Search

Begin New Search Political Geography Global Focus Content Type Working Paper Publishing Institution Center for Global Development Publication Year within 10 Years Publication Year within 3 Years

21. Navigating the Straits: Pull Financing for Climate and Development Outcomes

Author:
Ranil Dissanayake
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
An increasing share of official development assistance is being used for climate-related activities. This trend is continuing despite the lack of comprehensive cost-effectiveness evidence to guide spending decisions and continuing concerns that few applications are effective or efficient mechanisms for either climate or development outcomes. This represents both a waste of scarce resources and a missed opportunity. This paper proposes that a well-designed pull financing mechanism, which identifies specific problems for which it will pay a pre-specified price for solutions that can scale up, has the potential to navigate these problems. When they work, a pull instrument can solve problems at scale at low cost by incentivizing private innovators to produce a socially beneficial product that people want to buy and use. However, the design challenges associated with them are not trivial: firstly, the identification and selection of technologies or problems for which the pull financing facility would be a sufficiently large portion of the market to shift incentives for innovators or producers (for technologies that exist but have not been taken up widely yet); and secondly, the ability to design contracts that incentivize socially beneficial innovation that are bought and used. This paper sets out the case for pull financing for climate and development activities, the challenges that need to be addressed to do it well, criteria for judging potential applications of pull financing and an initial indication of some sectors to which pull financing may be applied.
Topic:
Climate Change, Development, Environment, and Finance
Political Geography:
Global Focus

22. How Do Humanitarian Donors Make Decisions, and What Is the Scope for Change?

Author:
Rose Worden and Patrick Saez
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
n this policy paper we review donor responses to a survey and interviews to probe the effects of the broader political and economic context in which donors operate, and identify internal constraints on humanitarian funding, planning, and making allocative decisions. We identify and highlight perceived and real constraints with which donors contend when making decisions on how to allocate limited resources. The way humanitarian donors fund is key to system-wide efficiency, effectiveness, and reforms in the humanitarian system. Donors face competing priorities when engaging in humanitarian response. They care about retaining control, must rely on limited information sources to inform decisions, and balance their approaches with other foreign policy objectives. Institutional legacies, trust, and visibility for their efforts also matter to donors. These factors have shaped how donors have approach their current commitments to Grand Bargain reforms as donors prepare to engage with the newest iteration of reform—the Grand Bargain 2.0.
Topic:
Humanitarian Aid, Reform, Institutions, and Donors
Political Geography:
Global Focus

23. Are Development Finance Institutions Good Value for Money?

Author:
Paddy Carter
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Finance institutions take money from foreign aid budgets to invest in private enterprises. How much should they be given? We can make some progress on that question by looking at the return on investment in the form of higher real incomes for workers and customers, and comparing that to a cash transfer benchmark. There is considerable uncertainty, but what evidence we have suggests returns on investment are in a range that compares well to that benchmark. There is also a diversification argument that because we don’t know which of the things that aid can finance will ultimately prove most important for poverty eradication, aid allocation should hedge its bets. A low single digit percentage of aid allocated to increase the quantity and quality of private investment in low- and middle-income countries seems reasonable.
Topic:
Development, Foreign Aid, Finance, Investment, and Institutions
Political Geography:
Global Focus

24. Valuing Climate Liabilities: Calculating the Cost of Countries’ Historical Damage from Carbon Emissions to Inform Future Climate Finance Commitments

