1. finance

How to Overcome the Barriers
to Successful Climate Finance
LESSONS FROM EL SALVADOR
Executive Summary
San Salvador / Washington, DC
October 2012
Contents
Foreword, 2
1 Why does climate finance matter to El Salvador?, 4
2 Overcoming climate finance barriers, 7
3 Barriers in accessing climate finance, 8
3.1 Domestic challenges in accessing climate finance, 8
3.2 Barriers detected in the international community, 10
4 Barriers in the management of climate finance, 12
4.1 Domestic challenges in climate finance management, 12
4.2 Barriers detected in the international community, 13
5 Barriers in accountability for climate change actions, 15
5.1 Domestic challenges in accountability,15
5.2 Barriers detected in the international community, 16
6 A roadmap for effective climate finance, 17
Acronyms, 19
Bibliography, 20
This study is a contribution of the Ministry of Foreign Affairs of El Salvador to the Inter-Institutional Committee on Climate Finance.
It has been coordinated by Nils-Sjard Schulz (MultiPolar) in collaboration with Julio Flores and Bryan Pratt. Design by Whitney Gratton.
Foreword
Among Central American countries, El Salvador faces a very high vulnerability to the
effects of climate change. The severe impact of the last three climatological events,
which occurred between 2009-2011, caused the death of hundreds of citizens. Tropical
Depression 12E (2011) alone, generated economic damages
BOX 1
El Salvador’s position on climate change
As one of the world’s most vulnerable countries, the
Government of El Salvador has been very actively involved
in global and regional negotiations (for example, under
the United Nations Framework Convention on Climate
Change, and the Central American Integration System).
The Government has been recognized for its commitment
to defend the need to:
• Ensure that there are binding agreements based on the
principle of common but differentiated responsibilities.
• Make a clear distinction between climate finance and
Official Development Assistance.
• Require that financial contributions to the Green Climate
Fund and the Adaptation Fund are consistent with the
international commitments made.
totaling near 900 million dollars (USD), equivalent to 4% of the
nominal Gross Domestic Product for 2011.
Despite our sensitive vulnerability and the clear threats
climate change poses on our country, El Salvador is among the
countries that have gained less access to currently available
climate finance.
This deep climate finance gap is currently being addressed
within a limited fiscal leeway, product of the low fiscal
pressure experienced by the country, despite the efforts
undertaken by the current government and the strategic and
historic prioritization of social issues. In practice, this means
that the country is reorienting its public expenditures, often
leaving the line ministries without sufficient resources to meet
the basic needs of the Salvadoran citizens.
The study “How to overcome the barriers to effective climate finance - Lessons from El
Salvador” is a pilot initiative emerging from the First Latin American & Caribbean Dialogue
on Effective Climate Finance, held in May 2012 in Tela, Honduras. During this Dialogue 92
representatives from 26 countries, including practitioners from Ministries of Environment,
Development, Finance, and Foreign Affairs, discussed climate finance from the practice of
the countries.
It is important to highlight that this analysis has been a collective effort of the institutions
that are part of the Inter-Institutional Committee for Climate Finance. This Committee is
2
Foreword
steered by three key ministries (Environment, Presidency and Foreign Affairs) and gathers
a total of 18 government ministries and institutions. For the national process on climate
finance, the study has become a vital contribution, as it clearly identifies the key challenges
we face when accessing climate finance for our adaptation and mitigation priorities.
In the executive summary we are sharing today, some of the most important conclusions
relate to our institutional capacities and financial architecture which need to become
stronger in order to access and manage climate finance in an effective way. This process
has helped the government to develop a series of priorities to take action in the short and
medium run.
While the key challenges have been analyzed, the study also offers insights into the
important advances our institutions have made over the last years in order to be able
to access and manage climate finance. Here, we need to fully recognize that national
institutions have become empowered, and are now increasingly preparing for large-scale
climate finance.
I am very delighted to share with you this executive summary, which I trust will not only
be an interesting read, but also a tool for future South-South knowledge exchange. We are
confident that we have a lot to learn from each other, and it is time that we come together
around shared processes of capacity development.
Jaime Miranda
Deputy Minister for Development Cooperation
Ministry of Foreign Affairs
3
1
Why Does Climate Finance Matter
to El Salvador?
