Environmental ODA to Africa: Policies, Determinants and Implications

Abstract

We explore the trends and policies of environmental ODA - that is, aid with a focus on the environment - and empirically analyze the determinants of Japanese and Swedish environmental ODA for Africa utilizing the OECD CRS(Creditor Reporting System) data. We find that each country has its own environmental ODA policies. Various models were used, moreover, to assess the determinants for Japan and Sweden’s environmental ODA. The Hausman test reveals that the random effect model is most fitting for Japan, and the fixed effect model for Sweden. This means that for Japan, observable characteristics and unobservable heterogeneity have no correlation; consequently, these two factors are not simultaneously considered when determining environmental ODA to Africa. On the other hand, the fact that Sweden’s environmental ODA to Africa is determined based on the fixed effect model means that a correlation exists between unobservable heterogeneity and observable characteristics, which is in turn because Sweden considers both observable and unobservable factors when determining environmental ODA to Africa.