• Friday, Apr 19, 2019
  • Last Update : 02:29 pm

What Attracts Climate Finance?

  • Published at 05:09 pm April 1st, 2019
What Attracts Climate Finance?
Photo : Rawpixel

A donor-recipient perspective

When the least developed countries (LDCs) received news that under an Accord of the United Nations Framework Convention on Climate Change (UNFCCC), Article 11, developed nations agreed to raise financial resources to climate change vulnerable developing nations (United Nations, 1998), these innocent victims breathed a sigh of relief. They believed, now, they would at least be partially compensated for the loss and trauma brought upon them by the emission practices of the richer, industrialized countries over the past several decades. The Paris Agreement of 2015 seemed like the starting point of the promised climate funds’ inflow, but within a few short years it became quite evident that all was not well in the donor-recipient channel; LDCs were not receiving enough Climate Finance (CF). Furthermore, some LDCs were receiving more/less than their fair share of CF, irrespective of their vulnerability status. Hence, there arose a question –  what were the criteria to receive CF?

In the Copenhagen Accord on Climate Change (CC) of December 2009, developed nations agreed to raise $100 bn annually by 2020 to be given to the LDCs to tackle CC. However, according to the Carbon Brief report (2018), donor government gave away a total of only $34 bn in 2015 and US$37 billion by 2016. This gap between commitment and actual donations further necessitated the aforementioned question’s answer. 

A review of the CF literature revealed that the G8 countries, primarily responsible for providing CF, are more sympathetic towards LDCs that are more transparent, have better project-writing and implementation/accounting capabilities, and have proven themselves proficient at managing the financial resource provided (Lo, 2016). Moreover, countries which have more abundant natural resource reserves and are more democratic, receive larger chunks of CF (Lewis, 2003). Hence, there seems to be more appeal towards the merit of the poorer country in terms of transparency, accounting, and project-writing and/or their alignment with donors’ interest, than their actual vulnerabilities from the donors’/development partners’ standpoint. 

Alternatively, LDCs think biasedness circulates in CF flow as it is a highly political issue (Hedger, 2011). They claim that LDCs are so because lower transparency is a typical trait in such countries and they can hardly be judged on this criterion or that of their capacity as they are still new in this arena. Additional claims of donors clinging to similar types of projects that align with their interests than those that address actual vulnerabilities are splashed across the literature.

So, what are the criteria that decide the CF inflow into an LDC? The answer that evidence from the past portrays is this – merit of the country, donor interests, and vulnerability of the country: The former two seem to get precedence over the latter one (Lewis, 2003; Tirpak et al., 2014; Larsen et al., 2015; The Guardian, 2015; The Daily Sun, 2017). This notion also largely explains why the richer LDCs have better transparency, more skilled project writers and mutual trust with donors, and receive more significant amounts of climate funds than their less transparent, poorer counterparts. These issues and the findings from the relevant analysis are what is highlighted in the North South University Research Grants funded project titled, “Fairness of Climate Finance Share among Select Least Developed Countries: A Comparative Analysis.”

Khandker Tarin Tahsin is currently an undergraduate student, pursuing a major in Environmental Science, from the Department of Environmental Science and Management (ESM), North South University (NSU), Dhaka, Bangladesh.  

Raisa Bashar is a Lecturer at the Department of Environmental Science and Management (ESM) of North South University (NSU), Dhaka, Bangladesh. She completed her Masters in Environmental and Natural Resource Economics from Durham University, UK and a dual Bachelors in Economics and Environmental Science from NSU.