New figures from OECD show that while overall aid funding is rising, help for the 48-strong Least Developed Countries is dropping
By Ed King
The world’s poorest scored a significant diplomatic hit at the Paris climate talks in December.
Nearly 200 countries agreed to “pursue efforts” to limit global warming to below 1.5C above pre industrial levels as part of a new global deal, the result of fierce lobbying from a group known as the Climate Vulnerable Forum.
The target marked a shift in gears – in ambition – at the UN climate talks, a sense that finally governments recognised how much suffering warming well below 2C will cause poorer nations.
The deal included further pledges to boost funding flows, help with extreme weather early warning systems and a commitment to prioritise adaptation.
And there was also a promise from wealthier nations to deliver at least US$100 billion a year in climate funds by 2020, a key demand from many NGOs yet a tiny amount compared with the trillions organisations like the International Energy Agency say are required.
And it’s the funding that will be critical – and challenging – if new aid figures from the OECD are to be believed.
While overseas development aid (ODA) hit a record high of $137.2 bn in 2014, the share enjoyed by the world’s poorest fell – for the second year in a row – and is now down to 2006 levels at $43.7bn.
The reasons for this are mixed. Some funds were diverted to tackle the vast refugee crisis sparked by the Syria conflict, while key funders like Japan and Canada surprisingly cut support for poorer nations.
It may be just the tip, according to Adrian Lovett, director of the anti-poverty ONE campaign.
“These figures are for 2014, before the huge peak in refugees we saw last year. We expect that when preliminary aid figures for 2015 are released in April, the problem will have got even worse,” he wrote in the Guardian this week.
This has potentially catastrophic implications for the 48 countries that make up the Least Developed Countries (LDCs) include Bangladesh, Ethiopia, Kiribati, Nepal and Tuvalu.
While civil society routinely call for climate funds to be separate from development aid, they generally come from the same pot of developed country budgets.
The LDC group is already suffering from a huge shortfall in climate-related funds, according to analysts at the International Institute for Environment and Development (IIED).
Climate plans presented to the UN by LDC countries ahead of the 2015 Paris summit will need $93.7 billion a year from 2020.
But according to analysis from the IIED, finance available is around $11.8 billion the mark at present.
“These also include credit based instruments which will have to be repaid,” says the study. “Most of this (US$10 billion) goes towards supporting mitigation projects, with just US$1.8 billion allocated each year to support adaptation.”
To put this in context: Brazil, China, India, Morocco, South Africa and Turkey receive more aid than the LDCs combined.
“There’s an argument to guide money to where you’ll get the biggest bang for your buck… that’s often direct aid to big emitters,” says Andrew Norton, head of the IIED – by way of explanation.
A solution is not straightforward, admits Romily Greenhill, team leader development finance at the London-based Overseas Development Institute (ODI).
Overall ODA levels have held up well, she stresses, but middle income countries are often more attractive to donors.
The ODI – among others – had pushed for the LDCs to receive 50% of aid during the UN’s development finance summit in Ethiopia last July, a move that failed.
This was a “minimum that was needed for leaving no-one behind,” says Greenhill.
The problem is that middle income countries usually have better transparency systems in place, so it’s often easier to demonstrate the results and visibility of aid succeeding, she says.
That’s important given value for money is becoming increasingly important to donors.
For instance, new UK development aid guidelines published in November 2015 stress aid flows should offer value to taxpayers, and “strengthen UK trade and investment opportunities”.
And from a climate perspective, poorer nations are often more concerned with preparing for extreme weather events, rather than more lucrative clean energy projects that investors prefer.
One investment vehicle that was meant to solve the LDC funding dilemma is the UN-backed Green Climate Fund, a development bank that came online in 2015.
Backed with $10 billion of pledges from rich and emerging economies, it’s supposed to split funding 50-50 between clean energy and climate adaptation funding – a key ask of poorer nations.
An initial raft of eight projects – valued at $168 million – focus heavily on adaptation in countries like Malawi, Senegal, Bangladesh and the Maldives.
A new tranche are set to be unveiled in the first half of 2016, but the reality, says Norton, is that longer term it may struggle to achieve that aim.
That’s simply because adaptation (planting mangrove trees, investing in irrigation or heat resistant seeds) offers fewer fast financial returns to investors, so generally needs to be grant-based, as opposed to the loans that Greenhill and Norton say are increasingly common.
“I think it’s going be hard to meet (50-50) unless they do more grant funding than it appears they are going to do,” he says.
In a warming world where scientists say extreme events will occur more often, the implications for fragile states are worrying.
One factor in the ongoing Syrian conflict was a severe drought that first struck in 2006, according to one of Dasmascus’ top climate experts.
A UK government sponsored climate risk study out last year warned heatwaves and food price spikes linked to climate change in poorer nations will spark conflict, economic collapse and migration.
Ethiopia is experiencing its worst drought in 50 years, triggered by El Nino and exacerbated, say experts, by global warming.
In 2015 200,000 animals died, with 450,000 expected to follow in 2016. UN agencies say the country will need $1.1 billion to buy wheat for 18 million people after harvests failed. Malawi, Zimbabwe and Zambia have also reported failed crops.
Back to Lovett in the Guardian. As some developed countries accept more refugees, they are using ODA budgets to pay for the costs incurred.
That, he argues, is just tackling the symptom rather than the cause of the problem, and could exacerbate an already dire problem.
“They should start by pledging half of aid to LDCs. These countries have the fewest resources to lift themselves out of poverty, and the greatest need, and will require significant external support for some time to come. Donor countries must target their aid to the world’s poorest.
“Only then will we stand a chance of reaching the lofty goals leaders agreed to last year, goals that billions of people are counting on.”