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How do you finance international environmental agreements?

When drafting international environmental agreements, nation states must be aware of how these solutions will be funded. The UN has various institutions in place that deal with funding.

Background

  • World Bank/IMF

    • World Bank - The World Bank is an international organization founded by the United Nations (UN) with the purpose of financing projects that promote the economic development of its member states (Britannica). 

    • The International Monetary Fund was created by the UN to stabilize international economic cooperation and balance currency exchange rates (Britannica).

    • Both institutions support the “structure of the world's economic and financial order” and “concentrate their efforts on broadening and strengthening the economies of their member nations” (IMF). However, there is a main distinction between the two. While the Bank is a development institution that aims to end extreme poverty in UN’s client countries, the IMF is a cooperative institution that attempts to strengthen the current economic order (UN; IMF).

  • Global Environment Fund

    • The Global Environment Fund (GEF) is a “private equity fund manager” with the goals of “long-term financial returns” through the investment in “businesses that advance resource and energy efficiency, safety, and security” (GEF). The investment done by GEF has mainly focused on increasing growth capital for businesses that have the technology to succeed in “key growth markets” as well as managing the sustainability of natural resources like forestry (GEF).

  • How the UNFCCC is funded

    • The UNFCCC established a “Financial Mechanism to provide funds to developing country Parties” which is under the operation of the Global Environment Facility (UNFCCC). Parties have also set up four special funds:  the Green Climate Fund, the Special Climate Change Fund, the Least Developed Countries Fund), and the Adaptation Fund. Under the Paris Agreement, developed country Parties agreed to provide financial resources to help developing parties meet the existing obligations under the Convention (UNFCCC). Parties that are “particularly vulnerable to the adverse effects of climate change and have significant capacity constraints” would be prioritized.


Example(s)

At the Conference of the Parties during its twenty-first session in 2015, it was decided that the developed countries would sustain their long-term climate finance goals. They would “continue their existing collective mobilization goal through 2025” using “meaningful mitigation actions and transparency on implementation” (UNFCCC). This would be done by setting a goal of USD 100 billion per year. This can be found under Decision 5/CP.21. There have also been continued contributions to the Green Climate Fund, the Least Developed Countries Fund, and the Adaptation Fund (UNFCCC).



Questions for Delegates to Consider

How do you get country parties to actually implement the use of one of the special funds to mitigate environmental issues?

How will you come up with solutions/agreements while keeping financing in mind?


List of References

https://www.britannica.com/topic/World-Bank

https://www.britannica.com/topic/International-Monetary-Fund

https://www.imf.org/external/pubs/ft/exrp/differ/differ.htm

https://www.un.org/ruleoflaw/un-and-the-rule-of-law/world-bank/

http://www.globalenvironmentfund.com/about-us/

https://unfccc.int/topics/climate-finance/the-big-picture/climate-finance-in-the-negotiations

https://unfccc.int/resource/docs/2015/cop21/eng/10a02.pdf#page=7

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