Intergovernmental Fiscal Transfers and Adaptation to Climate Change

The Governance of Adaptation: International Symposium March 22-23, 2012, Amsterdam, the Netherlands

Dr. Sonny MumbunanResearch Centre for Climate ChangeUniversity of Indonesia – RCCC UI

The overview

Background Question Framework

- 3E criteria- Responsibility assignments and public

functions- Fiscal transfers for adaptation

Concluding notes

Background

Financial needs for adaptation measures still far outweigh the available fund

Risks and vulnerabilities from CC are unevenly distributed among jurisdictions (rural/urban, district/municipality, poor/rich countries)

Background

CC impacts occur at different scales – so do CC adaptation actions and measures

Different actors at different scales and public agencies are important in public goods provision for adaptation measures

Background

Scientific interests

The relationship between scales in CC adaptation; Really, is there an ‘adaptation paradox’ (Ayers 2011)?

The importance of scale and public financing in CC adaptation have begun to be addressed (e.g. Swart et al 2009; Termer et al 2011). So far, rather casually – not a systematic treatment.

Background

Scientific interests (continued)

The notion of agency-scale and the challenges of Ostrom’s polycentricity as an enabler to adaptation (Boyd and Kjellen, in progress)

The differentiation between public provision (i.e. by state actors) and public production for adaptation

(i.e. by individuals and communities for state-based public provision)

Background

Policy interests

The present need of policy response: effective, efficient and equitable set of (financing) instruments for CC adaptation in light of differences in scale and governmental relation

The question

How to conceptually build a meaningful relationship between adaptation measures to climate

change and intergovernmental fiscal transfers in a multi-layered

system of governance at different jurisdictional scale?

The framework

The framework

Note: UNFCC Adaptation Fund

Source of fund: CDM mechanism; potentially from international ‘adaptation levies’ e.g. International Air Travel Adaptation Levy (IATAL) or bunker fuels under International Maritime Emission Reduction Scheme (IMERS)

It is on the revenue side

Question: how to allocate and distribute the fund to different scales of government?

Governance issue: Interactions at international and supranational levels should be incorporated (read: institutionally arranged) into the national system of governmental structure and relations

For example:- REDD mechanism in CC mitigation- Or, adaptation fund under GEF channeled through institutions like UNDP, UNEP, the World Bank?

Note: UNFCC Adaptation Fund

The framework

The 3Es criteria in adaptation

Effectiveness – in meeting desired adaptation results

Efficiency – the use of resources; incentive structure in terms of cost and benefit

Equity – sharing or equalizing the burden

The 3Es criteria in adaptation

Effectiveness - Outcome oriented in addressing CC adaptation

Efficiency - Economies of scale- Public goods and ‘correspondence principle’

Equity - Fiscal gap approach for regions with weak fiscal capacities

Scaling up or down? On responsibility assignments

Public functions for adaptation

Fiscal transfer instruments

General-purpose transfersLower level governments have full discretion on its use (block grant)

Specific-purpose transfersOutcome oriented, for priority sectors and measures

Revenue-sharing arrangement

Sharing arrangement of revenues from taxes or sector-based revenues (marine, forestry, infrastructure, etc)

Transfer instrument for adaptation

Transfer instrument for adaptation

“Ecological fiscal transfers” are already in place to address ecological issues in general (Mumbunan, 2011)

In CC, intergovernmental fiscal transfers have been proposed for mitigation measures

Most of which are in form of revenue-sharing arrangement (e.g. Busch et al 2011; Indartik Nurfatriani and Ginoga 2011)

The framework

Concluding notes

The options for intergovernmental fiscal transfers for CC adaptation are there

Mixed instruments of transfer to fulfill multi-criteria of adaptation measures

Thank you for your attention!

Dr. Sonny MumbunanResearch Centre for Climate ChangeUniversity of Indonesia – RCCC UIE-mail: sonny_mumbunan@yahoo.comGedung Rektorat Lt. 8,5Kampus UI Depok, 16424Indonesia