Since November 2009, El Salvador has suffered the impact of three extreme weather events
causing the death of 244 people and generating economic losses amounting 1,329 million
U.S. dollars (USD), equivalent to 6% of nominal GDP for 2011. Climate variability presents
new patterns that point to the occurrence of more extreme rainfall and droughts (see Figure
1). This high and increasing vulnerability is met with clearly inadequate responses by the
international community. According to government records, external contributions to
post-disaster reconstruction of the three events indicated in Table 1 only reached about
21.6 million USD, approximately 0.016% of the total damage. Within a very narrow fiscal
“
Within a very narrow
fiscal space, El Salvador
faces climate change
mainly through a forced
reorientation of public
expenditures (‘climate
adjustment’).
”
space, El Salvador faces climate change mainly through a forced reorientation of public
expenditures (‘climate adjustment’). In addition, the government is in a critical situation
where it has to resort to additional big loans from multilateral development banks that
are generating alarming levels of long-term climate debts. Finally, one of the biggest
challenges for El Salvador is to include the increasing climate vulnerability, in particular
the adaptation to climate change, into its development model and, very specifically, the
national fiscal framework.
At the sight of these complex challenges, climate finance (see Box 3) is gaining
prominence in the national political agenda. Over the past three years, there has been
progress in national and sector climate change policies, institutional capacities, intragovernmental coordination, and the design of financial mechanisms and instruments as
pillars of a national climate finance architecture. Among its assets, the country can rely on a
TABLE 1
Impact of Three Climatological Events 2009-2011
Name of Climate Event
Date
Human Loss
(Deaths)
Economic
Damage
(M of USD)
Support
Received
(M of USD)
Tropical Storm E96/Ida
Nov 2009
198
315
6.4
Hurricane Agatha
May 2010
12
112
0.6
Tropical Depression 12E
Oct 2011
34
902
14.6
244
1,329
21.6
TOTAL
Source: MARN 2012c and data from SICDES 2012
4
1. Why Does Climate Finance Matter to El Salvador?
FIGURE 1
Extreme Weather Events in El Salvador 1961-2011
significant capital of firm political leadership in various ministries, as well as capable and
highly motivated staff in government institutions. This capital translates into a dynamic
national process, which especially in the early months of 2012 has produced important
results. These include the approval of the National Environment Policy, the launch of
ambitious programs in agriculture, ecosystems and energy, the creation of Climate Change
Unit in the pioneer ministries (Agriculture, Finance, Public Works, and Foreign Affairs),
and the strong push to political and technical coordination through the Climate Change
5
1. Why Does Climate Finance Matter to El Salvador?
Committee (CCC) and the Inter-Agency Committee on Climate Change Financing (CIFCC,
for its Spanish acronym), respectively (see Box 4).
BOX 2
So, what is international climate financing?
Refers to financial flows from developed countries to developing
countries, in ways that are not reimbursable (or reimbursable at
concessional rates, in terms of ODA), and that are designed to finance
the incremental costs of mitigation and adaptation to climate
change, according to the commitments made under the UNFCCC.
In this context, the Government engaged in
this study of the barriers El Salvador is facing
when it comes to accessing, managing
and accounting for international climate
financing. This analysis aims to generate a
detailed understanding of the limitations
both at the level of national capacities,
“
Following this study,
the Government of
El Salvador, through
the CCC and CIFCC, is
defining a roadmap to
ensure the effectiveness
of climate finance.
”
and with regard to the current support schemes of the international community. This
dual perspective helps identify the domestic and external factors that determine the
apparent contradiction between the high and continuing vulnerability of the country, on
the one hand, and the very limited international financial support, on the other.
To assess these factors, this government-led study reviews the barriers in the three basic
phases of the financial cycle (access, management, and accountability), both domestically
and in the international community that is active in El Salvador. Importantly, this study of
barriers is a pilot exercise informing a process of analysis and capacity development that
emerged in the Regional Dialogue that gathered 90 policy makers and practitioners
from 26 countries in Tela, Honduras, in May 2012 (Kreisler / Schulz 2012). This pilot effort
started from a solid base of information available in El Salvador, and largely benefited from
the interest of CIFCC members to embark on this analysis through, among other research
tools, 41 interviews and two national workshops with a total of 96 participants.
