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Development finance

Climate finance and humanitarian aid

by Ulrich Post

In brief

Waste collector in Sierra Leone: Donor funding is still needed to reduce poverty.

Waste collector in Sierra Leone: Donor funding is still needed to reduce poverty.

Climate finance is a very complex and dynamic issue. Funds flow through multilateral channels – both within and beyond the UN Framework Convention on Climate Change (UNFCCC). Increasingly, bilateral and national agencies are becoming more important. Climate finance is very difficult to monitor and even harder to forecast because there is no agreed definition of what exactly the term means.

It is abundantly clear, however, that fears of climate finance displacing other forms of official development assistance (ODA) are groundless. The growth rates are roughly the same. Climate-related ODA for the poorest developing countries has increased, and funds for climate adaptation, in particular, are forecast to rise even faster. In all probability, however, there will be a relative decrease in ODA climate finance in comparison to other financial flows.

Generally speaking, climate finance as a whole falls far short of expectations and promises. Support for climate programmes largely takes the form of non-concessional loans, export credits, green bonds and direct investment. But they are voluntary arrangements and susceptible to implementation failure. The OECD puts the current level of climate finance at $ 57 billion – $ 41 billion from public coffers and just under $ 15 billion from the private sector.

The volume of humanitarian aid is virtually impossible to forecast because it fluctuates, depending on the frequency and scale of conflicts and natural catastrophes. The figure is expected to rise in the coming years but not necessarily because of traditional donors. Non-OECD countries, philanthropists and foundations will play a significant role. In 2017, $ 15.3 billion of total ODA was humanitarian assistance – 6.1 % more than in the previous year. (up)

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