Measuring the effectiveness of public climate finance delivery at the national level

This paper presents a framework for measuring the effectiveness of national systems that deliver public climate finance; an approach that incorporates the policy environment, institutional architecture and the public financial system through which climate-based expenditures are channelled. It identifies key principles of effective climate finance delivery and formulates criteria that seek not to present an ‘ideal state’, but rather to provide a means by which current practice can be interpreted.

Concerning policy development and implementation, the following four key principles are identified in this report.

• Ease of implementation: policies should be fully costed and supported, with time-bound objectives.
• Legitimacy: involvement of all stakeholders is a necessary component of legitimate policy, though the relative influence of actors must be utilised.
• Coherence: the cross-cutting nature of climate change requires integration of multiple government agencies at all levels.
• Transparency: crucial for effective finance delivery, transparency should be a commitment of all actors along the delivery chain.

A further three principles relate to institutional effectiveness.

• Coordination: decision-making and responsibility should be coordinated and coherent in order to manage the complex interactions between multiple actors and channels.
• Innovation: such coordination is a pre-requisite for the capacity to innovate, making it an indicator of potential for effective delivery of climate finance.
• Local anchorage: it is necessary to have local institutional capacity to deliver finance in order to best reflect local needs and ensure effectiveness.

Finally, the report presents four principles key to public expenditure: planning, including the clear inclusion of climate finance in budgetary commitments; execution of said budgeting in a consistent and standardised process; reporting of expenditure using original budgets as a template for comparison; and external auditing.

The conclusion emphasises that the criteria laid out is to be seen as a research tool and it is intended to assist country-level studies on climate finance. The authors note that further study will be required on outcome-based effectiveness measures to complement the focus on institutional and governance processes in this paper.