indcs and climate financing in latin america and the caribbean

7/25/2019 INDCs and Climate Financing in Latin America and the Caribbean

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Produced by

Sandra Guzmn, General Coordinator, GFLAC

Mariana Castillo, Research Coordinator, GFLAC

INDCs and Climate Financing inLatin America and the Caribbean


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Part 1. Climate financing in the INDCs: an analysis from Latin America

Methodology

This analysis parts from the fact that the INDCs submitted by countries studied show a great di-

versity in content and goals; therefore, doing a comparative study would not be entirely accurate.

Thus, this exercise focuses and seeks to understand the way these countries integrated the core

element of funding, to identify the challenges and opportunities that countries will face to the

implementation of the INDCs.

In order to reach this goal, six relevant criteria for the issue of funding were identified. As shown

below, each of these criteria was evaluated from the response to a number of relevant questions.

Financing mechanisms: Are measures and specific funding mechanisms inclu-ded?

Financing Commitments: Are commitments to specific amounts of funding forunconditional goals included?

Financing requirements (costs): Are financing needs included with specific

amounts for the conditioned goals?

Losses and damages: Are estimates of losses and damages from climate changeincluded?

Private financing and innovative mechanisms: Is there mentioned theidea of involving other stakeholders such as the private sector and/or other innovative me-

asures to climate financing?

Transparency in financing: Are transparency mechanisms, measurement, repor-ting and verification for financing included?

In this analysis, 31 countries were studied, including Venezuela who placed its INDCs on December

12th, 2015. It should be mentioned that there are countries from the region that have not submitted

their INDCs, such as Nicaragua, while others presented their INDCs not including measures such as

El Salvador, so its content is not mentioned for not summing up anything to the discussion.


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Countries analyzed:

Antigua and Barbuda; Argentina; Bahamas; Barbados; Belize; Bolivia; Brazil; Chile; Colombia;

Costa Rica; Cuba; Dominica; Ecuador; El Salvador; Granada; Guatemala; Guyana; Haiti; Hondu-

ras; Jamaica; Mexico; Paraguay; Peru; Republic of Suriname; Dominican Republic; St. Vincent

and the Grenadines; St. Kitts and Nevis, Saint Lucia; Trinidad and Tobago; Uruguay, Venezuela.

Results

Parting from these criteria, the review of 31 countries INDCs was carried out, highlighting on the

specific mentions of goals, measures and funding mechanisms. This is because although most of

the countries speak about the importance of this issue, it is done in a generically way. Hence, the

importance of really knowing which measures will be implemented. The main outcomes for each

of the six elements are presented below:

Funding Mechanisms

In the first component, it was analyzed whether the countries included the importance and the

establishment of measures and funding mechanisms for climate change attention. In this regard,

it was identified that a good part of the countries point out the importance of climate financing

to increase the ambition of INDCs, but few countries propose specific measures. For example,

Venezuela notes that the degree to which its GHG reduction target is achieved will depend on

the fulfillment of the commitments of developed countries in terms of provision of financing, and

refers to Article 4.7 of the Convention.

Countries like Antigua and Barbuda, Chile, and Trinidad and Tobago talk about the importance to

get access to mechanisms such as the Green Climate Fund and the Global Environment Fund. For

its part, Honduras and Guatemala refer to the construction of national mechanisms and processes

on climate finance; being Guatemala the one that mentions the existence of a National Climate

Change Fund.

St. Kitts and Nevis refer that is relevant to prepare sectoral financial plans with specific funding

sources and disbursement planning to implement the necessary policies and measures.

On the other hand, it is interesting to see that countries like Costa Rica, Dominica, Granada, Guy-

ana, St. Lucia, Antigua and Barbuda, St. Vincent and the Grenadines, St. Kitts and Nevis and Mexico

speak about the importance of market mechanisms to finance their actions.

In general, the role of financing is recognized but it is not deepen into specific measures to imple-

ment the INDCs.


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Funding Commitments

In the second component on commitments to specific amounts for unconditional compliance

of goals, it is identified that some countries such as Chile and Colombia speak about creating

climate-financing strategies at national level to accomplish these actions, but they are referredto processes in construction. For its part, the Bahamas and St. Lucia point out the commitment

to implement incentive programs and tax measures to support the infrastructure on the energy

sector. While Costa Rica points out the need to create credits and micro credits for INDCs compli-

ance nationwide.

In the case of Guatemala, the national budget role is mentioned, as well as the creation of forest

incentives. Meanwhile, Honduras, for its part, talks about the review of public spending to create

an investment plan. In Paraguay, it is indicated that the country has allocated 40,000.00 USD for

the National Plan for Afforestation and Reforestation through a presidential decree the Depart-

ment of Mines and Energy is authorized to establish a certification and funding regimes to the

National Development Bank for forest plantations.1

Meanwhile, Haiti notes that for unconditional compliance goals and allocation of 7,999.00 USD

will be accomplished, assuming that these are budget items. The same applies to Cuba, which

plans to give resources to adaptation without indicating specific amounts.

