Angelica Nunez
Moderator
Cities will be at the forefront of confronting and mitigating the impacts of climate change, and they need substantial financing to address this challenge. Local governments (LGs)—especially municipalities—will need to make large investments in climate adaptation and mitigation, but often lack the fiscal resources for such investments. They will need to mobilize resources using a variety of financing mechanisms and instruments. National governments will also need play a critical enabling and facilitating role to support LGs in this objective.
This session will discuss various climate finance sources and instruments available to municipalities and local governments to support climate change-related infrastructure investment and expenditure. It will showcase a set of climate finance instruments for local governments through case studies and presentation of international experiences with their use. It will assess the constraints faced by municipalities in accessing these instruments and provide recommendations for municipalities, national governments, and development partners to increase and facilitate this access to help meet climate investment needs. The session will include a moderated panel discussion with subject matter experts, city leaders, and officials of the United Nations Capital Development Fund (UNCDF) and the World Bank who will present their new joint publication on this topic.
The set of financing instruments and case studies to be discussed in this event – which are featured in the joint publication - include the full spectrum of financing instruments, including climate-focused intergovernmental fiscal transfers and grants; own-source revenue instruments with climate focus (e.g. land value capture instruments, pollution charges, sale of carbon credits); municipal borrowing instruments such as green bonds, sustainability-linked bonds, climate-focused loans; public-private partnership commitments for climate-related projects; and credit enhancement instruments such as guarantees.
Case studies will be presented for each type of instrument, followed by a panel discussion involving city and national government leaders and representatives from the private financial sector on the constraints, enabling conditions and opportunities for the use of these instruments.
The event aims to provide municipalities with a better understanding of the various financing instruments and sources available to them to meet climate investment needs at the local level, along with case studies presenting international experiences with their use, an assessment of constraints in developing countries in getting access to these instruments, and recommending a set of actions that municipalities, national governments, and development partners can take to increase and facilitate this access to help meet climate investment needs.
A second objective is to clarify how the sources and instruments of “climate finance” may or may not differ from the more “traditional” sources and instruments routinely used by municipalities, and how they can be tailored to achieve climate-related objectives for mitigation, adaptation, and resilience.
Finally, the event will take a forward-looking approach in recommending the enabling conditions to facilitate and increase the access of municipalities to climate finance. Significant potential exists for more advantageous climate finance conditions for cities, whether in comparison to traditional finance or in absolute terms. Financing available for climate action at the local level is also expected to grow in volume. Looking forward, therefore, it is essential for municipalities to be prepared to take advantage of these prospects, and for national governments to play the enabling role of setting the right conditions.