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Recap Day 2

Recap Day 2. Key messages. Day 1 Why CPEIRs? How they were done in different countries? Findings and recommendations Day 2 Questions and themes emerging from CPEIRs Everybody is still learning. Sourcebook.

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Recap Day 2

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  1. Recap Day 2

  2. Key messages • Day 1 • Why CPEIRs? How they were done in different countries? Findings and recommendations • Day 2 • Questions and themes emerging from CPEIRs • Everybody is still learning....

  3. Sourcebook • Introduction to the sourcebook – a tool for public finance professionals to conduct PERs on climate change • Looks at ‘full toolkit’ of policies: information, regulation, taxation and expenditure

  4. Climate change and budget process… • Key role of budget and tools for integrating climate change with the budget system: (e.g. sector strategies, tagging, budget call circular, screening guidelines etc.) • Not just ‘on-budget’ to consider, ‘off-budget’ also implications for climate change (e.g. green loans, PPPs energy or transport, tax expenditures) • Use of country systems and modalities for international finance(e.g. NCFs vs. ‘virtual climate funds)

  5. Defining Expenditures • Technical challenges (embedded expenditures, co-benefits, splitting out ‘climate change’, data collection) • Nationally led – possible refinements, but the process is important, brings institutions together and builds awareness

  6. Broaden ownership of response… • Linking to planning, budgeting, M&E systems not enough on its own, need to consider INCENTIVES • Building political ownership (e.g. using the right language ‘green growth’, role of media, CSOs, engaging local politicians) • Leveraging more money where it is needed (e.g. better understanding of costs and benefits – to help mobilize resources for investment plans) • Alignment with values and knowledge (e.g. building on existing programs/poverty agenda)

  7. Fiscal policy • The role of public sector: market failures and public goods (i.e. infrastructures, R&D, new technologies) • Mitigation: use of price based instruments to change incentives for private actions (i.e. ETS, carbon taxes) • Adaptation: decision-making under uncertainty • Considerations for fiscal instruments • Cost effectiveness (i.e.Carbon tax vs cap and trade) • Distributional impact and interaction with other policies and instruments

  8. Local government • Local response to climate change needs to be rooted in national realities of decentralization processes • 2 way flow: (i) Sector provides guidance to local: but (ii) use local knowledge as inputs into planning CC initiatives to respond to local needs • Build on financing modalities that allow for discretion at local level

  9. Sector Issues around CPEIRs • Scope for CPEIR analysis to be linked to key sector goals • E.g. Indonesia CPEIR focus of forestry and energy sectors in mitigation • Adaptation means different things to different sectors (transport, agriculture, water management) • Sector goals may conflict (land concessions vs. conservation). Focus on ‘climate change policy’ insufficient • Economics of climate change skills can play complementary role to CPEIR (e.g. Joint Adapt-Asia/UNDP program)

  10. Incentivizing Private Sector • Viet Nam’s Green Growth Strategy – area of particular interest in CPEIRs to date in MICs • Need to understand barriers to investment • Develop a range of policy instruments to overcome barriers • Awareness building • Seed capital • Regulatory

  11. Decision making under uncertainty • Incongruence between • short-term budgeting cycles ‘use it, or lose it’ • Long-term uncertainty of effects and costs of climate change – may be optimal to wait and see ‘Invest now rather than later?’ • Some emerging responses • Philippines planning cycle (ST, MT, LT) • Financing vehicles (insurance, catastrophe bonds)

  12. Fiscal policy and disaster risk financing • How can fiscal policy be used to manage fiscal risk of disasters? • Matching the funding needs over time: time line for mobilizing resources in case of emergency • Combine financing instruments to cope with climate disaster riskand reduce contingent liability • Building tools to enable informed decision making about complex dynamics: cost and benefit analysis

  13. And today.... • Opportunity to bring this together and look forward...

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