I took part in a panel at the annual Norwegian Agency for Development Cooperation (Norad) conference last week. The topic was green aid. Many governments and their development agencies are now striving for a balance between environmental and climate goals and a focus on poverty reduction. They are also urging their private sector companies to engage in green initiatives in low-income country contexts. The typical projects that fall under this category include renewable energy and energy efficiency, pollution prevention and control, biodiversity conservation, circular economy initiatives and the sustainable use of natural resources and land.
Increased investments in green aid are, of course, important. However, placing “green” labels on various development projects can be problematic if they do not take into account local interests and needs. Donor agencies must ensure that new green initiatives are sufficiently quality assured and have local “ownership”. It may also be necessary in certain contexts to “sequence” new projects by concentrating on one problem at a time. But most importantly, additional money is needed. There is always a risk that the rush for greening aid may crowd out the traditional emphasis on poverty reduction. Indeed, some civil society organizations claim that climate finance distracts from development assistance – that the increased support for combating climate change does not reflect new resources, but rather a re-budgeting of funds.
Another important question to ask is the extent to which climate finance reaches the world’s most vulnerable, even though the funding is intended to help countries protect themselves against climate risk. A recent report by WaterAid actually finds that climate finance often does not reach the poorest and most vulnerable, who are likely to be most affected by climate disruption. And an Oxfam study concludes that almost 80 percent of publicly reported climate financing to least developed countries in recent years was in the form of loans, not grants. When these countries take out loans to protect themselves from the climate crisis, caused mainly by rich countries, they risk getting deeper into debt.
Many governments are currently concerned with strengthening their health sector in the fight against the ongoing pandemic. Experts have long pointed out that despite previous warnings such as the Ebola crisis, investments in healthcare, especially in Sub-Saharan Africa, have been neglected. Governments must also prioritize social protection programmes that target economically vulnerable groups, such as those that rely heavily on the informal economy for their survival.
The Green Climate Fund has initiated much-needed investments in climate robust and low-emission small-scale agriculture and in early warning systems for extreme weather. But more is needed. A better integration of poverty reduction and improved health and education together with environment and climate goals will be crucial in the years ahead.