Why central planning and finance agencies are well placed to respond to climate change
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After a quasi-apocalyptic summer, with never seen before records of floods, droughts, and fires that affected millions of people across the planet, it is more urgent than ever to respond to this question: Who should respond to the formidable challenges of climate change?
In 73 countries, ministries of environment are identified as the main anchors to coordinate, monitor, and regulate all climate-related matters. Central planning and finance agencies have the institutional ownership of the climate change agenda in only twelve countries.
Figure 1. Institutional Ownership of Climate Change Agenda by Region
Institutions matter for climate change. Effective climate action requires a whole-of-economy and a whole-of-government response. Policy makers need to be able to make tradeoffs across development and climate policy objectives. They must translate the policy objectives into instruments considering the relative merits of information, regulation, taxation and public spending as policy tools. Policymakers also have to offer incentives to both the public and private sectors and to be able to enforce implementation. All of these considerations underscore the importance of having institutions take responsibility for climate policy, from presidencies and prime ministers’ offices, to planning and finance agencies depending on the country. Having said that, this institutional configuration is still the exception rather than the rule.
Historically, ministries of environment have taken the lead on the climate agenda to promote environmental sustainability, natural resource protection, and other conservation efforts. They also coordinate relevant policy implementation and the ratification of international agreements. However, their position outside the center of government prevents them from taking broader development polices into consideration and building consensus around effective solutions to climate change.
In the last decade, ministries of climate change have been established in 11 countries to prioritize action on this critical agenda. The Ministry also facilitates and coordinates the mainstreaming of climate change programs and policies for federal and provincial departments. India and Bangladesh have also each created a Ministry of Environment, Forest and Climate Change, in 2014 and 2018 respectively. As opposed to ministries of environment, the goals and duties of ministries of climate change are more specific, which allows them to focus on addressing both economic and social impacts of climate change more effectively through tailored technical expertise. The downside is that ministries of climate change are unable to align climate targets with broader development and economic policies. And, due to their infancy, these ministries are often insufficiently resourced, have limited program and execution capabilities, and are unable to influence other national and subnational agencies.
As countries take on increasingly ambitious climate targets, the role of central planning and finance agencies becomes critical. These agencies are well-positioned to ensure that climate change goals are aligned with economic and development policies. They are also able to choose the appropriate instruments required to deliver policy objectives across information, regulation, taxation, and public spending. Speaking at the Sixth Ministerial Meeting of the Coalition of Finance Ministers for Climate Action, UN Secretary-General António Guterres said, “Your decisions and actions in the coming weeks will determine whether the global economic recovery will be low-carbon, resilient and inclusive or whether it will lock-in fossil fuel-intensive investments with high risks of stranded assets…The world needs your leadership.”
“Your decisions and actions in the coming weeks will determine whether the global economic recovery will be low-carbon, resilient and inclusive or whether it will lock-in fossil fuel-intensive investments with high risks of stranded assets…The world needs your leadership.” - General António Guterres
Climate change is one of many and not necessarily the most pressing priority that governments face; nonetheless, taking institutional ownership of the climate change agenda is important. . It also requires strong coordination between government and nongovernment stakeholders. Central planning and finance agencies are well-positioned to take the lead on setting climate policy so that climate change gets the attention – and resources – that it urgently deserves.
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Taking a holistic look at the Climate Change, the policy makers (UN) must as a matter of fact engage the private sectors in the monitoring and evaluations of climate change programs, especially those agreed on at the COP. its not enough to agree on some basic fundamental programs without ensuring that there is a political will to drive the process and also realistic report on the successes or the failure of such agreements and programs from the members. To avoid repetition of such programs year in year out, the private sector must play a major role, in terms of policy implementation and reporting of the measurable achievements of the government institutions. The World Bank or any stakeholder must come up with a template with which the Private Sectors would use in reporting the progress so far made. This is the only way to ensure that Governments are not just playing a lips service to the issues of climate change.
I would be interested to see the underlying data of Figure 1. Institutional Ownership of Climate Change Agenda by Region.