Toward climate finance reporting systems in Latin America

Published: 2nd October 2017 12:37Last Updated: 31st October 2017 13:30
Glacier in Chile

Glacier in Chile. Curt Carnemark/World Bank, via Flickr

Summary

Climate finance is critical to help Latin America build resilience and pursue low-carbon development. However, efforts to track climate finance flows in Latin America have produced incomplete and sometimes conflicting estimates.

This brief is the first in a series summarizing research carried out for the 2017 AdaptationWatch Report. It presents recent work by the Climate Finance Group for Latin America and the Caribbean, and calls for robust climate finance reporting systems across Latin America based on common principles in order to harmonize climate finance information.

The research shows that while several countries have begun to make progress, guidance is needed on what information should be reported and how it should be presented. In particular, the authors propose that mutually-agreed definitions of climate finance that can be applied in multiple contexts are critical for the accurate comparison of data. They also assert the need to develop indicators that capture the extent to which climate finance is effective in building resilience or achieving emissions reductions, and that capacity must be built within national governments in order to collect and interpret climate finance information, and this data should be combined with assessments of climate risk to inform decisions on how to allocate these scarce and critically important resources.

The key barriers to assessing climate finance flows in Latin America and the key messages and policy pointers from the report are provided below. Download the full text from the right-hand column for more detail.

Challenges in tracking climate finance flows to Latin America

  • Global climate finance is fragmented: public funding is provided through multiple channels operating at national and international levels. International climate finance may flow bilaterally between nations, via multilateral climate funds or multilateral development banks, while national governments may allocate climate finance across the budgets of relevant ministries and authorities.
  • The provision and receipt of finance need to be linked: In addition to tracking primary these four public flows, there is a need to link information on the provision of international finance (top-down information) with receipt of the finance (bottom-up information).
  • Differing definitions of key terms is resulting in discrepancies in reported estimates: A comparison of estimates in four reports finds that the discrepancies between them are a result of differing definitions of key terms like ‘climate finance’ and ‘climate adaptation’, as well as differing timelines for reporting (e.g. fiscal year vs. calendar year).
  • Data is sometimes highly aggregated, and little information is available on finance disbursed or received. These factors make it difficult to harmonize information and to produce a comprehensive picture of climate finance in the region. 

Key messages from the report

  • Efforts to track climate finance flows in Latin America have produced incomplete and sometimes conflicting estimates.
  • There is a need for robust reporting systems based on common principles in order to harmonize climate finance information.
  • To be successful, these reporting systems will need to be based on agreed definitions of climate finance, and should include effectiveness indicators.
  • Additionally, capacity must be built to collect and interpret climate finance information and to use it for decision-making. 

Policy pointers:

  • Clear guidelines must be developed for recipient countries to report climate finance information. Guidance to measure and classify climate finance should be adapted or developed to fit various national circumstances, and countries should be provided with implementation support as capacities are built.
  • Mutually agreed definitions are needed for key terms like climate finance, climate mitigation, and climate adaptation, and should form the basis of budget coding frameworks for the classification of climate finance.

Further resources