UNDP Releases NCF Discussion Paper and Asia-Pacific Case Studies

15 January 2013: The UN Development Programme's (UNDP) Asia-Pacific office has published a discussion paper, titled “National Climate Funds: Learning from the Experience of Asia-Pacific countries.” The paper was released together with seven case studies examining national climate funds (NCFs), mechanisms to direct finance towards climate change projects and programmes in Bhutan, Laos People's Democratic Republic, China, Thailand, Cambodia, Micronesia and Tuvalu. 

The paper emphasizes the importance of tailoring climate finance to national circumstances, and investing time and resources in building human and institutional capacity to manage climate funds. It proposes a set of criteria to assist decision makers in assessing the feasibility of an NCF for a country, including its: strategic role (such as leveraging private and public investments or driving transformational change); human and institutional resource capacity; cost and time effectiveness; financial sustainability; and political feasibility.

It provides an overview of the design features of NCFs, including different funds types, legal arrangements, governing bodies and beneficiaries. It also discusses NCF management, such as the project cycle, working with beneficiaries at the local level, performance based monitoring and ensuring effective programmes.

The paper includes policy recommendations on the design, establishment and management of NCFs. When deciding to establish an NCF, the paper recommends that decision makers should first analyze the overall climate finance landscape, identify specific objectives the NCF aims to achieve and consider how the NCF can contribute to national climate change policies. The paper then recommends particular fund types for different national objectives and goals. For instance, it recommends endowment funds when countries want to generate sustainable income from investments. If countries want to pool external financial resources, it suggests a sinking fund.

The discussion paper is based on a regional clinic on the establishment and management of NCFs and discussions and e-discussions on NCFs among Asia-Pacific practitioners that took place between March and June 2012. [UNDP Press Release[Publication: National Climate Funds: Learning from the Experience of Asia-Pacific Countries]