The Third Financing for Development Conference: A summit halfway on the road to Paris

You might not have thought it at first glance but the Third Financing for Development Conference (FFD) could end up a key stepping stone to success we need in Paris to keep global warming below two degrees. While a big part of the conference will focus on how developing countries finance their own development and futures, the question of how the huge costs of climate change action will be financed, particularly for countries to adapt, is the big elephant in the room. And the conference couldn’t come at a more crucial time, just 6 months before major international climate change negotiations in Paris later in the year.

Climate change costs

Figure this – climate change impacts bring a huge additional burden to government budgets. Even as the price of clean energy is tumbling down, making it cheaper for countries to make the switch to a clean development pathway, the costs to adapt to climate change are rising rapidly. The UN Environment Programme (UNEP) estimates that adaptation costs for the world’s poorest countries will rise to $50bn a year by 2025-2030. Even today, before climate impacts really begin to bite, countries are paying out of their own pockets to deal with climate change. Tanzania, for example, pays three times more on adaptation per year than they received in climate funds from rich countries from 2010-12 and Ethiopia spends about double each year.

Who is paying the price?

The injustice is stark. The world’s poorest countries have done nothing to cause the climate crisis and yet they paying the price for a problem they have not caused. As if that isn’t enough, the money that richer nations are giving poorer countries to deal with climate impacts often comes from existing aid commitments. For example, they make sure that agricultural programmes take climate impacts into account or they re-direct money from the existing pot of aid funding towards new climate programmes. The bottom line is that very little actual additional money is being provided: while climate finance levels have increased over the past years – this has been part of stagnating aid levels. Total climate finance given bilaterally between countries already represented 17% of bilateral Overseas Development Assistance in 2013.

We need new money to fund the solutions to a new problem.

So what does this have to do with the FFD where climate change has been barely mentioned? Despite the reluctance of negotiators to broach this difficult topic, this conference could help re-build some of the confidence we need to see ahead of the Paris climate negotiations at the end of the year.

Make no mistake, it is good that climate change is increasingly mainstreamed into development aid, and the FFD conference should put a stop to aid that does not acknowledge or integrate the realities of climate change. Programs that do not take into account that we are already dealing with a 0.8 degree Celsius temperature rise will be irrelevant in the not so distant future. Mainstreaming climate change is good for development, for helping to improve people’s lives, but it doesn’t deal with the fact that new and additional finance is needed.

And yes, more public finance will need to be coming from the so-called new contributors, emerging economies that should and are increasingly taking up their global responsibilities, including through ensuring that these new flows of money help support low carbon development and climate resilience.

But first things first. Let’s get the rich countries who have contributed most to climate change, whose emissions put them on the path to prosperity, back on track. It’s only fair that big historic emitters lead the way by living up to their commitments. This means that they should provide guarantees that the current practice of siphoning off aid budgets towards climate finance will stop with immediate effect. As a first step, developed countries could commit to ensure that as climate finance rises, it will be part of a rising overall aid budget, and one that is rising at least as fast. Secondly, they need to stop beating around the bush when it comes to bringing in big new public money, and arrange for the immediate creation and implementation new and innovative public sources of finance that are ready to harvest like the Financial Transaction Tax, carbon pricing schemes like in the EU, and a fossil fuel subsidy shift.

The FFD conference in Addis Ababa is a crucial stop on the road to Paris. We must ensure that the world’s poorest countries, who are impacted most by climate change, do not continue to pay the price for a problem they have contributed least to. We will be working to lobby governments in Addis.

In the meantime, YOU can take action to stand with those hit hardest by climate change.

This entry posted by Lies Craeynest, Oxfam Food and Climate Justice lead, on 10 July 2015.

Photo: Joel Villamor, fisher farmer in Tacloban. Joel and his partner May-May live in a house on stilts above the water in Rawis, Anibong Bay, Tacloban. In November 2013 their home was totally destroyed by typhoon Haiyan. Joel rebuilt a house using wood salvaged from the storm wreckage and a tarpaulin provided by Oxfam. Climate change could make extreme weather events such as Typhoon Haiyan more common in the future. Credit: Eleanor Farmer/Oxfam

The poorest people are hit hardest by climate change.

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