Dissecting climate finance: A burden or a boon for the poor?

The global context of climate finance is known to be a constantly evolving and convoluted arena of discourse, and also one that has been unprecedentedly impacted by the Covid-19 pandemic.

This has resulted in one of the most devastating humanitarian and economic crises since the Second World War and it had significant adverse effects on developing economies with emerging markets. 

The list of countries suffering from a drastic economic upheaval unarguably includes climate-vulnerable developing countries, fighting against the forces of nature. In their concurrent struggle with the Covid-19 pandemic as well as a climate crisis, the climate-vulnerable countries can only emerge victorious by mobilising support from the rest of the world. 

According to a UN report, the pledge to mobilise at least $100 billion annually to provide support to climate-vulnerable countries in their mitigation and adaptation journey has seen very slow progress, since the onset of the pandemic, and requires urgent action from various fronts to be jump-started again.

To strive for stronger, sustainable, and holistic schemes, ambitious climate action and expedited progress towards lower carbon emission and climate-resilient growth, global contributions to climate finance must be ramped up. 

It has been estimated that half of all climate-vulnerable countries receive less than £4 per person every year for expenditure on climate mitigation and adaptation, despite being on the receiving end of adverse climate impacts. 

Rural households across Bangladesh spend nearly $2 billion annually repairing the damages caused by climate change and disasters.

This demand and supply gap in climate finance is the most conspicuous in developing nations of Africa, Asia, and South America. According to the Global Climate Risk Index (CRI) 2021,  Bangladesh ranked seventh most climate-vulnerable country.

Quite recently, Bangladesh just experienced two back-to-back cyclones within a year (i.e., Amphan and Yaas). Given such circumstances, the need to elevate existing funds dedicated to climate finance becomes even more pronounced. 

Localising national contributions: Expectation vs reality 

For Bangladesh, national efforts towards preparing important policy documents such as the Bangladesh Climate Change Strategy and Action Plan (BCCSAP) commenced over a decade ago. 

It was then followed by the creation of a Climate Change Trust Fund (BCCTF) to support numerous decade-long climate actions by government agencies and line ministries. 

The arena of adaptation calls for a 'learning-by-doing' approach, and for Bangladesh, the experience has not only been rewarding but also one that consequently resulted in many lessons to be learned from.

Significant progress has been made in enhancing awareness among the majority of the population about the adverse impact of climate change, and the roles and responsibilities of various institutions, stakeholders and groups across different arenas (government, private sector and civil society) to mobilise nation-wide progress towards climate adaptation. 

In the current scenario, major institutions, groups and communities have built their capacities and become well equipped over time, progressing with the necessary tools needed to tackle the impacts of climate change. 

The government, being the primary actor in this area includes focal ministries such as Environment, Agriculture, Water, Disaster Management, Education, as well as Planning and

Finance as well as local government bodies based in both rural and urban contexts, along with the legislature. 

However, one of the most significant transitions that all of the aforementioned ministries and affiliated stakeholders have been able to go through is to realise the urgency to tackle climate change and ensure its integration and inclusion in their day to day practices. 

For example, the Ministry of Finance, for the last consecutive three years, has prepared a climate change budget in each national budget and in 2020, it allocated almost eight per cent of the national budget to tackling climate change across 25 ministries. 

Another landmark move ensured that climate change is now to be included or mainstreamed into all the ministries in the 8th Five-Year Plan.

At the legislative level, the National Parliament of Bangladesh recently passed a resolution to declare climate change as a planetary emergency, being the first parliament to do so. 

However, despite the aforementioned progress, one of the areas of concern today revolves around the world falling behind the Paris Climate Agreement which laid down the provision of raising $100 billion per year for climate-vulnerable countries from 2020 onwards. 

Other than the $100 billion, questions also arise regarding how the total amount allocated towards climate adaptation in the most vulnerable countries would be disbursed.

Funding adaptation: Who bears the brunt?

A groundbreaking research conducted by Paul Steele and Shaikh Iskander highlighted the appalling burden of climate costs borne by rural Bangladeshi households. 

It was observed that such households spent almost $2 billion on repairing the damage caused by climate change and disaster and more often at the expense of other household needs, which was by far the largest proportion of overall spending on climate change and disaster in the country. 

As one of the most climate-vulnerable countries, Bangladesh has been on the receiving end of climate and disaster finances from multiple national and international sources including international agencies, donors and government bodies based in developing countries. 

However, despite their generosity in terms of climate finance, their respective contributions are not always at par with the needs of the poor, marginalised and most vulnerable. 

The rural context of Bangladesh, home to the majority of poverty-ridden households, reflects a primarily agrarian, subsistence economy where livelihoods are based on farming and livestock rearing.

In the absence of strong market infrastructural support needed to operate credit markets and ensure property rights, these households are under immense pressure to ensure access to basic amenities, while adapting and coping with climate change. 

Implementing and experimenting with a number of adaptations and coping strategies using their limited incomes, rural households require cash and in-kind assistance, usually allocated by the central and local government, donors and NGOs. 

One of the globally accepted narratives on climate change revolves around its disproportionate impact on women, especially in the context of developing countries. 

Major factors that influence the vulnerability of women to natural disasters include lack of agency and access to assets to ensure their safety in situations of floods, storms, and cyclones. 

Further research has also revealed that in absolute terms, rural households led by female members, despite spending similar amounts on climate and disaster as male-headed rural households, tend to bear a heavier burden as their average income is much lower, and therefore, in terms of share of income, they end up spending three times as much. 
Climate finance: For the poor, by the poor and of the poor

Asia and the Pacific region is one of the most disaster-prone global regions, both in terms of the absolute number of disasters and the percentage of populations affected. 
Countries and populations of Asia and the Pacific such as India, Sri Lanka, China and the Philippines will be affected in different ways, leading to various migration patterns and scenarios. 

Given that most of the migration will be cross-country, an increase in cross-border migration may also occur, giving rise to more climate refugees. 
As big cities in developed nations struggle to accommodate heightened levels of rural-urban migration driven primarily or in part by environmental factors, the fraction of urban poor is expected to increase.

Conclusively, to ensure the highest contribution of climate finance committed by government and international agencies towards enhancing climate adaptation, it is vital to acknowledge that vulnerable households are true 'partners', and not beneficiaries in the fight against climate change, so that the necessary finance reaches poor households along with the decision making power to use them to address their priorities. 

Lamia Mohsin is working as a Junior National Consultant at the Resilience and Inclusive Growth Cluster of UNDP, Bangladesh country office.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.