Effective climate action needs more money directed to local levels

The International Institute for Environment and Development (IIED) estimates that less than 10 per cent of the US$17 billion climate finance committed from international climate funds by 2016 were prioritised for local-level activities. Committing these funds to every level – national, regional and local – is key. It is vital that the imbalance is addressed and more of this money is channelled to the local level.

Inadequate systems and failure to recognise the importance of climate financing at the local level mean it will be significantly harder for developing countries to meet the United Nations' Sustainable Development Goals and implement the Paris Agreement.

IIED's 'Delivering real change: getting international climate finance to the local level' reveals a number of obstacles preventing crucial finance from reaching local communities. These include some multilateral development banks and UN agencies being less able to finance small-scale projects directly due to higher transaction costs.  

Plus there is no specific priority for the funds to reach institutions on the ground. And concerns over the ability to manage large amounts of finance while failing to provide support so these skills can be developed, are also leading to the vast majority of climate finance to be channelled to national and regional programmes. It is key this support is given so developing country governments at every level can administer this finance.

It is crucial the necessary levels of climate finance reach local communities and that the huge gap in how it is distributed is addressed. Despite the Paris Agreement and Addis Ababa Action Agenda making the importance of local institutions and communities clear, no international target was established. It is vital that this is changed and a baseline of finance established and target level set. 

The structure of how funding is channelled and how the finance is tracked also needs to be reformed. International funds' policies need to be revised in order to increase their willingness to undertake risks for such activities as supporting innovative financial instruments, increase flexibility on co-financing and use more appropriate measurement frameworks that are relevant to local conditions. 

IIED director Andrew Norton said: "Substantial reform needs to be made to how development banks and UN agencies distribute this crucial money. To be effective in helping poor communities build resilience and tackle the effects of climate change, many more climate funds need to reach the local level. Today's meeting in Bonn must help address this imbalance and make sure more money from international climate funds is effectively directed to the local level."