Monitoring Climate Finance in Developing Countries
Improving National Procedures& Systems for MonitoringClimate Change Finance: Initialgood Practice GuidanceDennis Tirpak and Louise Brown
The Problem we are Trying to Solve..Getting the Ledgers to BalanceDonor $€£¥ ≠ Recipient $€£¥Country CountrySupport Receipts
Other Reasons for Tracking of ClimateChange Finance• Facilitate comprehensive national planning and effectiveuse of domestic and international funds• Provide data on support received for UNFCCC BiennialUpdate Reports• Provide a comprehensive picture of climate finance at theinternational level; thereby facilitating an assessment ofgaps & trends• Means to verify developed country reports of financeallocated & delivered and Foster trust with donors• Facilitate direct access in the international financialmechanism
Current Efforts to Track Financefor Climate Change• Bloomberg New Energy Finance• OECD Development Assistance Committee (DAC)• UNFCCC National Communications• Multilateral Development Banks• World Bank Climate Co-Benefits Tracking• Fast-Start Finance Reporting• Other Reporting Systems (ad hoc, domestic, independent, etc.)
Approach• Three workshops were held in Asia, Africa andLatin America• Over forty representatives from 20 developingcountries, regional development banks (AfDB andIADB) and several national organizationsparticipated• Support was provided by Environment Canadaand BMU/UNEP Fit for Funds Pogramme
Objectives of the Workshops• Exchange information on the current systems andprocedures in developing countries for storing andreporting official development assistance (ODA), and, inparticular, climate finance;• Extract lessons learned, political and technical capacityconstraints, best practices and needs of the currentsystems;• Explore what an ideal system looks like, includingindicators, criteria, scope and institutionalarrangements; and• Identify the priorities of developing countries and thesupport they require to improve their systems andprocedures for reporting climate change finance.
Key Monitoring Challenges Identifiedby Participants• Inconsistent definitions and criteria to define climatechange finance;• Inconsistent markers, indicators and codes tocharacterize financial data (e.g., by sector andactivity);• Insufficient institutional arrangements, includingunclear clear roles and responsibilities;• Insufficient technical processes and systems toidentify and record climate expenditures;• Lack of information on climate finance provided tonon-government actors
Key Monitoring ChallengesIdentified by Participants• Limited treatment of different types of financialinstruments in existing data systems;• Limitations on the availability of private financialdata;• Lack of transparency and predictability on thepart of development partners contributingclimate finance; and• Limited use of developing country nationalsystems for reporting by development partners
Example of Options for Improving theStorage of Financial DataModification of existing financialmanagement systemsCreation of a new ODA/loan trackingsystemAdvantages Would allow for effective integrationof climate finance with otherelements of financial planning andmonitoring.Would not require substantivetraining and learning costs, as staffare already familiar with existingsystemsWould allow for better comparison ofdata between countriesDisadvantages Technically challenging, costly, andtime consuming to alter existingsystemsCould be met by bureaucraticresistance depending on the extentof the modifications neededWould require new procedures andtraining which would also be technicallychallenging, time consuming and costlyWould be challenging to coordinatebetween various countries should theychoose to design a system togetherWould run the risk of being poorlycoordinated with existing systems andpoorly integrated into core financial andmonitoring
Options for Improving Data on FinanceReceived by NGOs• Pass regulations that require NGOs to report thesource and amount of finance received• Develop voluntary ‘memoranda of understanding’between governments and NGOs that outline howclimate change finance data should be reported. T• Invite development partners to voluntarily report onfinance provided to NGOs or establish regulations torequire them to report on finance provided to allministries and NGOs.• Establish a requirement that internationaldevelopment partners input data directly to financemanagement systems
Initial Good Practice GuidanceExamples of issues Addressed• How should this guidance be used?• What is climate change finance?• What principles should guide thedevelopment of improved systems,procedures and institutional arrangements• What should be the legal basis?• Which financial instruments should bemonitored?
Initial Good Practice GuidanceExamples of issues Addressed• Which sources of climate finance should bemonitored?• What indicators or markers should be used tomonitor climate finance?• What institutional arrangements arenecessary to monitor climate finance?• How should climate finance data be stored?• How should climate finance data bereviewed?
Other Topics• Reporting formats• Capacity building• South-South learning and developed countryexperience• Pilots• Reference material
For more Information contact:–Dennis@Tirpak.com–LBrown@WRI.com