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Climate mitigation finance across developing countries: what are the major determinants?

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  • Aidy Halimanjaya

Abstract

This empirical study assesses the relationship between the characteristics of developing countries and the amount of official climate mitigation finance inflow. A two-part model and robustness checks were used to analyse 1998-2010 Rio Marker data on 180 developing countries. The results show that developing countries with higher CO 2 intensity, larger carbon sinks, lower per capita gross domestic product (GDP) and good governance tend to be selected as recipients of climate mitigation finance, and receive more of it. CO 2 emission is not used as a determinant of mitigation finance until the actual financial disbursement. Poverty aid tends to be allocated to countries with low CO 2 emissions, possibly to avoid diverting aid from poorer developing countries. However, such a diversion is unavoidable if the share of mitigation finance in climate finance and in overall official development assistance (ODA) continues to escalate. This study calls for an equitable allocation of total ODA mitigation and adaptation finance in addition to the 0.7% ODA/gross national income target, and for transparent criteria and the verification of reporting on the allocation of mitigation finance.

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  • Aidy Halimanjaya, 2015. "Climate mitigation finance across developing countries: what are the major determinants?," Climate Policy, Taylor & Francis Journals, vol. 15(2), pages 223-252, March.
    • Handle: RePEc:taf:tcpoxx:v:15:y:2015:i:2:p:223-252
    DOI: 10.1080/14693062.2014.912978
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    References listed on IDEAS

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    1. Todd M. Johnson & Claudio Alatorre & Zayra Romo & Feng Liu, 2010. "Low-Carbon Development for Mexico," World Bank Publications - Books, The World Bank Group, number 2398.
    2. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191.
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    Cited by:

    1. Fankhauser, Samuel & Jotzo, Frank, 2017. "Economic growth and development with low-carbon energy," LSE Research Online Documents on Economics 86850, London School of Economics and Political Science, LSE Library.
    2. Jale Samuwai & Jeremy Maxwell Hills, 2018. "Assessing Climate Finance Readiness in the Asia-Pacific Region," Sustainability, MDPI, vol. 10(4), pages 1-18, April.
    3. Qiutong Xue & Sixian Feng & Kairan Chen & Muchen Li, 2022. "Impact of Digital Finance on Regional Carbon Emissions: An Empirical Study of Sustainable Development in China," Sustainability, MDPI, vol. 14(14), pages 1-26, July.
    4. Isaac Doku, 2022. "Are Developing Countries Using Climate Funds for Poverty Alleviation? Evidence from Sub-Saharan Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 3026-3049, December.
    5. Mohamed Boly, 2021. "On the allocation of environmental aid : strategy beyond environmental considerations?," CERDI Working papers hal-03174770, HAL.
    6. Yingying Zhou & Zhuoqing Fang & Nan Li & Xueyan Wu & Yuehan Du & Zonghan Liu, 2019. "How Does Financial Development Affect Reductions in Carbon Emissions in High-Energy Industries?—A Perspective on Technological Progress," IJERPH, MDPI, vol. 16(17), pages 1-25, August.
    7. Jonathan Pickering & Carola Betzold & Jakob Skovgaard, 2017. "Special issue: managing fragmentation and complexity in the emerging system of international climate finance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 1-16, February.
    8. Mariana Reis Maria & Rosangela Ballini & Roney Fraga Souza, 2023. "Evolution of Green Finance: A Bibliometric Analysis through Complex Networks and Machine Learning," Sustainability, MDPI, vol. 15(2), pages 1-23, January.
    9. Nadia Basty & Dorsaf Azouz Ghachem, 2022. "A Sectoral Approach of Adaptation Finance in Developing Countries: Does Climate Justice Apply?," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
    10. Bhatnagar, S. & Sharma, D., 2022. "Evolution of green finance and its enablers: A bibliometric analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    11. Yang, Suyeon & Park, Sangchan, 2020. "The effects of renewable energy financial incentive policy and democratic governance on renewable energy aid effectiveness," Energy Policy, Elsevier, vol. 145(C).
    12. Bayramoglu, Basak & Jacques, Jean-François & Nedoncelle, Clément & Neumann-Noel, Lucille, 2023. "International climate aid and trade," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    13. Peterson, Lauri & Skovgaard, Jakob, 2019. "Bureaucratic politics and the allocation of climate finance," World Development, Elsevier, vol. 117(C), pages 72-97.
    14. Yeboah, Samuel & Boateng Prempeh, Kwadwo, 2023. "Greening the Future: Mobilizing Environmental Finance for Sustainable Development in Developing Countries," MPRA Paper 118281, University Library of Munich, Germany, revised 11 Aug 2023.
    15. Robert Bergsvik & Aarti Gupta & Romain Weikmans & Ina Möller, 2024. "Is transparency furthering clarity in multilateral climate governance? The case of climate finance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 24(4), pages 565-588, December.
    16. Olanrewaju Isola FATOKI & Jedidah WANJAGI, 2019. "The Future of Kenyan Banks: Mitigate Financial Risk Using Cryptocurrencies and Blockchain Technology," RAIS Journal for Social Sciences, Research Association for Interdisciplinary Studies, vol. 3(2), pages 69-84, November.
    17. Mohamed Shumais & Ibrahim Mohamed, 2020. "What makes an environmental trust fund successful? A case study of the Maldives," Climatic Change, Springer, vol. 161(2), pages 327-344, July.
    18. Maria Teresa Trentinaglia & Lucia Baldi & Massimo Peri, 2023. "Supporting agriculture in developing countries: new insights on the impact of official development assistance using a climate perspective," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-23, December.
    19. Gavard, Claire & Schoch, Niklas, 2021. "Climate finance and emission reductions: What do the last twenty years tell us?," ZEW Discussion Papers 21-014, ZEW - Leibniz Centre for European Economic Research.
    20. Noman Rasheed & Dilawar Khan & Aisha Gul & Róbert Magda, 2023. "Impact Assessment of Climate Mitigation Finance on Climate Change in South Asia," Sustainability, MDPI, vol. 15(8), pages 1-19, April.
    21. Lauri Peterson, 2022. "Domestic and international climate policies: complementarity or disparity?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(1), pages 97-118, March.
    22. Liu, Yang & Dong, Kangyin & Nepal, Rabindra, 2024. "How does climate vulnerability affect the just allocation of climate aid funds?," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 298-317.
    23. J. Timmons Roberts & Romain Weikmans, 2017. "Postface: fragmentation, failing trust and enduring tensions over what counts as climate finance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 129-137, February.

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