D e v e l o pme n t : E q u a l i t i e s a n d s u s t a i n a b i l i t y of national systems of a Pacific island country – Nauru. This was necessary to provide concrete recommendations for improving overall access to climate finance and to more effectively manage and use these resources as part of overall development and resilience building efforts. This level of specificity is needed to focus limited capacity towards interventions that have the greatest leverage and impact. The Nauru case study report3 was based largely on review of readily available information on the policies, programmes and approaches of Nauru and key development partners, and through consultations with government officials, community and private sector representatives, donors and other development partners. It draws together a variety of previous studies, including policy reviews and analyses focusing on specific sectors or thematic issues, in particular, the Forum Compact Peer Review and its follow up, and the Public Expenditure and Financial Accountability (PEFA) Assessment.4 It also included climate change budgeting and expenditure analysis undertaken by the PIFS, UNDP and Government of Nauru officials, as well as a specific National Implementing Entity (NIE) assessment undertaken by UNDP. The Pacific Climate Change Finance Assessment Framework (PCCFAF)5 was developed through the Nauru case study and provided the overarching framework for this assessment. The PCCFAF sets out a comprehensive method to assess issues relating to climate change financing in order to select the most appropriate approaches to address Key lessons and observations from the Nauru case study Commonwealth Governance Handbook 2013/14 110 1 Consideration must be given to complexities and constraints at both the source (bilateral or international funds) and the demand side (country systems and the capacity to implement) 2 The importance of defining what constitutes climate change finance in country specific contexts, shaped directly by the climate change priorities of the recipient country 3 Tracking climate change expenditure through budget and expenditure systems where practicable provides significant benefits for FICs in being able to better quantify existing efforts on climate change related activities and better target and negotiate future sources of funding for climate change needs 4 It is difficult to accurately quantify the extent of external financing for climate change being made available and to separate it from existing development assistance. Accordingly, it is important for climate change financing and broader development assistance to be clearly differentiated in reports and delivered in a harmonised and streamlined way. For comparability purposes, donors should harmonise their reporting templates for differentiating between climate change financing and normal ODA 5 The ability to harness and effectively use climate change financing will benefit from strengthened national systems and increased use of those systems by development partners. Integration of climate change into national plans, policies and budgets will have significant implications on the sources and modalities of access/delivery available 6 Efforts to progress reform of public financial management systems and the adoption of more transparent (comprehensive) aid management policies will provide direct and tangible returns beyond improved access to climate change financing 7 Capacity constraints in donors and development partners in the region also present a significant challenge for FICs in accessing sources in a timely manner. In-country presence significantly helps this as does delegated authority arrangements between donors 8 Donors are likely to continue to use a range of modalities to deliver climate change resources. Modalities of delivery and management have different advantages for addressing different activities over various timeframes. Consequently, FICs will need to draw on a range of modalities and sources to improve access to and management of these resources against their specific climate change needs 9 Direct budget support is expressed as the preferred option by most FICs. Accordingly, it is vital to strengthen policies and budgetary processes that guide budget support, and FICs must clearly articulate their climate change needs and costs within those systems. Therefore, tracking climate change activities budgeted for and/or expended against will assist FICs in better understanding their climate change needs and cost implications, and help them to target the most appropriate sources of climate change financing in future 10 Project based implementation is likely to remain a significant access requirement particularly for global funding sources, into the foreseeable future. The ability to write a sound project proposal, manage, monitor and report remains a critical capacity constraint for most FICs 11 The challenges faced in accessing these funding mechanisms and, in many instances, the process itself will continue to divert capacity from other aspects of core policy management and implementation of climate change priorities. The understanding and support of donors in ensuring that processes do not gain additional complexity will allow FICs to focus on the challenges of climate change adaptation, mitigation and disaster risk reduction
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