How do you deliver climate finance at the local level?

Until recently, climate finance mainly focused on donors – the global climate funds and governments who pledge the funding.

As the U.N. climate talks are underway in Bonn this week and next, however, it is crucial to understand how to effectively deliver climate finance down to the local level, to ensure that it reaches the most vulnerable people.

Decentralisation can take various forms – administrative, fiscal and political – but at the heart of all is the question: who makes the decisions, and what are their implications?

As noted in a recent report on decentralising climate finance in Kenya and Ethiopia, the more locally climate funds are managed, the more local priorities influence the investment decision – although this varies based on the country’s political structures.

The research reveals a trade-off in decentralising climate finance in these two countries – between ensuring both local priorities and national climate goals are met.

In Kenya, devolution has brought with it the development of County Climate Change Funds (CCCFs) to deliver climate finance at the local level, whereby local planning committees are directly involved in deciding which investments to prioritise in their area.

Criteria for accessing the funds incorporate tools such as vulnerability assessments and community consultations. This ensures that the investment decision takes local priorities into account.

However, local institutions risk making decisions driven by political preferences or internal clan divisions, which may clash with the planning tools mentioned above.

Ethiopia has adopted a more centralised approach through its Climate Resilient Green Economy (CRGE) Facility, a mechanism whereby government ministries make investment decisions on how to spend climate funding.

Climate finance decisions are made to align with the priority sectors – agriculture, forestry, water and energy – of the Growth and Development Plan, the country’s development blueprint, which limits the scope for local government to decide which sector or activity to focus on.

Critics say that this “top-down approach” risks excluding local voices and ignoring communities’ priorities.

Here are some lessons we can learn from these countries’ experience:

- While planning and budgeting at the local level allows investments to reflect local priorities, it tends to address current and urgent needs and may not acknowledge climate risks – which is crucial to building climate resilience in the long run. Setting up an irrigation system, for example, will bring water to an area, but may not be enough for the community to adapt to drought if it doesn’t come with climate-smart practices such as using drought-resistant seeds.

- Listening to local actors, while addressing complex structural issues, requires careful consideration, particularly on the roles that different levels of government should take.

For example, while local government may be best placed to enable local planning, national institutions may need to ensure that local actors integrate national climate priorities to their planning, rather than just focusing on their project or sector of choice.

- Oversight at the national level and participatory tools like community consultations should also act as checks on local governments’ decisions to ensure transparency and avoid any misuse of funds.

- Finally, international, national and sub-national climate funds should include clear and strict criteria, which are currently lacking in some funds, on how to include local priorities in investment decisions.