Rescuers evacuate people from a flooded area to a safer place in Aluva in the southern state of Kerala, India, August 18 2018. (Sivaram V/Reuters)
CLIMATE FINANCE
United States secretary of state John Kerry announced on December 9 that the US will double its climate aid to poor countries to $860-million a year. Although there is little doubt of the benefit of more (and much-needed) climate aid, the effect of the aid is fundamentally contingent on how it is allocated.
Following the conclusion of the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) and renewed commitments to climate finance, a crucial question is whether this “climate money” is properly spent by bilateral donors.
Climate funds are typically earmarked for climate adaptation and mitigation. The former relates to overcoming the adverse effects of climate change where measures would, for example, include the construction of dykes and adapting water resources, and financing the movement of people who are adversely affected by rising sea levels.
Mitigation, on the other hand, refers to the reduction of the rate and magnitude of climate change by reducing greenhouse gases. The central question is, are these funds assigned to the appropriate countries and to the right projects?
When looking at adaptation, the answer to this question is simply, no.
Our current comparative country study, which looked at seven of the largest climate finance donors, five of which were European, with a regional focus on sub-Saharan Africa, shows funding for climate change adaptation is not provided to the most climate-vulnerable countries, which are not necessarily the poorest countries. Climate vulnerability is determined by the exposure and sensitivity of a country to global warming and the resources present in the country to adapt to the negative effects.
Yet bilateral donors are not driven by climate vulnerability, but by the existing relationships they have with their partners in development co-operation.
In other words, countries that receive more climate aid are already receiving official development assistance and, as our research shows, democratic countries also generally receive more climate funding than nondemocratic countries.
Importantly, climate vulnerability plays no role in spending climate funds, which implies that the countries that will be most adversely affected by global warming do not get enough money. To illustrate this, South Africa – with some sparsely populated countries and some small island states disregarded – received the highest amount for climate adaptation (per capita) between 2010 and 2013, but it is the least vulnerable country in sub-Saharan Africa.
Related to mitigation, the answer is also negative. This is illustrated by the use of mitigation funds by countries such as Japan to finance coal plants in India, Indonesia and Bangladesh when coal is the largest source of climate pollution.
Admittedly, Japan has focused heavily on technology that reduces the emissions of carbon dioxide in coal-fired plants. But the energy generated from coal plants is still significantly more polluting than energy derived from the sun, wind or natural gas. Indonesia and Japan, furthermore, have strong commercial ties. Indonesia is the second-largest supplier of coal to Japan.
Japan’s financing therefore ensures that a number of national companies remain internationally competitive. In short, the commercial interest prevails.
The risk then, with climate finance, is we fall into the old traps of traditional development aid and this, according to academic literature, usually goes to ex-colonies, to countries where a (potential) commercial interest prevails for the donor, or to countries of geostrategic importance. This often happens at the expense of the neediest countries.
Looking at the trends in climate finance, it appears as though bilateral donors are impervious to this criticism. Instead of learning from past mistakes, donors tend to be stubborn and consequently destined to make the same mistakes.
The World Bank warns in its new report, Shockwaves, that global warming is likely to affect the poor in countries considerably more than the rich, further exacerbating existing inequalities.
Moreover, the International Organisation for Migration has illustrated that migration will increase as a result of climate change. The incorrect assignment of climate aid may therefore have far-reaching consequences and lead to rising poverty in climate-vulnerable developing countries and an increase in climate-refugees to richer countries.
In short, urgency is certainly appropriate when it comes to fighting climate change, but the provision of financing is only half the battle.
The other half relates to relevant, effective disbursement of financing. It is essential bilateral donors learn from their mistakes in traditional development aid allocation, and that the US, in light of Kerry’s announcement, learns from the successes and failures of European bilaterals, which have thus far tended to commit more to climate finance.
We must correctly allocate the available funds to projects that signify the most efficient climate-friendly interventions in the most climate-vulnerable countries.
Jamie Robertsen is an associate at Genesis-Analytics. Nathalie Francken is a research manager at the University of Leuven, Belgium. Nadia Molenaers is a professor at Antwerp University in Belgium.