Following this study, the Government of El Salvador, through the CCC and CIFCC, is
defining a roadmap to ensure the effectiveness of climate finance (see section 6). Its
priorities include the in-depth analysis of climate-relevant public expenditures and the
adaptation of the national financial system to the challenges of climate change, as key
responses to the increasingly severe impact of climate change on the national economy
and the lives of the Salvadoran people.
6
Overcoming Climate Finance Barriers
Identifying the principal limitations to securing climate finance effectiveness in El Salvador,
this study analyzed the climate finance cycle in its basic components (see graphic). Inspired
2
GRAPHIC
The climate finance cycle
by the principle of common but differentiated responsibilities, the study opts for a double
perspective. It looks into the existing barriers in terms of (a) national capacities, and (b) the
capacities of the international community to support the country in the face of climate
change. The barriers encountered in this study can be overcome in the following ways:
When accessing climate finance…
•
The Government should have national and sector programs and plans, that
are costed and budgeted, and planning and pre-investment capacities need to
be improved.
•
The international community should ensure transparency with respect to
the availability of funds and harmonize procedures for effective access by
national institutions.
In the management of climate finance…
•
The Government should include climate change in public finances and could
diversify the menu of financial instruments, adapting the national financial
architecture in line with the national climate change strategy, which is still to
be finalized.
•
The international community should use country systems and instruments to
channel financing and engage in a continued dialogue with the Government.
When accounting for climate finance…
•
The Government should ensure results-based
management, ideally within existing country
mechanisms and institutions.
•
The international community should improve
the accountability of its actions and engage
in mutual accountability, avoiding parallel
mechanisms.
BOX 3
And what is climate finance?
Refers to all resources, whether from national or foreign sources,
whether public or private, dedicated to the reduction of emissions
of greenhouse gases (‘mitigation’) and the development of social
and productive infrastructure resilient to the negative effects of
climate change (‘adaptation’). In other words, climate finance
includes both international funding (see Box 2) and a country’s
own budget allocations and financial instruments.
7
3
Barriers in Accessing Climate Finance
Access to climate finance has become a high priority for the Government of El Salvador. To
date, there have been significant advances in public policies, capacity development, and
financial instruments. In the short term, the Government needs to strengthen financial
planning for its programs, while the international community should ensure sufficient
transparency in the possibilities and procedures for accessing external financing.
3.1 Domestic challenges in accessing climate finance
“
The increasingly clear
climate vulnerability
of the country has
penetrated national
politics in El Salvador,
with firm ministerial
leadership, building
consensus around the
upcoming National
Climate Change Strategy
and its Action Plan.
”
El Salvador is advancing in a dynamic manner with anchoring climate change in its public
policies, such as the Fifteen Year Development Plan 2009-2014 (Plan Quinquenal de
Desarrollo 2009-2014) and the National Environment Policy (Política Nacional del Medio
Ambiente), passed in June of 2012. The increasingly clear climate vulnerability of the country
has penetrated national politics in El Salvador, with firm ministerial leadership, building
consensus around the upcoming National Climate Change Strategy and its Action Plan.
At the sector level, there are several important initiatives. The Ecosystem and Landscape
Restoration Program (Programa de Restauración de Ecosistemas y Paisajes, PREP), launched
in May of 2012, will incentive collaboration among the distinct state sectors, with a projected
budget of 180 million USD for the next five years. The PREP has originated innovative
work plans and inter-institutional agreements with key ministries, including Environment,
Finance, Public Works, and Agriculture. In early 2012, the Agriculture Ministry (Ministerio
de Agricultura y Ganaderia, MAG) created its Environmental Strategy for Climate Change
Adaptation and Mitigation in the Farming and Livestock Sector (Estrategia Ambiental de
Adaptación y Mitigación al Cambio Climático del Sector Agropecuario). Since early 2011,
MARN has promoted a process of institutional re-engineering and capacity strengthening
for the Environmental Fund of El Salvador (Fondo Ambiental de El Salvador, FONAES) in order
to convert FONAES into a powerful financial instrument for implementing the National
Environment Policy. MARN has also designated the Fund as the National Implementing
Entity that is in the process of accreditation for the UNFCCC’s Adaptation Fund. In May of
2012, the National Energy Council (Consejo Nacional de Energia, CNE) presented its Master
8
3. Barriers in Accessing Climate Finance
Plan for Renewable Energy (Plan Maestro de Energía Renovables), which is part of the
National Energy Policy for 2010-2024. The Ministries of Education (MINED) and Public
Works (Obras Publicas, MOP) have initiated climate planning processes. Finally, the
Regional Climate Change Strategy (Estrategia Regional de Cambio Climático, ERCC,
November 2010) of the SICA is also very relevant for El Salvador, as it opens regional,
national, and local perspectives on climate finance.
