Mobilizing finance for the implementation of national climate plans (NDCs) remains one of the most challenging issues as countries grabble with turning their intentions into actions. Getting a grasp on the domestic financial landscape and expenditures related to climate action is thereby a critical step in order to clarify the national base scenario and engage critical players (like finance or planning ministries). Thanks to some existing climate finance assessment tools, however, some countries already have a leg up in this area.
One example are six countries in Latin America, Chile, Colombia, Ecuador, El Salvador, Honduras and Nicaragua. These countries have embarked on the ambitious journey to determine public expenditures related to climate change, in the context of sectoral mitigation or adaptation plans. They did so by applying an UNDP tool, the Climate Public Expenditures and Institutional Review (CPEIR); a systematic qualitative and quantitative methodology that allows for the tracking of a country's public expenditures on sectoral, climate-related activities. In Latin America, the countries had started working separately on this challenging process, and the UNDP Regional Climate Change program proposed to convene all countries in 2014 in Panama to exchange experiences and offer peer support.
Today, all six completed their review on climate change public expenditures in the context of an NDC implementation process, which generated significant experiences and ideas for the Latin American region. One of the most important outcome of those assessments, which were carried with the UNDP methodology, was their contribution to clarify the role of Finance Ministries for climate actions. These insights also carry vital clues for any financial follow-up activities on climate spending, which has gained new relevance with the Paris Agreement.
Building on the insights generated from this process, the UNDP’s regional office proposed a peer-to-peer exchange ahead of the Latin American NDC Dialogues, which took place at the end of the summer. There, four out of the six countries (Chile, Colombia, Ecuador and El Salvador) presented their experiences, while two new countries - Costa Rica and Dominican Republic - participated in the workshop following particular expressions of interest in initiating their own CPEIR.
The objective of the meeting was to analyze how follow-up activities could (a) contribute to the implementation and monitoring of the NDCs; (b) help with the establishment of the required institutional framework and (c) clarify how the national budget will support NDC implementation plans.
Sharing experiences on a whole-of-government process such as this, will for sure offer important clues on how to approach the organization of the NDC implementation process itself. But even more importantly, it became clear that countries increasingly see the public expenditure review process as a tool to better align their 2030 emission reduction targets with climate-related SDGs for NDC implementation planning.
Thus, one of the most significant conclusions that may drive future work was that the climate expenditure assessments can provide critical information for NDC updates. For one, assessing one’s domestic budget landscape may reveal interesting pathways and critical actors for the integration of a climate finance strategy into the national budget. As such, climate expenditure reviews such as the CPEIR, can serve as a powerful tool to bridge a country’s NDC with its climate-related development goals. Secondly, the meticulous financial legwork can help align various emission reporting initiatives for the UN Climate Change agency (UNFCCC), such as the Bi-annual Update Report (BUR), National communications, and others.
Finally, the exchange revealed that deep technical discussions with neighbor countries, who share similar objectives, and lessons from their pitfalls and successes, provide a highly effective way for enhancing national capacities. Building on their common concerns, these countries also seized the opportunity to identify possibilities for cooperation and joint action in the region, including action with other participating institutions such as the UNFCCC, the Economic Commission for Latin America and the Caribbean (CEPAL) and the Inter-American Development Bank (IADB).
The assessments were conducted with support from various UNDP teams, including the Low Emission Capacity Building programme and will be continued under the new NDC Support Programme. A select number of UNDP tools related to climate finance and transparency are available at the NDC Cluster Toolbox to help countries put in place a sound financial strategy for the implementation of their NDC roadmaps. These tools include Climate Budget Tagging (CBT), Investment and Financial Flows (I&FF) Assessments, the Climate Public Expenditures and Institutional Review (CPEIR) and the Private Sector Climate Expenditure Review (PCEIR).