Opening Budgets to Fight Climate Change

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This post is from “That’s How the Light Gets In”: Making Change in Closing Political Environmentsa collection of essays that examine evidence of how to pursue fiscal accountability in a tougher political environment. The collection is a companion to IBP’s 2016 Annual Report. Read more essays from the collection on the Open Budgets Blog here.

The response to global climate change may be the biggest opportunity for the foreseeable future to direct public funds to poor and vulnerable communities. In December 2015 195 countries joined the Paris Agreement under the United Nations Framework Convention on Climate Change, committing to dramatically reducing greenhouse gas emissions (“mitigation”) and protecting communities and vulnerable people from the impacts of climate change (“adaptation”). By the deadline of 7 October 2016, enough countries had ratified the agreement to allow it on 4 November to enter into force as an international treaty “to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty.”

As countries prepare for comprehensive climate action, they are also increasing the funding needed to implement actions toward meeting their commitments under the Paris Agreement. Estimates of the new funds that will be mobilized globally for an adequate response to climate change amount to hundreds of billions of dollars per year. If such a mobilization proves successful, it would generate a massive flow of funds into countries to address the impacts of climate change. If used right, they could also make major inroads into addressing poverty and inequality.

And why would IBP jump into this new area? Although funds will be coming from both international and domestic private and public sources, much of the climate change efforts will be managed by national and subnational governments through their domestic budgeting systems. To ensure that the scarce resources invested in climate-related activities are spent most effectively and reach the intended beneficiaries — the people and communities most vulnerable to the impacts of climate change — with minimum leakages, transparency and accountability will be essential.

For instance, in the wake of Typhoon Yolanda, which ripped through the Philippines in 2013 and devastated families and communities, Social Watch Philippines (SWP) investigated how public funds were used in the reconstruction and rehabilitation effort in several communities. After successfully challenging the Department of Budget Management to release information on the reconstruction effort that it had not made publicly available, SWP conducted an expenditure tracking survey that found that by November 2015 only 8 percent of the 14,000 resettlement units that were to be built by March 2016 had been built and were occupied. Through careful analysis and external pressure, actions like those of SWP, that identify and publicize the failure of government to meet the critical needs of those whose lives are turned upside down by the impacts of climate change, are essential to ensure that public funds for such purposes are used effectively. Thus in 2016 IBP took two significant steps forward in investigating potential work around climate change finance accountability. The first was to partner with the UNDP’s Governance of Climate Change Finance Team to assess the climate change finance accountability ecosystems in four countries: Bangladesh, India, Nepal, and the Philippines.

IBP also established a partnership with the World Resources Institute (WRI) that links our fiscal accountability work with WRI’s environmental expertise, and our respective civil society partnerships in countries. This potentially powerful partnership aims to help strengthen the capacity of domestic accountability actors to ensure that climate change funds will be managed with full transparency and accountability in order to create sustainable futures, especially for poor and marginalized people.

What Have We Learned so Far?

The IBP-UNDP assessments in the four countries found that formal accountability systems and accountability ecosystems for climate change finance are, at best, still emerging. There are common weaknesses in the systems across countries, including a lack of national- and local-level transparency on the funds available to address climate change and how they are used; limited opportunities for citizens and CSOs to participate in climate-related planning, budgeting, and monitoring on the ground; and capacity issues hindering effective oversight from civil society, media, and formal oversight institutions. There were also signs that a lack of country ownership of donor-driven projects threatened the effective use of resources. It is important to note that these weaknesses are generally not specific to climate change, but instead a function of the public finance management and accountability ecosystem overall.

However, while strengthening weak core systems can often take several years, there are examples in each of the countries that point to work that CSOs already undertake with good impact on accountability, even if they do not have good access to formal processes or to information. These include the SWP’s tracking of typhoon reconstruction expenditures in the Philippines, analyses to identify the amount the government invests in climate change adaptation in India and Nepal, and CSOs helping local governments to draft project proposals for government adaptation funds in the Philippines.

Cracking Open Closing Contexts?

There are a number of factors related to action on climate change finance that point to its potential as an opening in the current trend of closing space for public engagement and accountability. First, the stakes of governments failing to use climate change funds effectively are high, with potentially devastating loss of life and massive economic costs. Those countries most vulnerable to the impacts of climate change, even those like Bangladesh that have seriously constrained most avenues of public scrutiny and engagement, will face increasing pressure from internal and external actors to open up and increase accountability. This and the factors described below, as well as the nascent CSO work identified in the country assessments, point to potentially substantial returns on investments in building the field of civil society climate change finance accountability work at this early stage.

Another important factor is that the global effort to address climate change is embedded in a formal process and structure established through an international treaty. Signatory countries (148 as of 9 June 2017) have committed to reaching specified mitigation and adaptation goals within a framework of transparency and accountability. In the countries IBP assessed, these commitments were translating into efforts, or at least legal frameworks, to make some climate change-related finance information available and to engage CSOs in planning processes, but there is still a long way to go. Engaging early on to ensure adequate transparency and public engagement as countries are developing their systems and processes has the potential to pay off in the long run.

Within countries, climate finance accountability work could dramatically expand the pressure on governments to open budget processes and ensure newly available resources reach those most in need. First, because of the cross-cutting nature of climate change action, particularly on adaptation, the issue has brought in a wide range of CSOs to pressure government, including environmental groups, governance/transparency groups, and social movements. Second, for true climate change finance accountability, information and opportunities for participation must be available at the national and subnational level, at which projects and programs will be implemented. Given the urgency of the need to act on climate change, combined with the cross-cutting nature of the issue, there is the potential for accountability efforts around climate-related finance to increase momentum on broader public finance accountability.

Related Resources

Further Reading

2016 International Budget Partnership Annual ReportThat’s How the Light Gets In”: Making Change in Closing Political Environments

This collection of essays — a companion to IBP’s 2016 Annual Report — examines evidence of how to pursue fiscal accountability in tougher political environments.
Download »

2016 International Budget Partnership Annual ReportInternational Budget Partnership 2016 Annual Report

The International Budget Partnership’s 2016 Annual Report documents our work over the past year, focusing on what we have achieved and what we have learned.
Download »

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