How can PFM systems support the implementation of climate change policies effectively, in a way that meets different citizens’ needs, especially at the local level? We in the PEFA Secretariat reflected on some of the interesting questions arising from our Research Competition publications.
A University of Essex team found that in climate-affected South Asian countries, there is a challenge to translate national-level climate policies into effective actions at the local level. There is concern, for example, that the government does not always ask for citizens’ opinions on what actions might be beneficial to their communities, and what solutions might be relevant and sustainable.
Further, research from the International Institute for Environment and Development (IIED) and the International Budget Partnership (IBP) suggests that more data needs to be collected to understand the financial burden that households currently bear for climate change and disaster risk management. In one IIED country, rural households spent more than double in absolute terms compared to the government’s spending on climate change and disaster risk management policies. When household spending was measured as a share of personal income, women spent three times more than men.
Participatory budgeting (PB) can help ensure that local needs are reflected in budgets - but only if these processes are well implemented. Countries researched in several PEFA studies have used PB with mixed results including in the field of climate change policies. Some of the enabling legislation or consultation structures have been a form of tokenism; these are not designed to engender good citizen participation, particularly from groups vulnerable to climate change. Some of the more successful examples of PB have used local stakeholder structures, received support from local politicians and civil society groups, and have set realistic expectations.
Improved budgetary transparency can help inform citizens of government climate-related policies but it is not a complete solution. For example, in one of the countries researched, the country embarked on impressive PFM reforms, including climate tagging, to support the transparency of climate-related budget information. The National Climate Change Policy allocated 80% of national climate-related spending for local level implementation but, despite best efforts, the University of Essex study shows that there were still challenges to quantifying how big an impact this spending had on the ground.
To what extent might the social contract – the deal between the government and its citizens - be challenged by ineffective climate-related policies at the local level? The University of Essex study concluded that “At present, the gap between the national level climate change policies and the level of implementation at local levels is widening, which ultimately means that these policies are having limited impact in terms of action on the ground”. The study also noted that when a non-state actor (NSA), including a development partner, plays a role that the government should play, the NSA, effectively, becomes a surrogate in the social contract.
Finally, credible, inclusive national climate change policies need to be backed up by effective, inclusive, and climate-responsive PFM systems that deliver to local needs. What are the main elements of such an approach? The messages for governments from the latest round of PEFA-supported research are not new, but perhaps more relevant than ever:
- Coordinate effectively across all levels of government, the public sector, and businesses – more focus, including research, needs to be on building systems that support the implementation of locally-fit climate change policies.
- Promote transparency in defining and tracking climate expenditures – more political direction, capacity and data are needed to track what results are delivered, how well, and to whom.
- Promote more meaningful integration of local community needs in climate spending, with an emphasis on the most vulnerable groups, to inform a dialog on how these expenditures should be prioritized, allocated, and delivered.
It is encouraging that governments across the world are increasingly making use of the pilot PEFA supplementary module on Climate Responsive PFM for baselining their PFM systems’ ability to support climate change and designing reform programs. The PEFA Research Competition Series of publications and PEFA Climate Reports authorised for publication are available on the PEFA website: www.pefa.org.
