Distributive justice in global climate finance – Recipients’ climate vulnerability and the allocation of climate funds

Abstract

The ‘climate justice’ lens is increasingly being used in framing discussions and debates on global climate finance. A variant of such justice – distributive justice – emphasises recipient countries’ vulnerability to be an important consideration in funding allocation. The extent to which this principle is pursued in practice has been of widespread and ongoing concerns. Empirical evidence in this regard however remains inadequate and methodologically weak. This research examined the effect of recipients’ climate vulnerability on the allocation of climate funds by controlling for other commonly-identified determinants. A dynamic panel regression method based on Generalised Method of Moments (GMM) was used on a longitudinal dataset, containing approved funds for more than 100,000 projects covering three areas of climate action (mitigation, adaptation, and overlap) in 133 countries over two decades (2000–2018). Findings indicated a non-significant effect of recipients’ vulnerability on mitigation funding, but significant positive effects on adaptation and overlap fundings. ‘Most vulnerable’ countries were likely to receive higher amounts of these two types of funding than the ‘least vulnerable’ countries. All these provided evidence of distributive justice. However, the relationship between vulnerability and funding was parabolic, suggesting ‘moderately vulnerable’ countries likely to receive more funding than the ‘most vulnerable’ countries. Whilst, for mitigation funding, this observation was not a reason for concern, for adaptation and overlap fundings this was not in complete harmony with distributive justice. Paradoxically, countries with better investment readiness were likely to receive more adaptation and overlap funds. In discordance with distributive justice, countries within the Sub-Saharan Africa and South Asia regions, despite their higher climatic vulnerabilities, were likely to receive significantly less adaptation and overlap fundings. Effects of vulnerability were persistent, and past funding had significant effects on current funding. These, coupled with the impact of readiness, suggested a probable Low Funding Trap for the world’s most vulnerable countries. The overarching conclusion is that, although positive changes have occurred since the 2015 Paris Agreement, considerable challenges to distributive justice remain. Significant data and methodological challenges encountered in the research and their implications are also discussed.