However, as a primary challenge, these public policies still need to include the
identification of investment needs, results-based management, and financial
programming, in order to attract, channel,
and account for external climate financing.
Specifically, the costing and budgeting
of plans and programs with a focus
in adaptation and/or mitigation, as a
basic element for access to large-scale
financing, is a pending task that depends
in large part on different ministries and
autonomous
institutions
developing
capacities for adequate financial planning.
There have been substantial advances in
the creation of Climate Change Units in
certain ‘vanguard’ ministries, among them
the Ministry of Environment and National
Resources (Ministerio de Ambiente y
Recursos Naturales, MARN), MAG, Finance
(Ministerio de Hacienda, MH), MOP, and
Foreign Affairs (Ministerio de Relaciones
Exteriores, RREE), in addition to focal points
in 13 other government institutions.
BOX 4
Coordination, a key to success
The Government of El Salvador has created two coordination mechanisms
to handle climate change and its financing. Created in August of 2012, the
Climate Change Committee (Comité de Cambio Climático, CCC) gathers the
ministers of the vanguard institutions (MARN, MAG, MH, MOP, and soon RREE).
It is part of the National Environment System (Sistema Nacional de Medio
Ambiente, SINAMA) and seeks to articulate the political efforts around climate
change. Since May of 2011, 18 ministries and autonomous institutions are
meeting in the Inter-institutional Committee for Climate Finance (Comité InterInstitucional para el Financiamiento Climático, CIFCC), under the leadership of
MARN, RREE, and STP. As an informal space, CIFCC gathers institutional focal
points for climate finance. Among other issues, the CIFCC focuses on:
•
•
•
•
capacity development,
operational and technical concepts,
financing needs and options, and
analytical work, including this study on barriers.
In the future, the CIFCC will be formalized under the CCC as the principal avenue
for coordinating capacity development, agreeing on climate finance guidelines,
and ensuring division of labor among entities responsible for climate financerelated country systems and procedures. damage. Within a very narrow fiscal
space, El Salvador faces climate change mainly through a forced reorientation
of public expenditures (‘climate adjustment’).
9
3. Barriers in Accessing Climate Finance
This construction of institutional capacity has also been influenced by the conditionalities
of a recent Inter-American Development Bank (IDB) loan, dubbed ‘Fiscal Sustainability and
Climate Change Adaptation Program in El Salvador’ (Programa de Sostenibilidad Fiscal
y Adaptación al Cambio Climático en El Salvador). Valued at 200 million USD, this loan is
“
The Government
is working in
complementary ways to
diversify its instruments
for large-scale external
finance, based on the
country’s successful
experiences in accessing
and managing Official
Development Assistance.
”
specifically directed toward institution strengthening in climate change themes. Taking
into account the fact that many institutions have expressed operational difficulties, it
will be essential to keep investing in human resources, procedures, expertise, and preinvestment capacities. Here, vanguard institutions could gradually advance in financial
planning for climate change plans and programs.
A second challenge is direct access to large-scale external finance, avoiding multilateral
intermediaries that tend to incur high transaction costs. The Government is pushing for
the re-engineering of the FONAES with a view towards its accreditation for the Adaptation
Fund (AF). At the same time, this could become relevant for a future accreditation for
the Green Climate Fund (GCF) and other international climate finance windows. In
addition to this effort, the Government is working in complementary ways to diversify
its instruments for large-scale external finance, based on the country’s successful
experiences in accessing and managing Official Development Assistance (ODA). This
might include sector-wide approaches, such as the PREP, general budget support, and
special financial vehicles of the National Development Bank (Banco Nacional del Desarrollo,
BANDESAL), created in early 2012.
