Environmental and Climate Finance in a New World

Environmental and Climate Finance in a New WorldChristopher Marcoux DePauw University

Michael Tierney The College of William and Mary

www.aiddata.org

www.aiddata.org

Environmental Impacts of Development Finance

Brown vs. Green Environmental Aid

Project Donor Recipient Year Amount

Aluminum Recycling Sweden Serbia 2001 $28,215

Elephant Awareness Education U.S. Zimbabwe 2007 $9,136

Waste Management / Disposal Spain Brazil 2008 $80,753

Water and Sanitation UNICEF Tajikistan 2000 $39,855

Annual Environmental Aid, 1990-2008

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

Billi

ons

USD

(200

0)

Green

Brown

Source: www.aiddata.org

Annual Environmental Aid, 1990-2008

Source: www.aiddata.org

Bargaining Theory and Aid Allocations

Weaker Donor Outside Options

Stronger Recipient Outside Options

Donors More Dependent on Recipient CollaborationDonors Have Less Bargaining Power

Donors Contribute Less

Donors Contribute More

Club Goods Present

Conjectures on Environmental Aid Allocation

• As recipients’ outside options weaken, donor allocation increases. As recipients’ outside options strengthen, donor allocation decreases.

• If donors’ outside options weaken, donor allocations to multilateral organizations will likely decrease. However, donors’ direct activity (e.g. provision of bilateral aid) may remain constant or even increase.

• If donors do not internalize the entire benefit of global public goods (e.g. mitigating climate change), donors may strengthen their outside options by shifting from multilateral to bilateral aid provision.

• The presence of Club Goods tends to increase donor allocation.

Trends in Green Aid Delivery, 1990-2008

Source: www.aiddata.org

Trends in Brown Aid Delivery, 1990-2008

Source: www.aiddata.org

The Future of the Green Climate Fund?

• Developing countries have been united in their demands for climate funds to be administered by the UNFCCC and COP to the Kyoto Protocol.

• Related demands have been for ‘direct access’ to funds, in which national governments in recipient countries administer funds through NIEs.

• While the steps toward establishing the GCF have been celebrated as a victory, questions remain regarding how much funding it will govern.

• Only about 2 per cent of Fast Start climate funds have been channeled through COP and Kyoto Protocol (KP) Funds, with limited consistent or predictable sources of revenue (Ciplet et al. 2013).

• The creation of funding structures that reflect principles of adaptation finance justice may be largely hollow victories.

What AidData Can Do . . .

• Track nearly all climate finance in one place using existing technology

• Leverage open data, linkages, current standards and partnerships

• Consistently identify climate adaptation and mitigation activities across all donors and systems

• By doing so, we would create a quantum leap in transparency and increased participation in monitoring

• Improve targeting and effectiveness of climate finance through mapping and evaluation

Composition of Multilateral Environmental Aid, 1990-2008

Source: www.aiddata.org

Composition of Bilateral Environmental Aid, 1990-2008

Source: www.aiddata.org