Venezuela does not include amounts, but refers to a series of nationally financed actions with an

impact on loss and damage repair, adaptation and mitigation. These actions are organized within

the framework of the nations development plan, in which the deepening of Eco socialists poli-

cies arises with high social, economic and environmental impact on Climate Change.

Of the eight countries analyzed, only eight mention ways in which they will make use of the pub-

lic spending. However, no specific amounts for compliance purposes of the INDCs are included; in

some cases previous assignations done are mentioned, as in Paraguay which includes a specific

amount already set, but does not indicate how much will be assigned to fulfill the goals that have

been already set.

It is noteworthy the case of Brazil that despite having included only unconditional measures that

may meet by themselves, it does not include amounts and commitments to carry out these ac-

tions.

The lack of specific commitments for fulfilling the established actions is of interest and concern, as

it is unknown whether countries estimated the cost of the actions and if it has been determined

what would be the commitment for the budget set. This may be partly because most of the coun-

tries will live governmental changes before the entry into force of the INDCs in 2020. However,

determining current commitments and future estimates could guide future governments to act.

1All information related with the INDCs can be found in http://unfccc.int/focus/indc_portal/items/8766.php


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Financing requirements (costs)

The third component of financing needs is one of the most important. However, of the 31 coun-

tries analyzed, only ten have calculated the costs of implementing the actions and, therefore, the

international funding needs they have for their accomplishment: Antigua and Barbuda, Bahamas,Belize, Cuba, Haiti, Trinidad and Tobago, Suriname, St. Lucia, Guyana and St. Vincent and the Gren-

adines are the ones that integrated costs. It is interesting to notice that most of these countries

are islands that manifest living already the climate impact change, hence their need and urgency

to integrate these requirements to be ready and face the problem.

In the following chart, estimated costs for these countries in the INDCs are shown. As it can be

seen, not all countries disaggregate the information for mitigation and adaptation, or report in-

formation for both sectors.

Table 1. Costs associated with INDCs

Country Concentrated(Millions USD)

Destination

Antigua and Barbuda $ 240.00 (annual) Approximate for mitigation and adaptation.

Bahamas $ 900.00 (to 2030) Resources for mitigation and adaptation, a costanalysis will be done.

Belize $ 231.40 Total

Cuba $ 4,000.00 Execution of programs on renewable energies.

Dominica $99.00 Mitigation

25.00 (for the next fiveyears)

Adaptation

Granada $ 161,430,500.00 (to-wards 2025)

Total cost

Guyana $ 1,600.00 (to 2025) Adaptation

Haiti $ 25,387.00 Adaptation and mitigation

Trinidad and Tobago $ 2,000.00 Mitigation

Suriname $ 3,492,000.00 Total cost

Santa Lucia $ 241.00 (2030) Mitigation and government programs

Saint Vincent and theGrenadines

$ 20.92 It is the cost of the Program for Disaster from2011 to 2018. It is noted that the costs of INDC are

significant.

Dominican Republic $ 20,153.00 Water, tourism, mitigation, National Strategy

to Strengthen Human Resources and SkillsDevelopment to Move forward towards a Green

Development with Low Emission and ClimateResilience

Source: Based on information from the site http://unfccc.int/focus/indc_portal/items/8766.php

Countries that have expressed their financing needs reflect different time frames for the provision

of these resources. It is noteworthy that the countries that present these figures are highly vulner-


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able and are in an emergency need to receive funds, but they are not main receivers of climate

funding. While countries like Mexico, Brazil, Peru and Colombia are the main receivers of climate

financing, they do not present need estimates according to a recent report by the Overseas Devel-

opment Institute(ODI).2

It is assumed that the need reflection indicated seeks to be covered by international financing,

although few countries describe it clearly. Such is the case of Haiti, which states that for the pro-

posed goals a $ 773.519.00 assignment is expected.

It is necessary to notice that several countries talk about estimates, and that these amounts may

vary. However, these first estimates allow the visualization of a financing strategic process for ac-

tion funding, and to know better how much is the budget and how much is needed.

It is important to point out that countries like Ecuador, Paraguay, Guatemala, Mexico, Peru, Do-

minican Republic, do speak about financing need but do not add figures as such.

Loss and damage

In the international discussion framework, it has been talked about the importance of funding

mechanisms and other alternatives to face the losses and damages which have derived as a con-

sequence from negative impacts of climate change. 11 of the countries analyzed stated these

estimates to highlight their vulnerability: Bahamas, Cuba, Jamaica, Guatemala, Colombia, Costa

Rica, Peru, Dominican Republic, Mexico and St. Vincent and the Grenadines, as shown in the fol-

lowing table:

Table 2. Loss estimates associated with climate change

Country Cost (million of USD) Causes

Bahamas $ 60.00 Hurricane Joaquin

Cuba $ 20,564.00 16 hurricanes

Dominica $ 392.30 Tropical Storm Erika, 2015

Haiti $77.00

Jamaica $ 128,540 .00 Hurricanes and droughts from2010 to 2011

Colombia $6,000

Costa Rica $1,130.39

Peru $3,500.00 Impacts due to El Nio

Dominican Republic $ 9,470.00

Mexico $1.5

Saint Vincent and theGrenadines

$ 600.00 Climatic events from 2010-to2014

2ODI, HBF, regional review on the financing for climate: Latin America, available in http://www.odi.org/sites/odi.org.uk/files/odi-as-sets/publications-opinion-files/10089.pdf


