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Equity and cost-effectiveness of multilateral adaptation finance: are they friends or foes?

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  • Martin Stadelmann
  • Åsa Persson
  • Izabela Ratajczak-Juszko
  • Axel Michaelowa

Abstract

This paper analyzes potential criteria to allocate international funding for adaptation to climate change, as a response to one of the main governance challenges of international adaptation funding—the prioritization of project proposals given scarce funding. Based on the review of the equity and cost-effectiveness literature and relevant policy documents, we identify three potential indicators for equity (vulnerability level, poverty, equal funding per capita), and three indicators for cost-effectiveness (economic savings in absolute and relative terms, human lives saved). Applying these simple indicators to information provided in all 39 project documents considered by the Adaptation Fund Board (AFB) in 2011, we find that projects approved or endorsed by the AFB rank high according to one cost-effectiveness indicator (absolute economic savings), while they rather rank low according to all equity and further cost-effectiveness indicators. Furthermore, we analyze whether equity and cost-effectiveness are two contradicting goals, or whether ways can be found to reconcile both goals in multilateral adaptation finance. We conclude from both the theory and the 39 analyzed project documents that a pure economic definition of cost-effectiveness tends to be in contradiction with equity but that trade-offs between equity and cost-effectiveness can be limited if relative economic savings or human live savings are used as indicator for cost-effectiveness. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Martin Stadelmann & Åsa Persson & Izabela Ratajczak-Juszko & Axel Michaelowa, 2014. "Equity and cost-effectiveness of multilateral adaptation finance: are they friends or foes?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 14(2), pages 101-120, May.
    • Handle: RePEc:spr:ieaple:v:14:y:2014:i:2:p:101-120
    DOI: 10.1007/s10784-013-9206-5
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    Cited by:

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    2. Jesse M. Keenan, 2018. "Regional resilience trust funds: an exploratory analysis for leveraging insurance surcharges," Environment Systems and Decisions, Springer, vol. 38(1), pages 118-139, March.
    3. Weiler, Florian & Klöck, Carola & Dornan, Matthew, 2018. "Vulnerability, good governance, or donor interests? The allocation of aid for climate change adaptation," World Development, Elsevier, vol. 104(C), pages 65-77.
    4. Florian Weiler, 2019. "Adaptation and Health: Are Countries with More Climate-Sensitive Health Sectors More Likely to Receive Adaptation Aid?," IJERPH, MDPI, vol. 16(8), pages 1-16, April.
    5. Jonathan Pickering & Carola Betzold & Jakob Skovgaard, 2017. "Special issue: managing fragmentation and complexity in the emerging system of international climate finance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 1-16, February.
    6. Carola Betzold & Florian Weiler, 2017. "Allocation of aid for adaptation to climate change: Do vulnerable countries receive more support?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 17-36, February.
    7. Bayramoglu, Basak & Jacques, Jean-François & Nedoncelle, Clément & Neumann-Noel, Lucille, 2023. "International climate aid and trade," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    8. Jakob Skovgaard, 2017. "Limiting costs or correcting market failures? Finance ministries and frame alignment in UN climate finance negotiations," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 89-106, February.
    9. Feindouno, Sosso & Guillaumont, Patrick & Simonet, Catherine, 2020. "The Physical Vulnerability to Climate Change Index: An Index to Be Used for International Policy," Ecological Economics, Elsevier, vol. 176(C).
    10. Peterson, Lauri & Skovgaard, Jakob, 2019. "Bureaucratic politics and the allocation of climate finance," World Development, Elsevier, vol. 117(C), pages 72-97.
    11. Agni Kalfagianni & Simon Meisch, 2020. "Epistemological and ethical understandings of access and allocation in Earth System Governance: a 10-year review of the literature," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 20(2), pages 203-221, June.
    12. Carla L. Archibald & Nathalie Butt, 2018. "Using Google search data to inform global climate change adaptation policy," Climatic Change, Springer, vol. 150(3), pages 447-456, October.
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    14. Karim, Azreen & Noy, Ilan, 2020. "Risk, poverty or politics? The determinants of subnational public spending allocation for adaptive disaster risk reduction in Bangladesh," World Development, Elsevier, vol. 129(C).

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