Integrating Climate Change into National Planning UNFCCC LEG Regional Workshop on NAPs for Latin America and the Caribbean San Jose, 4-7 September 2017 Umberto Labate UNDP NAP Global Support Programme umberto.labate@undp.org

Towards integration: National Planning & Budgeting Process Do things differently because of climate change - wherever necessary Systematically identify significant (CC) risks and opportunities for development Modify affected policies, strategies, plans Implement them Monitor and reassess Repeat The national planning and budgeting cycle Mainstreaming adaptation means taking it into account in the entire planning and budgeting cycle This starts with the National Plan and the Medium term Budget/Expenditure Framework Likewise, it needs to be mainstreamed into the Sectoral Plans that define sector priorities for the medium term and in sector budgets that allocate the financial resources for these plans. A possible entry point for this is the annual budget framework letter with which the ministry of finance requests sector ministries to submit their annual sector budget. Once the programs have been budgeted they need to be implemented and monitored, while taking into account climate change. Furthermore, during the Mid Term Review of the National Plan and Sectoral Plans the progress towards integrating climate change should be assessed. After completion of the implementation process, a final evaluation is conducted to determine the results and learn from it. This evaluation should also take into account climate change.

HOW TO INTEGRATE CLIMATE RISK IN PRACTICE? How could development goals be affected by climate change? Applying risks assessments systematically (based on climate info) Updating vulnerability assessments and socio-economic scenarios in a regular manner Analyze climate vulnerabilities Which policies, plans and budgets need to be modified to reduce the vulnerabilities? (barriers?) Identify entry points What adaptation options might be relevant to reduce the vulnerabilities? Costing measures and developing realistic financing plans Assessing and prioritizing programmes for budget allocations Assuring the quality/targeting of public expenditures Amend policies, plans and budgets What resources and capacities are required? Who is responsible? Monitoring, reporting and evaluating outcomes linked to $ resources and learning lessons Implement them Integration is not linear process across scales or sectors. Rather, mainstreaming has begun as there has been increasing evidence and understanding by policymakers and societies around the associated risks of climate change in each country’s context. Countries approaches vary as some are beginning by integrating climate change adaptation into national development policies, while others have taken a sector based approach. As such, each country is following its own path which reflects its ideals and priorities and while no two experiences are equivalent, there are commonalities across cases. Vulnerability assessments are an integral part of the policy process and implementation process. Vulnerability assessments gauge exposure and sensitivity to social, economic, and natural vulnerabilities within a system and a given context. Vulnerability assessments have acted as a catalyst and a foundation for effective and targeted policymaking and have been conducted at the national and subnational level by risks and by sector. Governments have found that the inclusion of local communities in the vulnerability assessment process is essential in order to understand how climate risks are interacting with existing challenges and to determine appropriate adaptation options. This is also a means to develop no-regrets approaches and address the uncertainty inherent in climate change projections. An understanding of the economic, ecosystem and social costs and benefits of climate change adaptation activities is also an important aspect in decision-making. The assessment of the costs and benefits allows governments to identify, categorize and appraise adaptation options. The Economics of Climate Change Adaptation programme, a joint program of UNDP and regional partners, has supported Ministries of Finance and Development Planning(?) to institutionalize these microeconomic tools for adaptation. This enables countries to formulate economically efficient and climate resilient development plans and build on the NAP process.

CLIMATE BUDGETING Core Elements of CC Planning and Budgeting CCA strategies integrally reflected in policies and strategies Finance Gap & Priority CCA Actions Costed Establishing coherent institutional arrangements WHAT GETS MONITORED GETS MANAGED Budgets are how CC funds are often utilized and are the most important documents to translate policy into action National (and local) budgets are critical for the implementation of adaptation plans and objectives, including NAPs Contributes to better understanding of the economics of various options and CCA measures through better costing & prioritizing Better management strongly correlates to more equitable and gender-responsive spending Planning and budgeting systems integrate CCA actions Clear results & target indicators identified and effective M&E systems in place Resource mobilization strategies (funding, knowledge, technologies) Source: ONEP, Nov. 2016 Countries have found that the integration of climate change into a development and sector plans facilitates and necessitates the budgeting of climate change activities. This addresses a key challenge with the development of climate policies, they rarely had any budget attached to their implementation. Governments have been primarily financing climate change activities through donor sources that were processed separate from annual budget accounting systems. This brought another challenge, which was continuing activities after the donor financing was finished. Budget management systems have been a key step in integrating climate change into existing budgeting processes. A climate sensitive budget management system allows for tracking how funding for climate change is being used to enable better decision-making. Countries have begun to work on tagging budgets and expenditures for their climate sensitivity. Generating knowledge about risks, vulnerability, opportunities, social-economic impacts and learning from CCA interventions

