Strengthening the Governance of Climate Change Finance to Benefit the Poor and Vulnerable Sujala Pant Governance and Climate Finance Specialist
Overview
Our guiding principles and approaches The Budget Focus on MoF, but Whole-of-society Use of country systems Focus on the budget cycle
Why would Ministries of Finance be interested in this agenda? Climate change sensitive, risk-informed decisions are necessary It helps MOFs present the required information on climate change related: allocations, actual expenditures Trends towards achieving expected outcomes and commitments (e.g. NDCs) Options may vary, but usually it requires minimal costs for MOFs to integrate CC information Enabling MOFs in mobilizing more resources from international funds
Diagnostics understanding the starting point
Climate Public Expenditure and Institutional Review (CPEIR) Diagnostic Tool A tool to assess CC related public expenditures and the institutional framework Includes recommendations on improving integration of the climate change in the budgets First completed in Nepal in 2011. And played an important role in introduction of the Climate Budget Tagging CPEIR now rolled-out in 20+ countries in Asia, Africa and Latin America
Why is it important to add climate change lens to the budgets? Countries in the region already spend significant public money on climate change related activities average of 5 to 8% (according to CPEIRs) The trend will likely continue to grow as the risks increase Ministries of finance cannot ignore such an important and growing demand for public funds It helps mobilizing more money and investments into the country BUT climate change is not visible enough in the budgets With such information asymmetry it is natural that other sectors will get more of the MOF s attention even if climate change is really important
The enabling environment
A Climate Change Budget Integration Index There were many initiatives on integration of the climate change into budget processes, But there was no systemic approach on measuring that. Hence, the CCBII was developed The objectives of the CCBII are: 1. Systemic approach and more objective validation of the progress towards CC integrated PFM system in countries 2. Setting a baseline, prioritization and helping with formulation of a reforms agenda for CC integration (guidance for formulating the country s reforms directions and agenda) 3. Cross-country comparison, especially relevant in the regional context 4. Platform for cooperation framework with development partners.
Country CCBII score estimates/forecast Nepal 2014 2015 2017 2018 Pakistan 2014 2015 2017 2018 CSO Donors Policy 10 9 8 7 6 5 4 3 2 1 0 Requirements Priorities CSO Donors Policy 10 9 8 7 6 5 4 3 2 1 0 Requirements Priorities Parliament Reporting Parliament Reporting VfM Coding VfM Coding Calculation Calculation
Technical support
Climate Budget Coding/Tagging Is a toolfor monitoring and tracking of CCfinance inthebudgets. Enables governments to make informed decisions and prioritize climate investments. Helps assessing whether it is on track with climate change spending targets. The Philippines, Nepal, and Pakistan have CC budget tags if it tracks both allocations and expenditures if it is used in generating expenditures reports if it is incorporated in the FMIS
Budget vs. actual expenditure: FY 2014-2015/ Federal Level/ Pakistan Function OriginalBudget OriginalBudget_CCRele ActualExpenditure Actual_CCRelevant Adaptation 115,027,354,000 50,055,173,850 116,300,347,320 51,123,747,302 Agriculture and Livestock 5,337,381,000 2,732,077,900 4,906,466,342 2,589,816,537 Biodiversity 7,709,000 3,854,500 13,096,000 6,548,000 Capacity Building and Institutional Strengthening 3,942,991,000 485,127,550 4,951,624,615 633,552,077 Disaster Prepardness 19,277,696,000 12,000,760,500 22,457,078,172 13,855,760,847 Health and Social Sciences 54,996,324,000 15,774,039,200 50,330,791,135 14,691,046,325 International and Regional Cooperation 8,000,000 2,400,000 4,814,846 1,444,454 Town Planning 20,000,000 5,000,000 - - Transport 37,823,000 9,455,750 694,711,000 242,626,950 Vulnerable Ecosystems 2,243,301,000 458,978,500 1,979,699,495 411,299,460 Water Resources 29,156,129,000 18,583,479,950 30,962,065,715 18,691,652,653 Adaptation/Mitigation 1,081,224,892,000 186,434,858,900 1,090,065,712,152 187,740,032,997 Disaster Prepardness 799,941,013,000 93,408,234,200 793,123,983,349 92,125,180,556 Energy 252,526,313,000 84,934,939,100 255,079,429,048 82,629,681,918 Health and Social Sciences 2,000,000,000 600,000,000 5,993,514,982 1,798,054,495 Town Planning 22,585,954,000 6,074,228,600 24,652,180,160 7,236,754,155 Transport 3,671,612,000 1,042,457,000 10,716,604,613 3,575,361,874 Water Resources - - - - Water Resources/Energy 500,000,000 375,000,000 500,000,000 375,000,000 Mitigation 181,071,001,000 89,219,548,950 192,496,382,634 114,321,922,138 Carbon sequestration and forestry 658,324,000 493,743,000 351,678,250 263,758,688 Energy 74,786,677,000 62,340,805,950 112,430,603,968 94,132,238,347 Town Planning 210,000,000 73,500,000 4,000,000 1,400,000 Transport 105,416,000,000 26,311,500,000 79,710,100,416 19,924,525,104 Supporting Areas 86,647,180,000 10,066,839,350 91,713,769,057 10,045,750,254 Awareness Raising and Education 75,000,387,000 8,015,614,800 81,209,661,268 8,158,499,053 Capacity Building and Institutional Strengthening 11,616,793,000 2,048,224,550 10,475,308,574 1,884,371,280 Health and Social Sciences 30,000,000 3,000,000 28,799,215 2,879,922 Grand Total 1,463,970,427,000 335,776,421,050 1,490,576,211,163 363,231,452,691
Objective decision-making
Information and analysis Make sense of existing information and data (eg, vulnerability indicators) Assess whether allocation/expenditure are leading to results on the ground Assess the socio-economic impact of climate relevant investments Decisionmaking and prioritiza tion More effective and equitable budget proposals Assess the climate change impact on key sectors
Integration
Climate Change Financing Framework Functions Highlight Resource Gap Details Identify range of gap between $ sources and uses (i.e. $ flows needed to meet national CC goals & current and expected resources) Costing Support costing out of climate policy targets/objectives or key CCA measures. Enable implementation via budget allocation. Evaluate policy realism and coherency Compare actual public spending (plus potentially external CC finance) to currently adopted, approved policies/actions plans. (e.g., SDG #13, INDCs, NCCPs) Enable Stronger Results-Based Budgeting Enhance the appraisal of programs as part of budget proposals to help government prioritize and ensure VFM Strengthen integratedcountry systems for MRV and results-based budgeting (tie together on and offbudget frameworks) Expenditure tracking and impact evaluation and feedback loop back to program design/budget guidelines.
Building blocks of a CCFF
What s in it for Financial Institutions? Understand the scale of investments being made by the government Understand the scope and type of climate related investments Assess where complementarities can be made Assess where duplications can be avoided Explore partnerships
www.climatefinance-developmenteffectiveness.org @APRC_CF