3.2 Barriers detected in the international community
The international community supports institutional development, but it does so in an
uncoordinated manner. Consequently, the Government is concerned with a lack of
harmonization, particularly with respect to requirements and procedures and articulation
with the ongoing national process. Despite the fact there are interesting experiences with
support to capacity development, such as through the IDB loan or Japanese cooperation
10
3. Barriers in Accessing Climate Finance
with MOP, these initiatives do not maximize their potential due to scarce coordination
among international agencies and limited dialogue between these entities and the
Government, particularly in the coordination of technical assistance. It is also vital to
deepen possible synergies between conventional development cooperation, on the one
hand, and South-South knowledge exchange, on the other, as a replicable model for the
climate finance management cycle.
The case of El Salvador clearly reflects an extensive deficiency and dispersion of
information regarding the possibilities, conditions, and procedures for climate finance
that Government institutions highlight as one of the principal barriers to accessing these
funds. The very limited transparency and scarce relevance, usefulness, and clarity
of information make adequate access more difficult for Salvadoran institutions, with
reduced institutional resources and specialized teams for investigating, systematizing,
and following up with a confusing labyrinth of external financing. The dialogue with
international representatives is weak, due to the insufficient flow of information from
the Governments and headquarters of the agencies and organisms present in the
country. However, first steps are underway for generating a relevant and updated menu
of opportunities for external cooperation around climate change. In the second half
of 2011, the Vice Ministry of International Development Cooperation (Viceministerio de
“
A national policy for
limiting and conditioning
climate debt levels
should be consulted and
coordinated with the
international community
in order to achieve a
minimum consensus.
”
Cooperación Internacional para el Desarrollo, VMCD) led an exercise to map and analyze
the opportunities for external financing, including more than 60 external sources, which
could become part of the Development Cooperation Information System of El Salvador
(Sistema de Información sobre la Cooperación para el Desarrollo de El Salvador, SICDES). The
international community present in the country is not yet supporting this effort to identify
and/or clarify the opportunities available for El Salvador. At the same time, however, these
external players voice their concern that it remains very difficult to allocate their resources
in the country, indicating a clear mismatch between climate finance demand and supply.
Also in-house information management of different international agencies constitutes a
barrier, as representatives of the international community in El Salvador appear to have, in
11
3. Barriers in Accessing Climate Finance
many cases, a partial knowledge of the broader climate finance initiatives led by their own
governments or headquarters.
As a responsibility shared with the Government, the task remains to generate spaces for
dialogue and consultation around key issues. At least two areas require a deeper dialogue
in order to advance in political alignment. The first is that the Government gives priority
to adaptation, while the international community primarily supports mitigation. The
second is the increasing concern in the Government regarding levels of ‘climate debts,’
generated, on many occasions, by the necessity to rely on loans in post-disaster situations.
While the decision to sign loans is in the hands of the Government, a national policy for
limiting and conditioning climate debt levels should be consulted and coordinated with
the international community in order to achieve a minimum consensus, especially with a
view to emergency situations.
12
Barriers in the Management
of Climate Finance
4
National capacities to manage climate finance are dynamically debated within the
Government. Current national barriers include the need to improve operational capacities
in key institutions, to diversify the menu of financial instruments, and to adapt the
national financial architecture in order to integrate climate change in the management
of public expenditures. On the part of the international community, there is a need for
more credible support via the use of country systems, mechanisms, and instruments, in
addition to a concerted effort among these, in line with the ongoing national process.
Domestic challenges in climate finance management
4.1
El Salvador needs to deepen its commitment with a financial architecture that is capable
of channeling large-scale climate financing with instruments, such as national funds, the
national development bank, program-based approaches, and general budget support.
Structural limits for adequately reflecting, channeling, and absorbing climate finance
still persist. However, various Salvadoran institutions are already experimenting with
operational frameworks and instruments adapted for climate finance. Key examples are
FONAES, PREP, the MAG Environmental Strategy, and the CNE Master Plan. Furthermore,
the private sector is looking for BANDESAL to play a stronger role, in line with innovations
pioneered by such countries as Brazil, Colombia, and Mexico in the area of special
financial vehicles and windows, in which multilateral development banks are particularly
interested. On the other hand, in the last two years, the Government of El Salvador has
made substantial progress in the use of budget support and programmatic approaches
to channel and manage ODA, which could potentially be used in the context of climate
finance. A concrete example is the Technical Secretariat of External Financing (Secretaría
Técnica del Financiamiento Externo, SETEFE), which administers substantial ODA funds
through national systems.
