Change Finance: If You Can't Measure It, You Can't Manage
By Christa S. Clapp
FNI Climate Policy
Climate change finance is
currently estimated at between approximately USD 70 and 120 billion per year.
However, these estimates involve a fair amount of uncertainty. There is no
agreed definition of what climate finance includes; moreover, for private
sector flows, the range is estimated using mismatched data sources.
significant sums of financing committed in the international climate change
negotiations (USD 100 billion per year by 2020) are expected to be earmarked
according to the traditional template whereby developed countries provide
financing to developing countries. Not only is this an outdated view of how
private investment moves in today's global world, it also provides an
impractical framework for keeping track of financial flows. Furthermore, the
developed/developing country negotiating viewpoints are plagued by disagreement
as to which public sector and private sector financial flows should
Managing limited financial resources effectively requires
grasping how financial flows contribute to results in climate mitigation and
adaptation. As yet we have little understanding of the tangible results being
achieved from these flows, and how public money and instruments drive private
investments. Better understanding will require consistent information on a
range of indicators of successful financial interventions, including leveraging
ratios. We need to consider what financial kinds of information could serve
both purposes: to measure progress towards the USD 100 billion commitment, and
to measure how effective financial flows are in achieving results.
need a common definition of what types of flows are to be considered 'climate
change finance'. Until such a definition has been agreed, governments and
organizations must be more transparent as to what account as 'climate finance'.
Governments should work with private investor groups and data providers to
adapt existing information so as to provide a more comprehensive dataset on
private climate finance.