CLIMATE BUDGETING UNDP along with other partners has been working with countries to conduct Climate Public Expenditure and Institutional Reviews (CPEIRs). This provides a means to understand the amount of the current budget, which is going toward climate related expenditures and help countries to improve their planning and budgeting. Through this process, it has become clear that a large amount of expenditures are climate related, although this varies across countries. In Bangladesh, the level of expenditure on climate sensitive activity is around US$1 billion per year and it equals about half of local government budgets including safety net schemes. Bangladesh has developed a Climate Fiscal Framework which recommends mainstreaming climate change into budget and accounting, but this is still in process. In Nepal, annual expenditure on all climate change-related activities constitutes approximately 2% of Gross Domestic Product (GDP) and around 6% of Government Expenditure and has increased to over 10% of the annual budget. Since 2012, Nepal has used a budget code system which marks each development plan budget item as highly relevant, moderately relevant or neutral from the perspective of climate change. This has provided a clearer picture of how the climate budget is planned, allocated and disbursed at the national level. The code demonstrated the gaps between sectors and has facilitated the coordination of climate activities and strengthened public finance systems to implement climate policy.   The Philippines has implemented a national and local budget code system, which is also connected to the planning process. Climate change is mainstreamed into national government agencies plans, programs and activities and then during the budget process, agencies tag their climate change adaptation and mitigation expenditures. Agencies present their climate budgets during technical budget hearings, which also provide an opportunity for tags to be added and removed. All climate change expenditures are then tracked through an M&E framework. The Philippines has also begun to publish all their climate expenditures on-line to ensure transparency in the budget process.

CLIMATE BUDGETING Key Components of CBT A climate budget tagging system would generally consist of 4 components, including 1) defining and 2) classifying climate activities, 3) weighing their climate relevance and 4) designing the tagging procedure. CBT complements other on-going relevant efforts in relation to tracking of climate finance, notably: i) UNFCCC Standing Committee on Finance’s work on methods of financial information reporting for developed countries; ii) monitoring international climate finance in developing countries by World Resources Institute (WRI) (Tirpak, 2014); iii) tracking private sector’s investments in climate change by UNDP Low Emission Capacity Building Programme (Oxford Consulting Partners 2015); iv) OECD-DAC Rio Markers to track climate-related aid (OECD 2011), v) Multilateral development banks (MDBs) joint approach in tracking their mitigation and adaptation investments Implication of CBT CBT is a budget tool for monitoring and tracking of climate-related expenditures in the national budget system. But CBT is more than a tracking tool. It provides Comprehensive data on climate relevant spending, Enabling government to make informed decisions and prioritize climate investments. Encourages planning officers and policy managers to incorporate climate considerations in project design from early stages Enables public scrutiny on government and donor spending towards addressing climate change issues   Key components of CBT are also implemented in Climate Public Expenditure & Institutional Review (CPEIR), implementing a climate budget tagging system can significantly benefit from CPEIR experience. CPEIR Methodological Guidebook provides more detailed guidance in implementing some of these components. Some points to be consideration. Climate Fiscal Framework (CFF): CBT provides the government with information which enables climate smart investment decision making. However, CBT alone is not sufficient to create a platform for the government to prioritize and make informed investment decisions in a systematic and transparent manner. In order to do so, CBT needs to be implemented in the context of a CFF which, utilizing the data generated by CBT, estimates domestic and external climate finance sources against the financing needs, and guides the prioritization of climate actions. Joint leadership between finance, planning and environment: buy-in and leadership from finance and planning ministries with technical support from environment ministry (or climate change focal agency) is essential. For example, climate budget tagging in the Philippines was led by both the Climate Change Commission and Department of Budget Management.

Japan-Caribbean Climate Change Partnership (J-CCCP) Umberto Labate UNDP GEF BPPS NAP GSP umberto.labate@undp.org THANK YOU Yoko Ebisawa Japan-Caribbean Climate Change Partnership (J-CCCP) yoko.ebisawa@undp.org Visit the webpage (www.CFADE.org) Hondurus and Nicaragua