Developing Countries Deserve More Climate Funding –
But Many Issues About How to Do It Remain Unanswered
The U.S. and other developed nations have a moral obligation to provide funding to developing nations being devastated by climate change. The rationale is simple: most of the warming has been due to emissions from developed nations, while mostly developing nations are proving to most at risk. International analyses conclude the costs to mitigate and respond to climate change would now be over $1 trillion per year by 2030, while a new commitment at COP29, the recent climate meetings in Baku, Azerbaijan, was a target of much less — $300 billion a year by 2030. Reactions from many developing country delegates and climate activists were unsurprisingly strident ranging from “abysmally poor,” “resource colonialism,” and “a complete failure” to it’s “a joke”.
A critical issue largely missing from the COP negotiations was the need for greater clarity concerning how climate funds should be used. From my experience, this topic is of great importance; the failure to discuss it may underlie some of the reticence of developed nations to contribute more. Consider:
Many developing nations are now burdened with enormous amounts of sovereign debt. Low and middle-income countries, many among the most vulnerable to climate change, have a collective external public debt of $3 trillion and spend more on debt service than education or health. However, donor nations including the U.S. are also increasingly in debt and relying more · on loans and blended finance — guarantees and other instruments that enable private investment — as instruments for meeting international obligations. Reconciling these conflicting needs is a major challenge.
· In a recent webinar, the heads of the World Bank, International Monetary Fund, and CEO of Masdar, an Emirati state-owned renewable energy company, all agreed the greatest barrier to many planned solar projects isn’t financial but the absence of government cooperation. Renewable energy projects are now profitable investments almost everywhere but getting a government official to approve a site and issue the necessary permits is a frequent obstacle. Climate funding should be contingent on government commitments and actions to implement projects.
· As the anti-corruption group U4e noted in a 2020 assessment, “The top recipients of climate finance are among the riskiest places in the world for corruption; however, they receive 41.9% of all climate related overseas development assistance. There has been some success with anti-corruption controls around overseas development assistance. However, vast sums of climate finance is routed outside typical, well-controlled channels. Anti-corruption controls on climate finance have to be established, coordinated, and evaluated.” A recent discussion paper by a UN anti-corruption agency and the World Bank notes “Corruption also poses a critical barrier to effective climate action since vested interests can distort or undermine the design and implementation of key policies or enable the embezzlement or misallocation of climate funds.”
· The government of India and donors recently abandoned a major initiative to provide financial and technical support to help India move away from fossil fuels like coal. A similar agreement with South Africa made in 2021 was worth $8.5 billion. The goal was consistent with national priorities but the GOI was reluctant to accept loans and several state economies remain heavily dependent on coal.
· In much of Africa, the biggest barrier to early warning of dangerous weather events is the absence of functioning radar. Dozens of such systems, many heavily subsidized by developed nations, are labeled “non-reporting” in World Meteorological Organization reports — a term which essentially means “not working.” Many African countries lack the expertise and resources necessary to maintain the systems, often acquired with export credits from developed nations. As I found working on a UN project attempting to improve such systems in 11 African LDCs, the challenge is often lack of government support and hostility toward collaboration with private sector weather services.
· While poor countries are often among the most vulnerable to climate change, some have been able to reduce the damages by implementing good climate policies. A good example is effective measures to reduce the impact of coastal flooding in Bangladesh versus the failure to restrict development in flood prone areas of Pakistan. Countries with good climate policies should be rewarded with greater funding than those whose policies contribute to the damages.
Another issue is how to provide financing to countries very at risk from climate change but embroiled in conflicts who may be without stable and financially responsible governments. Representatives of several such countries including Somalia, Yemen, Iraq, Chad and Burundi launched a “Network of Climate-vulnerable Countries Affected by Conflict or High Levels of Humanitarian Needs” at COP29 in an effort to lobby for climate funds.
There is no simple solution to these issues. Donor countries have historically relied on bureaucratic oversight by recipients’ domestic programs as well as multilateral institutions like the World Bank. In contrast, developing countries have sought greater freedom to manage funds through domestic channels. At least a partial solution may be to put more resources into programs rather than projects. Recipient countries could, for example, be required to prepare national adaptation programs that define priorities, identify staff and resource requirements, evaluate the most efficient financial instruments, and set out supporting government policies. Such programs could be reviewed by experts and be signed off by finance ministries and the highest levels of government. These programs would then provide a framework for subsequent approval and distribution of funds for specific projects.
One thing is certain — just agreeing on an amount of money to be given to developing countries will not be an effective remedy for climate change.
