Local governments climate finance instruments - Global experiences and prospects in developing countries

This report aims to contribute to discussions on increasing the access of local governments (LGs) and cities to climate finance and help LGs understand various financing instruments and sources available to them to meet climate investment needs. It organizes these instruments in a conceptual framework and provides information on each, along with case studies presenting international experiences with their use. 

The review of experiences and constraints presented in this report has shown that the ability to increase financing—especially from private sources—to LGs to a level that makes a substantial contribution to investment needs depends on improving their revenue base, creditworthiness, and institutional capacity. This section addresses these core constraints. Recommendations for LGs include:

• Strengthen core institutional and technical capacities on investment planning, financial management, and own-source revenue collection
• Improve project identification and prioritization and develop pipeline of “bankable” projects.
• Strengthen engagement with potential financiers and investors
• Advocate and build the case with higher tiers of government.