Climate-compatible growth is rational from the economic, environmental and social points of view.
Climate-compatible growth is rational from the economic, environmental and social points of view.
However, it would require large scale investment in the short-run. This is despite the existence of “no-regret”
policies that make economic sense in the short-run. Therefore, the key challenge is how to finance these large
investment needs in the near term.
International donors can play a critical role. Between 2007 and 2009, the amount of bilateral aid targeted for
climate purposes in Africa averaged USD 4.2 billion, led by France, Japan and Germany (Figure 3). This number is
partial, becoming higher if account is taken of major multilateral donors’ support through the World Bank, African
Development Bank, and the Global Environment Facility (GEF)3
. Such aid has already contributed to the efforts to
combat climate change at the regional and country levels. The top three recipient countries are Tunisia, Morocco
and Egypt (Figure 4). These countries have relatively large mitigation potentials and have demonstrated both
political commitment and domestic capacities to implement longer term environmental programmes. In addition,
there is an increasing flow through various climate funds and initiatives, the clean development mechanism under
the Climate Change Convention, as well as potential payments for ecosystem services through REDD+, a
mechanism to provide financial compensation to avoid deforestation and to undertake
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Sample Answer
- The high cost of investment: Climate-compatible growth requires large-scale investment in infrastructure, such as renewable energy, energy efficiency, and climate-resilient agriculture. This investment is often more expensive than traditional infrastructure, and it can be difficult to attract private investment.
- The lack of domestic financial resources: Many African countries lack the financial resources to invest in climate-compatible growth. This is due to low levels of economic development and high levels of debt.
- The uncertainty of climate finance: Climate finance is the financial support that is provided to developing countries to help them mitigate and adapt to climate change. However, the amount of climate finance available is uncertain, and it is often difficult to access.