• Structures of good governance

Structures of good governance

This paper describes recent developments and trends in global environmental finance. It aims at mapping out the new environmental funds in terms of their objectives, funding and institutional arrangements. The authors also identify factors that seem to be shaping the development of these funds and provide an initial analysis of the potential for duplication, complementarity or synergy between and among new funds.

The paper finds the following key issues with regard to international climate change funding:

• fourteen international funding initiatives have been announced over the past 18 months, all of which are aimed at addressing global environmental issues. This sudden proliferation of funds is unprecedented and warrants examination
• the need to respond to the threat of climate change has become an increasingly important international policy concern, particularly as it has become evident that those most likely to be affected soonest and most severely are the poorest people living in developing countries
• existing climate change funding systems has had limited impact in addressing climate change issues, and more broadly, its limited success in channeling sufficient funding to address major environmental concerns such as tropical deforestation
• all funding mechanisms aim at helping developing countries address the challenges associated with a changing climate,  yet in most cases there appears to have been only limited involvement of potential recipient countries in the design of these funds
• there is an important window of opportunity in which to try out new approaches and methods to secure the necessary financing for actions that respond to a changing climate around the world
• three new world bank managed funds signal an institutional ambition to respond to this challenge, however, all the three funds mirror similar funding schemes managed by the Global Environmental Facility (GEF) and therefore raise the prospect of duplication of effort
• policy coherence is badly needed among the new funds and between the globally agreed priorities on climate change and relevant national policy frameworks.

The authors conclude that every major institution involved in this restructuring of the global financial architecture will undergo fundamental change. There should be interactions among donor countries and all stakeholders about the proliferation of funds and the potential consequences of this multiplicity of funding mechanisms.

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