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Information on loss and damages is presented in a different way since it refers to different time

frames, but estimating the shown it explicitly talks about a cost of approximately $ 170,335.19

billion USD in the 11 countries that presented their figures. For its part, Guatemala talks about the

impact that events associated with climate change has produced in their gross domestic product

(GDP), having an effect of 1.3 % to 3.7 % of their GDP, and it is estimated that between 40 and70% of the impact is in the agricultural sector.3

The rest of the countries do not refer to the impacts derived from the climate change, though

some make mention of their vulnerability to the problem.

Private financing and innovative mechanisms

Internationally, the role of private funding has increased considerably, which is why it has been

proposed to evaluate what is the interest or need to involve these actors in the funding and mech-

anism processes. On this matter, it was identified that, besides the mentions on the importance or

interest in market mechanisms, countries like Colombia and Barbados talk about the role of the

private sector.

On the other hand, some countries talk about innovative mechanisms such as the Bahamas that

points out the importance of generating collection of money schemes on property insurance as

a measure for climate funding, reducing insurance costs for properties in high places and relo-

cate those found in low places, while proposing the generation of public-private partnerships to

finance mitigation actions.

Despite the increasing role of the private sector, there is no major mention of its role in the issueof funding.

Financing transparency

The issue of transparency is of vital importance both to build trust among stakeholders as to

improve understanding of the resources they have and those needed to meet the actions set

out in the INDCs. However, out of the 31 countries surveyed, only three included transparency

elements. Chile and Colombia stated the need and commitment to build measuring, reporting

and verification systems (MRV) of climate financing, while Peru pointed out that it plans to createa measuring and reporting system for the financial support received.

3 Guatemala INDC, available in http://www4.unfccc.int/submissions/INDC/Published%20Documents/Guatemala/1/Gobierno%20de%20Guatemala%20INDC-UNFCCC%20Sept%202015.pdf


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Balance

This analysis allowed to know initially the role that the financing topic, as a means of implemen-

tation, has within the INDCs, where despite recognizing the importance of having resources, oraccess to financing mechanisms, few countries have included commitments, mechanisms and

specific needs on this matter. Generally speaking, it is summed that of the 31 LAC INDCs analyzed:

30speak aboutconditional andunconditional goals.

include theuse of fundingmechanisms such astheGreen ClimateFund

talks about nationalfunds for climatechange

retakemarketmechanisms

specifies budgetamounts to beassigned

Chile, Granada,Trinidad andTobago and Antiguaand Barbuda

Guatemala

Costa Rica, Dominica,

Granada, Guyana, St.Lucia, Antigua andBarbuda, St. Vincent andthe Grenadines, St. Kittsand Nevis and Mexico

Haiti

4

1

9

1

2

12

11

3

2

3

1

speak about thereview ofbudgetsystems forinvestment

Guatemala,Honduras

includecost/fundingrequirements

includeeconomic lossesfrom climatechange impacts

Antigua and Barbuda,Bahamas, Belize, Cuba,Dominica, Haiti, Trinidadand Tobago, Suriname,St. Lucia, Guyana andSt. Vincent and theGrenadines

Bahamas, Cuba, Dominica,Jamaica, Guatemala,Colombia, Costa Rica,Peru, Dominican Republic,Mexico and St. Vincentand the Grenadines

include or foreseetransparencyschemes andMRV financingmechanisms

Chile, Colombia andPeru

mentionthe creation

of NationalStrategies forClimate Finance

Colombia and Chile

include theincorporationof theprivatesector

includesinnovativefinancingmeasures

Colombia,Barbados andBahamas

Bahamas


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This initial balance sets the need to strengthen and monitoring the actions and financing mea-

sures to ensure an effective INDCs action plan. Specifically, the pre 2020 planning should aim

towards increasing ambition, but also towards strategy building to implementing such actions.

Given this context, the following recommendations are identified regarding financing and the

INDCs in Latin America and the Caribbean:

Integrate implementation routes on the INDCs, establishing both mechanisms and costs

and financing needs related to conditional and unconditional measures.

Establish a monitoring, reporting and verification system for climate funding to identify

gaps and financing needs.

Construct national finance climate strategies that follow the INDCs, in its pre 2020 and

post 2020 process.

Expand the involvement and participation of civil society in the planning, implementa-

tion and evaluation of public policies and funding for climate change; including account-

ability of their impact for the fulfillment of the INDCs mitigation and adaptation goals.

Create mechanisms that allow the identification of resource set for climate change, such

as labels and cross-annexes, among other possibilities.

Ensure accountability and strengthening of mechanisms for access to information and

public participation in the INDCs process of implementation and revision.

This initial study is part of a monitoring process that the GFLAC seeks to do in order to strengthen

the INDCs and supports its pre and post 2020 preparation.

For more information on this balance and Country Profiles see: [email protected]


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