Intergovernmental Fiscal Transfers and Adaptation to Climate Change

Intergovernmental Fiscal Transfers and Adaptation to Climate Change Dr. Sonny Mumbunan Research Centre for Climate Change University of Indonesia – RCCC UI The Governance of Adaptation: International Symposium March 22 -23, 2012, Amsterdam, the Netherlands

The overview § Background § Question § Framework - 3 E 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?

Note: UNFCC Adaptation Fund 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?

The framework

The 3 Es 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 3 Es 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 transfers Lower level governments have full discretion on its use (block grant) § Specific-purpose transfers Outcome oriented, for priority sectors and measures § Revenue-sharing arrangement Sharing arrangement of revenues from taxes or sectorbased 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 multicriteria of adaptation measures

Thank you for your attention! Dr. Sonny Mumbunan Research Centre for Climate Change University of Indonesia – RCCC UI E-mail: sonny_mumbunan@yahoo. com Gedung Rektorat Lt. 8, 5 Kampus UI Depok, 16424 Indonesia