The Climate Finance Effectiveness Project aims to synthesize evidence on the effectiveness of climate finance for adaptation in low- and middle-income countries. The project seeks to provide insights about how various financial instruments and provisions support – or impede – climate change adaptation and mitigation efforts. The project aims to understand:
- What factors determine the effectiveness of climate finance? What factors are important in achieving change in the agricultural sector? What factors improve social, economic and environmental outcomes of adaptation?
- Which factors help or hinder climate goals? In particular, what factors help or hinder progress toward achieving Sustainable Development Goal 13 (“Take urgent action to combat climate change and its impact”)?
Climate finance is a key lever in achieving both the goals of the Paris Agreement and the Agenda 2030 for Sustainable Development. Developed countries have committed to jointly mobilize $100 billion a year in climate finance by 2025 to help low- and middle-income countries. Many of these countries are already beginning to feel the impact of climate change, which is compounding long-standing problems, such as poverty and inequality.
Evaluations of such finance rely on widely accepted criteria, such as relevance, effectiveness, efficiency, impact and sustainability. Over the last few years, studies have identified an increasing number of factors that may influence the effectiveness of climate-related financial support. These factors include the type of financial instrument, the size of the funds made available, and the delivery mechanisms employed at country levels.
Meanwhile, the specific provisions of climate finance terms and management practices run the gamut. Some funds provide unconditional budget support; others require recipients to meet certain policy commitments, or to achieve certain results. Some recipient countries manage funds on their own; other recipient countries manage funds jointly with development partners.
Against this backdrop, SEI research will ask, “What works?” Comparative analysis will examine the most promising practices for building capacity, and enhancing cost effectiveness of funding. SEI’s work will examine the outcomes from interventions that receive support from a wide variety of international and national climate change and development funds. The study will include analysis of projects that receive financial support from the UK Department for International Development, which funds the project and the wider CEDIL programme.
The project runs through October 2021.