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The time is right! Devolution of funding decisions to designated national/regional climate change funding entities

This comment discusses the need to devolve funding decisions to national (or, if more appropriate, regional) designated funding entities. It is about the rationale for devolving funding decisions to the recipients, as well as the need for joined-up decision-making at the recipient end. This is backed by outlining the national experiences of the African Autonomous Development Fund (ADF), the Multi-Donor Trust Fund (MDTF) of Bangladesh and the Indonesia Climate Change Trust Fund (ICCTF).

Key messages:

  • countries will not be able to provide financial support in an adequate, efficient and effective way without national funding entities
  • there is a transaction cost argument against retaining funding decisions either at the bilateral or multilateral payer end
  • what the international community must do is encourage countries to establish such designated national (or, where more appropriate, regional) climate change funding bodies, and give them the authority not only to make plans, but to spend the funds thus provided
  • by introducing National Implementing Entities, the Adaptation Fund Board has paved the way for the idea of designated funding entities even at the international level
  • an overall architecture for climate change funding and finance is still needed.