GHV's Blog

Climate: The Biggest Change in the Aid Landscape?

March 16, 2016 09:00


Ammad Bahalim, GHV Senior Consultant for Agriculture, Nutrition, and Trade


Every year countries disburse about $150 billion in development assistance funds. By most measures, this amount has remained relatively flat over the last decade and is unlikely to grow enough to achieve the UN's Sustainable Development Goals. As such, the focus has shifted to engaging developing country governments to commit their own domestic resources toward achieving goals. In fact, at the Financing for Development conference in Addis Ababa, Ethiopia in July, 2015, the agenda focused largely on improving the tax collecting capacity of developing countries. This shift in focus is critical but will likely take time to materialize; building the relevant institutions is a long and complicated process, especially in the poorest countries. 
Almost in parallel, the UN’s Conference of the Parties, the political process on climate change, came to a breakthrough agreement to reduce greenhouse gas emissions in Paris in late 2015. Developing countries agreed to the cuts on the heels of an agreement in Copenhagen that richer countries will increase their contributions to help poor countries adapt and mitigate climate change by an additional $100 billion annually by 2020. Although this figure includes public and private sources, it’s likely to be the biggest change in development finance in a generation, if realized. And the early signs are promising. One tally found that $62 billion of this total have already been committed. Ambitions have increased and some are evening hoping to raise $200 to $300 billion by 2030. 
What’s most exciting about this shift are the catalytic possibilities of these new resources. Today's poorest, hungriest, and most vulnerable populations are the same ones that will suffer the most from climate change: small holder farmers. If we make the right investments now, we’ll be able to tackle both climate and development simultaneously. Our recent work at GHV has been motivated by just this insight, and we’ve been identifying what these investments could be to improve outcomes in agriculture, food, and nutrition security. Not only is climate finance likely to be the biggest change that we’ll see in the aid landscape in dollar terms, but since some of it will be channeled through specialized funds, the development community will also be able to prioritize the highest-return interventions in a way that hasn’t really been done before.