What is a Political Economy Analysis, and what is its value for Climate Change Finance?

1. What is a Political Economy Analysis, and what is its value for Climate Change Finance? Thomas Tanner Institute of Development Studies, UK

2. My own political economy journey • Tinyurl.com/pecc2011

3. Challenging Assumptions • Climate change is a largely technical challenge • Climate change governance requires capacity building • Climate change finance is an extension of ODA • political • Climate change is a largely technical challenge • Climate change governance requires capacity building negotiating institutions, interests and ideologies • Climate change finance is an extension of ODA implies transfers based on equity and responsibility

4. What is political economy? • Political economy variously interpreted as: • Production, distribution and accumulation of economic surplus within a class-divided society (Marx) • Relationship between the state and the market (‘Regulation’) • Process governing, and distribution of, power and wealth between groups (OECD) • Dominant role of power and ideology in affecting decision making processes and resource allocation (Clapp and Devergne; Tanner and Allouche)

5. What is political economy analysis? • Political economy analysis seeks to understand: • Interests and Incentives • Norms and Institutions (formal and informal) • Values, Culture, Ideas, and Ideologies • ...and how these shape political action and development outcomes

6. What is political economy analysis? • Political economy analysis seeks to understand: • Interests and Incentives • ...and how these shape political action and development outcomes

7. What is political economy analysis? • Political economy analysis deals with: • Interests and Incentives • Norms and Institutions (formal and informal) • ...and how these shape political action and development outcomes

8. What is political economy analysis? • Political economy analysis deals with: • Interests and Incentives • Norms and Institutions (formal and informal) • Values, Culture, Ideas, and Ideologies • ...and how these shape political action and development outcomes

9. CorePEA Methods • Actor network mapping • Interviews and informal conversation (shadow networks) • Workshops, games, scenario exercises and trade-off analysis

10. Why is PEA useful for climate finance • Improved effectiveness • Baselines of actors, formal institutions and flows • Understand how change happens, what is feasible • Widen participation, improve accountability • Match different possible finance options to national conditions • Understand donor political economy too...

11. PEA Risks and challenges • Vested interests can resist and block change • Incentives range from cultural norms to illegal acts • Time-consuming: Trade-off urgency and effectiveness • Opening processes to wider voices can lead to contestation and conflict • BUT... Surely some PEA is better than making false assumptions?

12. Thank you • More on political economy of climate change at: • tinyurl.com/PECC2013 • Summary article at: • tinyurl.com/Incheon2013 NEW! Climate Change and Development Book tinyurl.com/tannerhorn