Funding sustainable development, one pledge at a time

Posted on: 20-11-2014

While development funding reaches an all-time high, questions remain over whether funds are sufficient to take on climate change as well.

As negotiations get underway on a set of Sustainable Development Goals (SDGs), there is a growing realization that additional funds will be required to ensure implementation.

United Nations General Assembly is currently holding informal consultations to secure funding after 2015, which included a four-day session last week to agree on a roadmap for the discussions.

This comes ahead of this week’s pledging conference at the Green Climate Fund (GCF), where governments have been encouraged to announce financial contributions for mitigation and adaptation on climate change.

These efforts are part of a trend towards increased funding for sustainable development. In 2013, international aid contributions were at an all-time high of $134.8 billion, while spending by developing countries rose from $838 billion in 2002 to $1.86 trillion in 2011.

The SDGs are likely to include extensive references to climate change and some proposals even refer to limiting the temperature rise below 2°C. Yet extending the development agenda to take on climate change poses a risk, as there may not be adequate funds for tackling both agendas at the same time.

Linking climate change and development

Climate change has been envisioned as an integral part of the SDGs. The UN proposal refers to strengthening resilience against climate hazards and natural disasters. It also calls for the implementation of the goal to mobilize $100 billion annually for climate change by 2020.

These linkages have implications for financing sustainable development, as noted by a recent UN report. The report views combatting climate change is a “global public goods” and estimates the cost of climate-compatible and sustainable development to be several trillion dollars annually.

The report states: “Environmental degradation, climate change, natural disasters and other threats […] pose additional challenges to the ability of all countries, and developing countries in particular, to achieve sustainable development.”

The cost of climate change

Annual investments to prevent climate change are likely to exceed $2.3 trillion, according to the report. This includes mitigation to prevent global warming and adaptation to build resilience against natural disasters, but also ensuring access to energy and investments in renewable energy.

Yet despite increasing funds, total funding for sustainable development was about $2.9 trillion from both domestic and international sources in 2011. Although this amount is slightly larger than what is needed to ensure climate-compatible development, it covers all areas of sustainable development and not just climate change.

That is why civil society groups have long called for additional funding to prevent climate change and ensuring that current funding for development is spent on areas such as poverty eradication and infrastructure. For example, the Climate Action Network this week called on governments “to mobilise additional international climate finance from new sources.”

There have been signs recently that governments are beginning to pledge additional financing for climate change. At the UN Climate Summit, six countries pledged a combined $2.3 billion for the GCF, while another six countries said that they would announce contributions this November.

These pledges are vital for realizing development that is not only sustainable in human terms, but also combating climate change, as envisioned by the UN proposal.

Future development funding

The UN consultations have so far focused on identifying different funding sources in preparation for making reaching an agreement at a conference in Addis Ababa, Ethiopia next year.

The G77 and China view international public finance as core to funding sustainable development. At last week’s session, the G77 and China stated that: “[T]here is still a significant difference and a gap between incomes of developed and developing countries.”

This was mirrored by the Least Developed Country group that called for an accountability framework to ensure international funding is made available. The group said: “The financing package must be ambitious, significantly strengthened and widened, predictable and time-bound with a robust mutual accountability framework.”

By contrast, the European Union noted that the implementing the SDGs would primarily be a national effort. The EU, the world’s largest aid contributor, also pointed out that many developing nations are now able to cover the costs of their own development.

Significant differences therefore remain over the future design of funding for sustainable development, including funding for climate change prevention.

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