Budgeting for climate change: A guidance note for governments to integrate climate change into budgeting

This paper serves as guidance for governments in integrating climate change into budgeting as Ministries of Finance are becoming rapidly interested in responding to climate change and take a more integrated approach to the social, environmental and economic objectives of the 2030 Agenda. While mobilization of finance remains an important consideration, spending prudently is attracting greater attention, particularly due to the need to balance competing urgent priorities in the fiscal policy responses of various governments, such as the COVID-19 crisis. Moreover, Ministries of Finance are also finding that it is important to address the macro-fiscal implications of climate change with proper consideration of risks, vulnerability, loss and damage assessment. Further, climate change mainstreaming is also critical because it affects the achievement of several Sustainable Development Goals (SDGs) and has a disproportionate impact on vulnerable populations like the poor, women, indigenous communities and those living in climate change hotspots.

This paper will provide the necessary information to practitioners and policy makers wishing to integrate climate change into budgets and strengthen climate policy budgeting with a particular focus on Medium-Term Budgeting. It is also important that while considering climate change in planning and budgeting, the gender and social inclusion aspects must be addressed. The Guidance Note can also be adapted to be used for mainstreaming the SDGs into the budgetary framework. Government spending remains the most potent source for financing policy commitments. Therefore, strengthening public planning and budgeting practices is imperative to combat climate change’s impact on socioeconomic development. The resultant enhancement in absorption capacity will give credence to the systems, reducing the use of parallel systems by donors. This Guidance Note will provide the necessary information to practitioners and policy makers wishing to integrate climate change into budgets and strengthen climate policy budgeting with a particular focus on Medium-Term Budgeting. It is also important that while considering climate change in planning and budgeting, the gender and social inclusion aspects must be addressed. The Guidance Note can also be adapted to be used for mainstreaming the SDGs into the budgetary framework. Government spending remains the most potent source for financing policy commitments. Therefore, strengthening public planning and budgeting practices is imperative to combat climate change’s impact on socioeconomic development. The resultant enhancement in absorption capacity will give credence to the systems, reducing the use of parallel systems by donors.