OPINION: Climate finance and poverty reduction – the need for synergy
Mariella Di Ciommo, Strategic Partnerships Manager at Development Initiatives, says that international climate finance flows could be designed a lot more effectively, to tackle poverty as well as climate change.
Climate change is among the greatest global development challenges of the 21st century, with wide-ranging effects for the environment and people, in particular for people living in poverty. People in poverty are disproportionately affected by climate change. They have fewer ‘safety nets’ and resources to respond to short- and long-term shocks and natural disasters, so the impact of climate-related disasters can be devastating. There is a high risk that climate change effects could reverse progress on poverty reduction. With around 766 million people globally still living in extreme poverty, we need to ensure that climate change effects do not undermine the progress that has already been made.
Because of the clear links between climate change and poverty, there are several overlaps and potential synergies between the agendas for tackling these global issues. These links are increasingly recognised at the high end of policymaking, for example in the Sustainable Development Goals and in the Paris Agreement – the two landmark agendas that shape our vision for a sustainable future. But how well are these overlaps and synergies reflected in practice?
International climate finance is a growing set of resources that, jointly with others, can contribute to better integration between the climate change and development agendas. Climate finance serves as a proxy to understand how international commitments to tackle both climate change and poverty work in practice. A recent study by Development Initiatives (DI) looks at how international public climate finance from developed to developing countries responds to indicators of need, such as vulnerability, poverty and greenhouse gas emissions.
Much of the narrative has focused on the fact that volumes of climate finance going to developing countries are low in comparison to commitments and need. DI’s report estimates that just US$48.9 billion of public climate finance was allocated to developing countries in 2014, from the estimated US$148 billion that was allocated globally that year. Adaptation finance (of particular relevance to those facing, or at risk of falling into, poverty) to developing countries remains low, representing less than a quarter of the climate resources explored in the report. Meanwhile, large volumes of mitigation finance are highly concentrated, with a third (32%) flowing to three countries alone.
Beyond these low volumes there is another aspect of particular importance: these scarce resources are not always targeted to where needs are likely to be highest. In 2014 most adaptation finance did not go to countries most vulnerable to climate change’s potentially devastating impacts, but to those with mid-range vulnerability scores. Similarly, countries with the deepest levels of poverty received relatively low amounts.
There are a number of reasons behind this distribution pattern. Firstly, as with other types of support, some donors avoid working in fragile and insecure contexts because they find these environments too challenging. This is problematic given that countries (or regions within countries) that are highly vulnerable to the affects of climate change are often also politically insecure. Secondly, a number of climate-vulnerable countries also lack the capacity to access, absorb and manage financial resources. Regardless of cause, the disconnect between needs and the distribution of climate finance should be addressed, particularly as the countries missing out often have limited domestic resources and capacity to respond to the impacts of climate change.
DI’s report also found that mitigation resources were better targeted when emissions are taken into account: in 2014 the majority of mitigation resources went to the 21 developing countries with annual emissions greater than 200 MtCO2e (metric tons of carbon dioxide equivalent). However, while these countries are home to more than half a billion people in poverty, some countries in this group with high emissions, high poverty levels and limited domestic resources lack support – the Democratic Republic of the Congo and Nigeria, for example, received relatively little in comparison with other countries in the group.
Mitigation finance is intended to cut emissions, not poverty. But, for countries such as these, careful consideration of how investments can impact on the poorest people and support national strategies to reduce emissions while addressing poverty is vital. This would lead to better outcomes for both climate and development. Integrated strategies and frameworks could also take into account the wider landscape of resources at country level and how better synergies among them can lead to more effective and impactful uses.
Another important message from DI’s report is that evidence on resources, people in poverty and climate impacts needs to improve dramatically. If we are to better understand the comparative advantages of climate finance to address both climate change and poverty, better data needs to be made available to identify the right mix of resources that can address specific needs at subnational, country and regional levels.
For now a strong conclusion arises. Clearly, not all climate finance has a mandate to address poverty, but there are opportunities for synergies between the climate and development agendas. The more we explore them, the less we will be caught between false choices on how we allocate resources. Some resources (for example official development assistance aimed at climate-related activities) have, or can have, a double mandate, and it’s essential that the mandate to tackle poverty is not forgotten. It is also important that synergies are explored in the context of increased resources that meet international targets on aid and climate finance. It is only by working together that the climate and development agendas can have maximum impact.
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