Climate Change Finance Tracking Method
Climate Change Finance Tracking Methodology
It is a tool for identifying, classifying, weighting and marking climate-relevant investment decisions in the development planning system, enabling the estimation, monitoring and tracking of those investments.
Four systematic approaches:
- Linking BCCSAP themes and programmes with the climate relevance criteria
- assigning climate relevance weight against each of the climate relevance criteria
- relevance of projects and programmes, and
- estimating climate investment for multiple relevance criteria
Climate public investment tracking is part of a broader package of reforms that is used to help operationalize national climate change policies and action plans. It is one component of Climate Fiscal Framework (CFF) which has the broader scope of providing a comprehensive overview of domestic and international climate finance; linking climate change policies with development planning process of the country; and prioritizing climate actions.
Detail Methodology
First, defining and classifying climate relevant investments. This includes developing guidance for identifying ‘what is’ and ‘what is not’ climate relevant, typically drawing on the national climate change policy. And also defining a typology for climate change invetmenst – which may for example be simply into two categories, adaptation and mitigation, or may be a more elaborate structure of climate change interventions as in BCCSAP 2009.
The Programmes identified under the BCCSAP Thematic Areas (44 Programmes under 6 Thematic Areas) is used as the Climate Relevance Criteria to be used for tracking climate public finance. The relevance criteria proposed in the Climate Fiscal Framework (CFF 2014) is also aligned with the BCCSAP thematic areas and programmes for harmonized climate finance reporting.
Assessing and “weighting” the climate relevance of those expenditures is critical.
Identify key relevant interventions under each climate relevance criteria and rate each of those in terms of
- Climate Sensitivity
- Climate Change Relevance
- The relevance weight for key interventions
are then calculated by deducting the assigned weight for climate sensitivity from the weight for climate change dimension of an intervention
- Maximum relevance weight from selected interventions under a climate relevance criteria MAX(x1, x2, ……… xn)
- Calculate the Standard Deviation of the relevance weight
- Calculate the climate relevance weight of a ‘Climate Relevance Criteria’
If a project or programme addresses only one relevance criteria, the climate relevant finance should be calculated as percentage (of climate relevance) of the annual project allocation for the project/ programme. But the projects/programmes are usually complex in nature and may have finances that match with more than one climate relevance criteria..
The budget desk officers will be able to select up to 3 climate relevance criteria (incuding the ‘non-climate finance’ criteria, if deemed fit) against a project or programme based on the amont of budget allocation for each relevance area (descending order). The project/programme relevance is then calculated following the same formula of deducting sample standard deviation from the maximun relevance weight percentage, as in Step-2.
Weighted Reciprocal Rank for multiple relevance criteria
| Relevance | Rank | Reciprocal Rank | Individual Weight:-3 Relevance | Individual Weight:-2 Relevance | Individual Weight:-1 Relevance |
|---|---|---|---|---|---|
| Relevance-1 | 1 | 1.00 | 0.55 | 0.67 | 1 |
| Relevance-2 | 2 | 0.50 | 0.27 | 0.33 | - |
| Relevance-1 | 3 | 0.33 | 0.18 | - | - |
Therefore, for projects and programmes with three Relevance the percentages are 55 percent, 27 percent and 18 percent for Relevance-1, Relevance-2, and Relevance-3 respectively. For projects and programmes with two Relevance the percentages are 67 percent and 33 percent for Relevance-1 and Relevance-2 respectively. For the projects and programmes with one Relevance Criteria, 100 percent of the allocation and expenditure is climate relevant.