Author:
Lee Robinson and Ian Mitchell
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A central commitment of action on climate is the promise of “developed countries” to jointly mobilize $100 billion of climate finance per year by 2020 (and through to 2025), formalised at the UN climate change conference in 2010 (COP16). Five years later, the Paris Agreement reaffirmed this commitment and promised a new goal after 2025 “from a floor of USD 100 billion per year.” We propose an approach for calculating financial climate liabilities for each country based on their historical CO2 emissions, using the idea of an externality: a social cost that has not been borne by the agent whose actions produced it. The paper follows earlier work on calculating carbon debts (e.g., Kunnas, 2014) which we update with recent and authoritative research on carbon pricing methods. We also adjust for awareness, calculating the accruing of liabilities only from the time that countries knew that their emissions were harmful. We present several scenarios adjusting this and other assumptions. The main scenario produces a clearly quantified liability for each country and a total carbon liability to the world of $34 trillion, or $4,500 per capita. If this liability was used to set climate finance goals, it would suggest OECD countries would need to contribute $190 billion a year to 2100. The analysis also highlights that other industrialised countries, notably China and Russia, have also built-up substantial liabilities and should therefore also contribute to future climate finance goals.
Topic:
Climate Change, Energy Policy, Environment, Carbon Emissions, and Green Transition
Political Geography:
Global Focus

25. Some Unpleasant ODA Arithmetic

Author:
Ranil Dissanayake and Atousa Tahmasebi
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Official development assistance is supposed to be designed to prioritise the economic development and welfare of developing countries. The OECD’s Development Assistance Committee is a club of wealthy donor countries which collaborate to set rules and norms to this effect. However, digging into the official data submitted by donors to the OECD reveals some unpleasant truths. We use data on every funding line reported by donors to the OECD between 2006 and 2019 to investigate the pattern and distribution of commitments and disbursements of ODA to developing countries, and discover that ODA is targeted poorly within the group of eligible developing countries; that this group of eligible countries is gradually expanding to include more relatively wealthy places; that aggregate ODA flows are organized and structured sub-optimally; and that ODA responds more to arbitrary income classifications than it should. We suggest informational and incentive reforms in response. These findings also suggest limits to what realistic reform of ODA can achieve, and, consequently, the importance of non-aid development policy for outcomes in developing countries.
Topic:
Development, International Cooperation, Foreign Aid, and Welfare
Political Geography:
Global Focus

26. Effective Humanitarian Governance

Author:
Patrick Saez, Jeremy Konyndyk, and Rose Worden
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper argues that humanitarian system reform should extend to governance. Governing institutions—such as member state boards of multilateral organizations, and NGO boards of directors—have tremendous influence over the strategic direction of individual institutions and the sector writ large. But governing bodies of humanitarian organizations and system-wide governance are exclusive, organizing power and influence around a few governments, organizations, and individuals. There are few entry points for aid agencies’ downstream clients, or for host governments with the willingness and capacity to take the lead in disaster response. Moving toward a sector where mission effectiveness is measured through partnerships rather than agency capabilities, and outcomes rather than fundraising totals, will depend on governance bodies that promote and monitor those priorities. This will require more direct representation of the views of communities affected by crises in governing bodies, in the relationships between donors and their partners, and in supporting national and local humanitarian governance in countries that have demonstrated their ability to lead the response to disasters impartially. Multistakeholder platforms at the global and country level should be established to align behind common needs assessments and policy directions, and to mobilize and align resources accordingly. Finally, assessing collective effectiveness should become an independent function systematically deployed alongside humanitarian operations, directly informing governing structures, donors, and the public.
Topic:
Governance, Institutions, NGOs, and Humanitarian Crisis
Political Geography:
Global Focus

27. Operationalizing Climate Adaptation at the US International Development Finance Corporation: The Case for an Agriculture-Led Agenda in Low-Income Countries

