1. Climate finance and country systems: methodology for review
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Climate finance and country systems: methodology for review
Neil Bird
Research Fellow
Climate and Environment Programme
Using country systems to manage climate change finance: a Global Forum
2 December2013, Sheraton Incheon Hotel, Republic of Korea

2. CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Purpose of study
To review whether country systems are being used to manage domestic and international climate change finance across a range of countries
To identify ways to strengthen country systems to manage domestic and international climate change finance

3. Sources of climate finance
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Sources of climate finance
For all countries:
National revenues
Domestic private sector
Foreign private flows
There are two additional sources for non-Annex 1 countries :
International climate funds
Donor funds (bilateral and multilateral)

4. Why is using country systems important?
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Country ownership is considered central to effective development, and use of country systems is seen as a key driver of ownership.
Well-functioning government institutions are vital for successful development to occur.
Aligning international funding better with government priorities, and working more closely with government entities, has the potential to make obtaining better results more likely, not least because it allows for more cohesive planning processes and a whole-of-government approach.
Country systems influence access options for international climate finance.

5. Definitions: using country systems
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Country – while ‘country ownership’ is often seen as going beyond the national government, there is consenus that ‘country systems’ means state institutions and processes.
Systems – going beyond public finance management and procurement processes.
Methodology encompasses 4 categories of system:
National policy processes
Financial management systems
Implementation procedures
Accountability systems

6. Background to methodological framework
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
A broad definition of ‘country systems’ (i.e. beyond financial systems) is used.
A country-led understanding of what ‘climate finance’ should cover (but excluding private sources for now).
Assess measures related to country system strengthening.
Existing assessments of the strength and use of country systems are likely to be adequate for the analysis we are carrying out/new measures are unlikely to be better.
Gender-sensitivity of methodology.

7. Criteria for use of Country Systems by climate finance (CSCF)
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Country Systems for Climate Finance (CSCF) Criterion
Questions for global stock-take 1
Public climate change finance is focused on results that meet country priorities
Do major climate change-related funded programmes appear as priority actions within national climate change strategies and national development plans? 2
Public climate change finance is predictable over the budget year
Is the credibility of the central government budget improving with respect to climate finance? 3
Countries PFM and procurement systems are strengthened for the delivery of climate finance
Does the national budget link to climate change policy priorities, with systems in place to ensure timely implementation and reporting?

8. Criteria for use of Country Systems by climate finance (CSCF)
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Country Systems for Climate Finance (CSCF) Criterion
Questions for global stock-take 4
Public climate change finance is on-budget that is subject to scrutiny by the national legislature
Does the legislature and its relevant committees scrutinise government financial performance, including performance against climate change-related objectives? 5
Information on public climate change finance is publicly available
Do mechanisms and modalities that promote transparency of climate finance exist?

9. Criteria for use of Country Systems by climate finance (CSCF)
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Country Systems for Climate Finance (CSCF) Criterion
Questions for global stock-take 6
Gender equality and women’s empowerment is a consideration in public climate change finance delivery
Is the planning and prioritization process for the major climate change related programmes gender aware? 7
Civil society and the private sector operate within an environment which maximises their engagement in and contribution to climate compatible development
Do policy platforms provide opportunities for all stakeholders to contribute to the process?
Country Systems for Climate Finance (CSCF) Criterion
Driving questions for global stock-take
Countries systems are strengthened
Does the national budget link to climate change policy priorities, with systems in place to ensure timely implementation and reporting?
Gender equality and women’s empowerment is a consideration in public climate change finance delivery
Is the planning and prioritization process for the major climate change related programmes gender aware?
Civil society and the private sector operate within an environment which maximises their engagement in and contribution to climate compatible development
Do policy platforms provide opportunities for all stakeholders to contribute to the process?

10. Country reviews
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Early reviews to test this methodology are now being carried out in five countries:
Colombia
Germany
Indonesia
Uganda
United States of America

11. Country assessments – the context
Annual CO2 emissions (kt)
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC

12. Country assessments – the context
GAIN index on vulnerability to climate change (rank out of 176 countries)
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Germany – 8
USA – 15
Colombia – 57
Indonesia – 88
Uganda - 134
Increasing vulnerability

13. Spending on Climate Change in Uganda
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Over the 4-year period, 2008/9 to 2011/12, available evidence does not show significant levels of funding to have come from international climate funds.

14. Criterion 1:
Public climate change finance is focused on results that meet country priorities
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Climate change is a new policy concern that has matured in the last five years.

15. Public climate change finance is predictable over the budget year
Criterion 2:
Public climate change finance is predictable over the budget year
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Budgeted expenditure (bn Shs)
Outturn expenditure (bn Shs)
Outturn vs. budget as a percentage
2008/09
96.9
41.5
57.2
2009/10
203.4
53.2
73.9
2010/11
153.6
66.5
56.7
2011/12
136.0
71.8
47.2
Annual predictability of donor funding is also low, with less than half of relevant committed funds disbursed each year since

16. Information on public climate change finance is publicly available
Criterion 5:
Information on public climate change finance is publicly available
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Policy Area and Output
Reporting Period
Budget
Expenditure
Weather, Climate and Climate Change
July 2012 to June 2013
The total budget for /13 was Shs million funded from central government.
By the end of June 2013 Shs million had been spent.
Source:
The challenge is that many climate change relevant expenditures have not yet been identified within the national budget documentation.

17. Climate finance and country systems
CAPACITY DEVELOPMENT FOR DEVELOPMENT EFFECTIVENESS FACILITY FOR ASIA AND PACIFIC
Studies of how both domestic and international climate finance uses country systems have just begun.
Evidence on use and strength of country systems is urgently needed to inform national and international policy on climate finance
Countries will benefit from being able to exchange lessons and innovation in this regard
Country assessment and methodology development should be completed in January 2014

18. Overseas Development Institute 203 Blackfriars Road, London, SE1 8NJ
Thank you Neil Bird
Overseas Development Institute
203 Blackfriars Road, London, SE1 8NJ