“
In the future, a clear
climate finance
framework should be
developed in order
to clarify guidelines,
instruments, and
procedures within the
overall national public
finance.
”
There has been progress in capacities for financial management in certain pioneer
institutions, which have or will soon have Climate Change Units (MAG, MARN, MH, MOP,
13
4. Barriers in the Management of Climate Finance
and RREE). However, most national entities still lack the basic capacities to channel and
execute large-scale external finance. For this reason, the country needs a strong investment
in specific operational instruments and models for climate finance, which should be
integrated into the operations of the respective responsible teams and units. In the future,
a clear climate finance framework should be developed in order to clarify guidelines,
instruments, and procedures within the
overall national public finance. Creating
this
administrative-financial
framework
could respond to an increasing demand
from different Salvadoran institutions that
are beginning to seek large-scale external
climate financing. As a first step in this area,
there is a perceived immediate need to clarify
the respective competencies of MH (as the
entity responsible for public finances), MARN
(as the entity of reference for environmental
plans and policies), the Technical Secretariat of the Presidency – Secretaría Técnica de la
Presidencia, STP – (as the entity responsible for development planning and results-based
management), and RREE (as the liaison with international development cooperation).
The integration of climate finance management in national public finances remains
a pending task. Up until now the Government has only used general budget lines and
codes for the environment, which do not capture the specific climate-relevant costs and
expenditures across sectors. In various institutions, including the Ministry of Finance (MH),
conscience of the technical necessity to move in this direction is increasing. The goal is
to be able to reflect the national climate vulnerability in national budgets and permit
adequate budgetary programming and execution within existing plans and programs.
In this vein, a Climate Public Expenditure and Institutional Review (CPEIR) might be
conducted, a methodology designed by the UNDP and the World Bank (CDDE 2011, Schulz
14
4. Barriers in the Management of Climate Finance
2012a) that eight countries in Asia and the Pacific are already applying. The CPEIR would
bear essential findings regarding the weight of climate change in public expenditures,
both those coming from budgetary allocations and those financed by external financing.
Barriers detected in the international community
4.2
The international community has promoted capacity development, particularly through
the IDB loan, which among other aspects, implies a more determined role for the MH in
climate finance. International actors, such as UNDP and JICA, perform an important role
in the construction of capacities, such as in FONAES and MOP, respectively. However, this
support is still not adequately coordinated with Government efforts, in particular the CIFCC,
with respect to the development of institutional and operational capacities. On the other
hand, external support usually lacks a specific focus in climate finance management,
even though the international community recognizes the clear necessity to increase the
options for efficient and sustainable allocations of external financing, both loans and
grants, through stronger national institutions, systems, and instruments.
In spite of institutional and operational advances underway, external support tends to be
managed outside the systems of the Government, where international agencies tend
to perform the functions of executing funds through Parallel Implementation Units (PIU)
that compromise domestic capacity development. The proliferation of PIU demonstrates
the double dilemma that the international community faces in El Salvador. On the one
hand, the vivid government dynamism with climate finance still contrasts with currently
weak management capacities. On the other hand, the international agencies struggle to
“
The international
agencies struggle to
reconcile their role as
‘temporary’ subsidiaries
with medium and long
term commitments
to national capacity
development.
”
reconcile their role as ‘temporary’ subsidiaries with medium and long term commitments
to national capacity development. Resolving these contradictions will require solid
coordination between the Government and the international agencies with respect to
shared objectives for effectiveness and sustainability of management and implementation
at both the technical and financial levels.
15
4. Barriers in the Management of Climate Finance
The dialogue regarding climate finance and its management continues to be principally
bilateral and fragmented among different government institutions, making it more
difficult to achieve synergies and an adequate division of labor among the international
funds, mechanisms, and agencies. In view of the strong commitment of the Salvadoran
Government to improving its capacities for accessing and managing financing, the scarcity
of joint action by the international community continues to be a central preoccupation
of national actors. Even though there have been certain initial advances, such as the
Consultative Reconstruction Group (Grupo Consultivo para la Reconstrucción) created after
Tropical Depression 12E of October 2011, the international community is not yet directly
involved in the national process generated around the CIFCC and the CCC. Here, the lessons
learned in the ODA management, such as through the National Plan for Aid Effectiveness
in El Salvador (Plan Nacional de Eficacia de Cooperación en El Salvador), an effort led by
the VMCD (2012a), could provide ideas of how to establish ‘rules of the game’ in order to
secure the effectiveness of external climate financing.
