Rethinking governance in international climate finance: Structural change and alternative approaches

Abstract

International public finance plays an increasingly prominent role in global efforts to combat climate change and, as it grows, it faces a familiar challenge: governance. Global organizations not only disburse climate funding, but are also expected to ensure the “good governance” of climate programs in recipient countries. Many of these same organizations faced similar challenges in disbursing development finance. In what became known as the “institutionalist turn,” they sought to reform governance and build effective institutions in recipient countries. At first glance, the approach to governance in climate finance appears to be a continuation of these largely ineffective policies. I argue, however, that important structural differences between climate finance and development finance have been overlooked, and that these differences create space for alternatives approaches to governance. I first examine the literature on what led to the ineffectiveness of governance reforms tied to development finance, concluding that global organizations have been consistently unable to recognize and grapple with how power actually works in recipient countries, especially informal power. I then highlight three new principles underlying climate finance: (1) that it is restitution not aid, (2) that recipient countries should control resource allocation, and (3) that funding should support mitigation and adaptation. I demonstrate how each new principle has produced shifts in decision‐making authority away from contributors and toward recipient countries. I discuss how alternative approaches could emerge both from forums where recipient countries exercise newfound authority, and from experimentation on the part of multilateral organizations. This article is categorized under: Climate and Development > Social Justice and the Politics of Development Policy and Governance > Multilevel and Transnational Climate Change Governance

Ten new insights in climate science 2023

“…Klepp & Fünfgeld, 2022). Researchers in this field argue for a fundamental reconsideration of how funders operate and how funds are distributed (Browne, 2022; Ciplet et al, 2022). For example, many communities lack the support needed to apply for funding or to complete the burdensome reporting requirements attached to most sources of funding.…”

Can civil society organizations and faith‐based organizations in Fiji, Samoa, and Solomon Islands access climate finance?

“…While there needs to be accountability and transparency in allocation and use of funds, creating overly complex funding channels only accessible to organizations with vast financial and human resources, simply creates gatekeepers and elitism that often benefits the global North (Khan et al, 2020). Although there have been some efforts to empower national governments (Browne, 2022), the dominance of international intermediaries, like the Green Climate Fund, who design and implement large multilateral funding undermines national intermediaries from playing this role and scaling up of projects, increasing the chance they will fail to meet national and local needs (Chaudhury, 2020).…”

The role of institutional design in mobilizing climate finance: Empirical evidence from Bangladesh, Brazil, Ethiopia, and Indonesia

“…Funder and Dupuy find that host governments can shape implementation and are better able to tilt practices towards their own preferences which may depart from the original agreement [21]. Why climate finance governance is different from development finance governance is a topic that Browne [22] has analyzed [22]. She identifies three principles that are unique to climate finance: 'restitution not aid'; allocation by developing countries; and adaptation and mitigation funding.…”