to establish dialogues.

In order to begin to overcome these challenges, Paul makes a number of recommendations:

  1. Capacity development, especially for public financial management, should be a key part of the readiness programmes being rolled out by major climate funds such as the Green Climate Fund (GCF).

  2. Government ministries, especially the Ministry of Finance and the Ministry of Local Government, must take a central role in collaborating to raise and distribute climate finance according to need at the local level.

  3. Community-based adaptation financed by community groups and local government needs to be supported in a far more co-ordinated way.

  4. Domestic private finance has huge potential for growth, especially through small and medium sized businesses. These must be supported by giving a large role to national development banks who reach these enterprises.

  5. Social protection schemes should be a major focus for delivering increased climate resilience. “Adaptive social protection” would mean blending climate finance with social protection schemes, to increase resilience for the most vulnerable people in society.

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Download a copy of the IIED report “Delivering real change: Getting international climate finance to the local level” here.

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