International financial institutions IFIs

There is clearly substantial activity on climate change; but if it is to be successful, then it must be backed up by funds. In 1992, Secretary General of the Rio Earth Summit Maurice Strong was asked how much it would cost to implement Agenda 21. The estimate was that it would cost US$625 billion a year, of which US$125 billion would be transferred from developed to developing countries (at that time, the amount being transferred in official development aid was US$55 billion - 33 per cent of gross national income (GNI)). In 2007, it is estimated at US$103.5 billion - 0.28 per cent of GNI, less than in 1992. Perhaps he should have been asked what the cost of inaction was. We are sure it would have been more by an order of magnitude.

The fragmented nature of the multilateral environment system can be laid at the doors of governments. It has been estimated that there are over 700 Multilateral Environmental Agreements (MEAs), and although there have been moves in recent years to try and cluster conventions, this has had limited success. For small developing countries this has been a disaster, as the costs of reporting and attending a fragmented system are huge.

A more coherent and equitable approach to funding climate change mitigation and adaptation needs to be developed. What we really do not need is a plethora of funds being set up, each with their own secretariats, application processes and reporting processes.

The following sections examine a number of the funding mechanisms available under multilateral institutions. We are not looking at the Italian, Dutch or Danish funds even if they are administered by the World Bank. We look at the World Bank, the Clean Development Mechanism, the Global Environment Facility and within it the Least Developed Countries Fund, the Adaptation Fund and the Special Climate Change Fund and joint implementation.

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