Abstract

Part of book
The Political Economy of Climate Finance: Lessons from International Development

Abstract

There is overwhelming evidence that those who are poor or marginalized will be disproportionately impacted by climate change. Poor people are more susceptible to climate hazards because they live in poorly constructed homes in high-risk areas; often rely heavily on natural resources for food, fuel and income; and have limited options. They also have little capacity to respond to climate hazards because of existing structural inequalities. How governments manage the funds needed to build the resilience of people and communities to climate change will determine whether climate change will further entrench or deepen existing poverty and force more of those who are “near poor” into poverty. Hundreds of billions of dollars are being mobilized globally from donors and domestic sources to address the causes and impacts of climate change. Governments around the world are now establishing and operationalizing the budget systems, institutions and processes for managing these funds. At the same time, countries are facing increasing pressure to generate revenues domestically as donors scale back aid, heightening the need for effective and accountable climate finance management. Unfortunately, the budget systems in most of the countries that will generate and/or receive significant funds for addressing climate change are not transparent and accountable. Such systems are more likely to produce inadequate, poorly designed or poorly implemented investments in climate change mitigation and adaptation, placing those most effected by climate hazards at grave risk. And because of the interaction of climate change and poverty, failure to improve these systems would have serious implications on the International Budget Partnership’s (IBP) mission to realize equitable, just and sustainable societies. This chapter presents evidence from IBP-supported pilot efforts by civil society organisations in Nepal and Indonesia to understand, navigate and explore how to strengthen climate finance accountability (CFA) ecosystems. The experience and lessons from these civic actors and other stakeholders form the basis of this chapter.