Author:
Clemence Landers, Jocilyn Estes, and Scott Morris
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The US International Development Finance Corporation (DFC) could be well placed to lead among development finance institutions (DFIs) on agriculture adaptation to climate change. With its mandate to support private investment in developing country markets, overcoming barriers to investment in agricultural adaptation—where agricultural growth is an estimated two to four times more effective at reducing poverty than growth originating from other sectors—is exactly the type of activity DFC is intended to pursue. Yet, DFC is paradoxically prone to the same investment incentives and disincentives as private investors with an investment portfolio that tends to favor lower risk, higher deal size (and lower overhead) transactions. So, while global estimates for adaptation investments financing needs total close to $140-$300 billion by 2030, a fraction of the global mitigation needs measured in the trillions of dollars, the barriers to project level investment in agriculture adaptation and resilience raises the risk that DFC will continue to favor larger and lower risk mitigation investments in more established markets. This paper reviews DFC’s agriculture portfolio, and based on this review, proposes elements of an agriculture strategy that can overcome barriers to adaptation and resilience investments in the most climate vulnerable markets.
Topic:
Agriculture, Climate Change, Environment, and Finance
Political Geography:
Global Focus

28. The Case for Transparency in Power Project Contracts: A Proposal for the Creation of Global Disclosure Standards and PPA Watch

Author:
Mohamed Rali Badissy, Charles Kenny, and Todd Moss
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
he purpose of a nation’s power sector is to deliver reliable electricity at the lowest cost and for the greatest benefit. At the heart of any private electricity generation project is a Power Purchase Agreement (PPA), a contract that contains key provisions such as price, payment stipulations, and obligations by the offtaker utility and/or host-government. Despite their significant effects on service quality and public finances, these contracts are often negotiated and signed in secret, with even the most basic terms shielded from the citizenry. This opacity has created risks and, in a growing number of cases, contributed to costly and damaging outcomes, such as overpayment, overcapacity, large debts, and grid instability. Drawing on examples from enhanced transparency in public budgets, sovereign debt, and extractive industries, we propose that governments agree to publish PPAs with any public sector obligation and that funders of private generation projects also agree to minimum disclosure standards. The objective is to create incentives for better practice, improve governance of the power sector, reduce transaction costs, and ultimately, to deliver cheaper and more reliable power for people and businesses. Transparency of PPAs would support the efforts of government policymakers and planners, investors, and development finance institutions to accelerate energy market development and to reap the benefits of open competition. Greater disclosure would also provide crucial information for citizens to hold their own governments accountable for the contracts they sign on behalf of the public.
Topic:
Economics, Energy Policy, Transparency, Electricity, and Purchasing Power
Political Geography:
Global Focus

29. A Review of Multilateral Development Banks’ Investments in Childcare

Author:
Megan O'Donnell, Kelsey Ross, and Shelby Bourgault
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The COVID-19 pandemic has led to an unprecedented increase in unpaid care work all over the world, causing women to leave the workforce, reversing decades of progress on gender equality, and resulting in increased focus and empathy around the global childcare crisis. Recognizing a gap in the evidence regarding multilateral development banks’ current (and historical) investments in childcare solutions, in this paper we seek to establish a baseline, exploring the extent to which MDBs have invested in childcare over time, across geographies, and through various sectors and activities. Using project data from eight multilateral development banks’ project databases, we compiled all projects with a childcare component from 2000 to June 2021. Our analysis explores best practices across institutions, identifies gaps and areas for improvement, and makes recommendations for how MDBs can increase and improve investments in childcare.
Topic:
Development, Multilateralism, Banks, Pandemic, COVID-19, and Childcare
Political Geography:
Global Focus

30. Financing the Humanitarian Public Good: Towards a More Effective Humanitarian Financing Model

Author:
Emmanuel Saez, Jeremy Konyndyk, and Rose Worden
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The international humanitarian system provides a global public service but is financed on a voluntary basis. The way official donor funding is mobilised and allocated is unpredictable and haphazard, reducing efficiency and effectiveness. Donors should overcome the collective action problem that is inhibiting change and reach a critical mass of finance delivered through collective mechanisms. This paper outlines the case for - and obstacles against – change. It suggests three ways to make some progress: a multi-year common replenishment model for protracted and predictable crises; rebalancing country-level pooled mechanisms; and aligning core funding to agencies with agreed core functions.
Topic:
Humanitarian Intervention, Humanitarian Crisis, Donors, and Public Goods
Political Geography:
Global Focus