16
Barriers in Accountability
for Climate Change Actions
5
The attention to accountability, which closes the cycle of effective financial management,
is still incipient in El Salvador. This still poses challenges to the implementation of a
system of Measurement, Reporting, and Verification (MRV).1 Creating basic conditions, the
Government should secure results-based management and promote accountability on
climate finance, ideally within the existing mechanisms and the institutional setting that
has advanced substantially in the last few years. For its part, the international community
should commit to mutual accountability, avoiding and reducing the proliferation of
parallel mechanisms.
Domestic challenges in accountability
5.1
El Salvador is entering with more clarity into results-based management and accountability
to design and adapt existing mechanisms. As a point of departure, El Salvador does not
have specific tools nor frameworks for results-based management and accountability
on climate change. It is imperative to finalize the National Climate Change Strategy and
Plan in order to design baselines, goals, and indicators under an umbrella shared by all
national institutions. However, there have been substantial advances in certain aspects,
including the programming of PREP or the systematized monitoring and observation
of the environment. On the other hand, there is still a need for greater clarification of
competencies and capacities in the institutional arrangements for accountability on
climate change. This institutionality should be increasingly directed toward Measurement,
Reporting, and Verification (MRV), in the framework of re-launched SINAMA, without casting
aside the imminent obligation that falls to the international community to support these
processes. A central challenge consists of integrating climate change goals and indicators,
of great complexity, in a system currently concerned with concrete environmental policies
only and primarily articulated in specific sectors.
“
A central challenge
consists of integrating
climate change goals
and indicators, of great
complexity, in a system
currently concerned with
concrete environmental
policies only.
”
1 In simple terms, MRV refers to the technical and institutional capacities to generate and disseminate data and
information regarding the fight against climate change. It is a central concept currently being debated in the
context of the United Nations Framework Convention on Climate Change (UNFCCC).
17
5. Barriers in Accountability for Climate Change Actions
With a view toward rapidly responding to these challenges, climate change could be
integrated as a pillar in the National Planning System (Sistema Nacional de Planificación,
SNP) led by the STP. Moreover, it will be important to secure an adequate management of
these finances through the national budget, with increased parliamentary supervision and
coordination with the Environment and Climate Change Commission (Comisión de Medio
Ambiente y Cambio Climático) of the Legislative Assembly of El Salvador. The Government
can also take advantage of lessons learned in ODA management, such as SICDES or the
Communities in Solidarity Program (Programa Comunidades Solidarias, see STP 2010),
oriented toward conditional cash transfers to populations with scarce resources. These
experiences could inform a systemic push for accountability in climate finance, under the
National Climate Change Plan and SINAMA.
5.2 Barriers detected in the international community
“
Some agencies and
organisms have
established quasiparallel accountability
mechanisms that
function outside
the circuits of the
Government and hinder
mutual accountability.
”
18
The international community has still not articulated with the Government with respect
to climate change accountability, despite its own needs for analyzing and verifying
advances achieved with the resources provided. It is especially concerning that there is
no push for a stronger ‘results culture’ in the execution of large-scale loans. Some agencies
and organisms have established quasi-parallel accountability mechanisms that function
outside the circuits of the Government and hinder mutual accountability between the
Government and the international community. In other cases, accountability is decidedly
unilateral, directed exclusively toward the interior of the respective agencies, organisms,
and funds, without reporting to the country about actions taken nor the results obtained
by those actions. In general terms, El Salvador is confronted by a complex framework
of requirements and procedures of monitoring and evaluation that vary by agency and
international organism and are very difficult to comply with for Salvadoran institutions.
On the whole, national stakeholders perceive an urgent necessity to articulate the
international community around all phases of the climate finance cycle and with a clear
5. Barriers in Accountability for Climate Change Actions
focus on harmonizing and aligning the procedures for design, execution, accountability,
and MRV. Currently, there are inherent weaknesses given that transparency of data on
current and potential external climate financing is deficient. This in turn impedes the
articulation of the international community’s efforts with the process of generating and
strengthening national capacities and systems. The agencies and organisms present
in El Salvador should engage in a deeper reflection on their will and capacity to
support and use national systems and procedures, both the existing and emerging,
with a view toward the capacity to channel large-scale climate finance under a logic
and orientation toward results.
