How to ensure climate change finance is well spent

Neil Bird and Jonathan Glennie in the PovertyMatters blog in the Guardian (UK): Most commentators agree that the additional funding developing countries need to respond to climate change will require a major flow of finance from richer countries to poorer ones. The 2010 World Development Report estimated that the overall incremental cost of mitigation and adaptation in poor countries will be between $170bn and $275bn per year by 2030. The sourcing and spending of such a large amount of money represents an extraordinary challenge for the global development finance system.

Climate finance, which is meant to pay for climate mitigation and adaptation in poor countries, is set to reach $100bn a year, according to the promises of rich countries. As with traditional forms of aid, quality will be as important as quantity, if not more so.

We have written a paper suggesting some ways to judge the quality of climate finance spending. We argue that the results of climate spending should be judged according to three criteria. First, how well actions that are funded lead to the desired result, in this case the mitigation of carbon emissions and the strengthening of adaptive capacity to climate change. Second, how such results can be achieved with the least amount of waste, or at the least cost. And third, the impact of such actions, in particular whether they meet the needs of the most vulnerable people.

While there are similarities between aid and climate finance, there are also important differences, which is why the Paris Principles on aid effectiveness, agreed by the major donors and recipient countries in 2005, are insufficient….