In 2009, the Copenhagen climate summit gathered industrialised nations to commit to giving more than 100 million dollars to address concerns of climate change. Eight years on and climate finance remains one important tool in the efforts to mitigate the effects of climate change. From 17 to 22 July, The Hague Academy, in partnership with UNCDF, organised a training titled Climate Change Resilience and Financing to help local authorities identify tools for recognising vulnerabilities to climate change.
The course gave special attention to Green Public-Private partnerships and climate funds which have played a key part in developing strong climate resilience plans and catalysing joint actions.
In lead up to the course, The Hague Academy met with Fakri Karim and Vito Intini from UNCDF to discuss climate finance and the upcoming course.
This topic was designed to improve the participants’ (especially local government officials’) capacity and awareness of the role of the sub-national government in delivering climate change adaptation activities to increase resilience to climate change impact at the local level.
Since the first training in 2014, UNCDF expanded the programme that deals with this area to 12 countries in three regions (Asia, Pacific, and Africa). More lessons learned and good practices in improving sub-national capacity through the Performance-Based Climate Resilience Grant system have been compiled and used to improve the training module. The LoCAL Programme will also facilitate the attendance of local government officials from new local LoCAL countries at the training.
Moreover, since 2014 the global development agenda has been heavily shaped by international initiatives and agreements that have put both climate change and local development finance at the centre following the Addis Ababa Agenda for Action, 2030 Agenda for Sustainable Development, CoP 21-Paris Agreement, and the New Urban Agenda.
Local governments, and in particular cities, from developing countries are facing multiple challenges arising from a continuous shift of functions and responsibilities at the local level, the fastest urbanisation pace ever seen in human history, additional risks posed by climate change, and insufficient funding and revenue sources to address these challenges. As a result, housing, transportation, water and sanitation, education, energy –most of which have also relevant aspects in climate adaptation – are under pressure and underfunded.
To overcome the obstacles mentioned above, local government needs to have a system and mechanism that allows the national government to transfer climate finance to the local government, to be delivered through the local government planning and budgeting process as part of their long-term sustainable development trajectory. Without a proper mechanism, intervention on climate change adaptation or mitigation at the local level will only be through a project-based approach, which will not be able to transfer capacity to local government to access climate finance and implement it in a sustainable way.
Only with a proven institutionalised mechanism, are both national and local government able to access climate finance and deliver it systematically. In the long run, it will also transform the local government capacity to be a key factor in increasing resilience at the local level.
Moreover, many cities have untapped revenue collection potential that could avail themselves of if they improved their collection systems in the areas of local taxation, license, fee, and tariff collection, on the one hand, while providing better service delivery, on the other.
Finally, local governments increasingly need to have access to long-term financing sources, including accessing capital markets such as by issuing municipal green bonds, that allow them to finance infrastructure projects while spreading benefits and associated costs along the life cycle of these projects so as to address inter-generational equity.
Besides the lack of finance, other main challenges of local governments in responding to climate change are:
“In conclusion, besides finance, local governments need more clarity in their relationships with other levels of government and capacity building support to improve their policy and institutions in order to be able to deliver their mandate in increasing resilience at the local level.”
Given the scale of the challenge, the public sector will not be able to provide alone the required funding to address climate change. The private sector is, therefore, the other pillar of a coordinated effort that is increasingly needed in this field. The private sector is a provider of commercially viable utilities and services at the local level and can be a reliable investor able to provide private equity and sound management for the construction and refurbishment of infrastructures, services, and utilities that are not related to basic service provision but have more commercial characteristics.
In addition, it can also be a purchaser of long-term debt instruments such as municipal green bonds that can finance climate resilient infrastructures. But in order to contribute effectively, the private sector needs a reliable counterpart on the local government’s side as well as stable policy environment that induce them to extend their investment horizon and reduce their discount rate.
Furthermore, proper project preparation by local governments could induce private investors in investing in local and innovative PPP projects. Indeed, within the private sector, a new fast-rising category of impact investors is increasingly moving to the fore of financing climate-resilient infrastructure projects.
There are several messages for participants to consider in this course.
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News Brief | August 2017
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