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6
A Roadmap for Effective
Climate Finance
Based on the analysis reflected in this study, the Government of El Salvador is designing
a roadmap (see Aguilar Garza 2012). Among its key objective, the roadmap will include
a coordinated approach to institutional capacity development, the adaptation of the
national financial system, an impulse to coordinated support by the international
community and the increased involvement of national actors beyond the executive,
particularly parliament and specialized civil society, as well as private sector actors
investing and providing services in climate-relevant areas.
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6. A Roadmap for Effective Climate Finance
By early 2013, the roadmap is expected to develop into a full-fledged program
approach, which might entail the following six elements:
•
Fine-tuning public policies and planning: The National Climate Change
Strategy and Plan will be finalized and further impetus to the sector strategies
ensured, in line with the updated analysis of climate variability and climate
change in El Salvador and the Central American region.
•
Adapting the national financial architecture: An analysis of public
expenditures will be conducted, while national financial instruments will
be diversified, for example by converting in the PREP into a pilot for climate
change program approaches.
•
Developing national capacities: Based on a thorough mapping of institutional
and operational capabilities, a National Capacity Development Program will
be designed and implemented to develop capacities in the climate finance
access, management and accountability.
•
Deepening inter-institutional coordination: Further political and technical
synergies between the CCC and CIFCC will be sought, while a results-based
work plan will guide the activities of the CIFCC.
•
Improving coordination with the international community: Enhancing the
dialogue, the government will seek for support to the road map and develop
a strategy and mechanisms for accessing external climate financing.
•
Positioning the country in the regional and global arenas: El Salvador’s
lessons learned in climate finance will be shared in the context of SICA and
during the Conference of Parties (COP) in Qatar.
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Acronyms
AF
Adaptation Fund
BANDESAL
National Development Bank (Banco Nacional de Desarrollo)
CCC
Climate Change Committee (Comité de Cambio Climático)
CDDE
Capacity Development for Development Effectiveness Facility (UNDP Asia-Pacific)
CIFCC
Inter-Institutional Committee for Climate Finance (Comité Interinstitucional de Financiamiento para el
Cambio Climático)
CNE
National Energy Council (Consejo Nacional de Energía)
CPEIR
Climate Public Expenditure and Institutional Review
ERCC
Regional Climate Change Strategy (Estrategia Regional de Cambio Climático)
FONAES
Environment Fund of El Salvador (Fondo Ambiental de El Salvador)
GCF
Green Climate Fund
IDB
Inter-American Development Bank
JICA
Japanese International Cooperation Agency
MAG
Ministry of Agriculture (Ministerio de Agricultura y Ganadería)
MARN
Ministry of Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales)
MH
Ministry of Finance (Ministerio de Hacienda)
MOP
Ministry of Public Works (Ministerio de Obras Públicas)
MRV
Measurement, Reporting, and Verification
ODA
Official Development Assistance
PIU
Parallel Implementation Units
PNMA
National Environment Policy (Política Nacional del Medio Ambiente)
PREP
Ecosystem and Landscape Restoration Program (Programa de Restauración de Ecosistemas y Paisajes)
RREE
Ministry of Foreign Affairs (Ministerio de Relaciones Exteriores)
SETEFE
Technical Secretariat of External Financing (Secretaria Técnica del Financiamiento Externo)
SICA
Central American Integration System (Sistema de Integración Centroamericana)
SICDES
Development Cooperation Information System of El Salvador (Sistema de Información sobre la Cooperación
para el Desarrollo de El Salvador)
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SINAMA
National Environment System (Sistema Nacional de Medio Ambiente)
SNP
National Planning System (Sistema Nacional de Planificación)
STP
Technical Secretariat of the Presidency of the Republic (Secretaría Técnica de la Presidencia de la República)
TD12E
Tropical Depression 12E
UNDP
United Nations Development Programme
UNFCCC
United Nations Framework Convention on Climate Change
USD
United States Dollars
VMCD
Vice Ministry of Development Cooperation (Viceministerio de Cooperación para el Desarrollo, de RREE)
Bibliography
Public Policies, Plans, and Programs
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y Acuícola, San Salvador.
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Bibliography (cont.)
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