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Commodities and Development Report 2015: smallholder farmers and sustainable commodity development

The report highlights the range of constraints that smallholder farmers face in developing economies and specifically provides new analyses of the state of their integration into the global economy. It underlines that smallholder farmers are both victims of climate change and key actors in the achievement of a more inclusive and environmentally friendly development path. The report argues for specific measures at the national, regional and global levels, including in international trade and investment agreements, for unleashing the full business potential of smallholders. It showcases good policy practices, including the role of strong political leadership in reversing the policy neglect that small farmers have suffered from. "Business as usual" is not an option if the 2030 Agenda for Sustainable Development is to be achieved. In light of this, the report calls for greater resources to be devoted to supporting smallholders. And finally, the report also urges for the establishment of an accountability mechanism for monitoring progress on key commitments related to smallholders on trade, investment, finance and technology.

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Population dynamics in the LDCs: challenges and opportunities for development and poverty reduction

This report, prepared for the 2011 UN Conference on Least Developed Countries, outlines major population dynamics in LDCs and addresses their implications for development and poverty reduction. It identifies five areas of intervention that can help countries anticipate, shape and plan for changes in their population. These areas include: focusing investments on adolescents and youth; increasing access to sexual and reproductive health care and empowering women; strengthening capacity to integrate population dynamics in the framework of sustainable development; linking population to climate change; and effectively utilizing data in public policy and development. According to the latest survey of the United Nations Population Division, about three-quarters of the governments of LDCs are concerned with major demographic shifts projected to impact them: high fertility, high population growth and rapid urbanization.

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Establishing a workable follow-up and review process for the Sustainable Development Goals

The Open Working Group document proposes that governments will set its own national targets. They will be guided by the global level of ambition but taking into account national circumstances. To make the Post-2015 agenda actionable, much more thought needs to be given to the process of target-setting, different actors’ responsibilities, implementation and accountability.

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Subsidies to key commodities driving forest loss: implications for private climate finance

There is an increasing focus on the role that public and private resources can play in supporting activities that reduce forest loss as part of wider efforts to address climate change, and ensure sustainable development. From our initial review of subsidies to beef and soy in Brazil, and timber and palm oil in Indonesia we find that there are significant opportunities for REDD+ finance to support identification, estimation and designing the reform of these subsidies - as part of a wider transition to economic development which increases agricultural productivity while avoiding forest loss.

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Climate finance for cities: how can climate funds best support low-carbon and climate resilient urban development?

This paper reviews the approaches taken by multilateral climate funds in the period 2010-2014 to support low-emission and climate-resilient development in developing country cities. It identifies US$842 million in approved climate finance for explicitly urban projects, which equates to just over one in every ten dollars spent on climate finance over these five years. The majority of this finance has supported low-carbon urban transport systems in fast-growing middle-income countries. Adaptation funds financed only a handful of explicitly urban projects in the review period. The report highlights the following implications for future climate fund engagement at the urban level: 1) Climate funds must focus on catalysing action by others; 2) Climate funds need to develop appropriate access arrangements for reaching the most vulnerable urban residents; 3) Main-streaming climate risks and mitigation into local governance must remain a priority, but is not a solution by itself; 4) Climate funds can expand their impact by supporting urban project preparation.

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Can fracking green China’s growth?

This paper analyses the best available technical, scientific and engineering literature on the risks and opportunities posed by shale gas, and what policy environment could maximise the opportunity and minimise the risk. It also analyses China’s current policies and practice to understand whether the conditions for greener growth are in place. We conclude that many of the environmental risks shale gas poses are manageable, and amenable to conventional environmental law and policy tools. Its development could in principle offer significant net environmental benefits if the gas produced permanently replaces coal and helps set China on a pathway to a renewable-dominated energy system. The greater impediment is political, hinging on whether China has the political will and capacity to dramatically cap coal generation, invest in renewable energy and enforce strong environmental regulations and targets. We therefore emerge from our analysis with a healthy dose of scepticism about unconventional gas greening China’s growth: truly making it work requires a broader set of practical commitments to sustainability, pollution control and low-carbon energy.

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Mapping current incentives and investment in Viet Nam's water and sanitation sector: lessons for private climate finance

This report summarising findings from the application of a diagnostic tool, is as a first step supporting governments and other stakeholders seeking to design interventions to mobilise private finance for climate-compatible development (CCD). Using this diagnostic tool in Viet Nam’s water and sanitation sector allowed us to make two distinct sets of findings that are useful for actors who want to mobilise private climate finance. The first set of findings emerges from the available data and information, through which we can identify opportunities for the Vietnamese government and development partners to modifying existing incentives and develop new tools to scale up climate-compatible investment; and where there are gaps in sources of capital that both public and private investment might fill. The second set of findings is around data gaps: unfortunately, owing to the absence of granular information and discrepancies in the definitions and categories in international and national datasets, there are challenges in understanding the impact of the country’s existing incentives on historic investment.

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Mind the gap? A comparison of international and national targets for the SDG agenda

The stretch required for low-income countries (LICs) to achieve SDG targets is generally greater than for middle-income and high-income countries (MICs and HICs). The gaps identified indicate where most work is needed to alter political priorities in order to realise the SDGs. Most hard work will be needed in areas that are highly politically contentious (climate policy) or expensive (secondary education, electricity and sanitation). This has implications for how governments structure a review process and how resources are mobilised for the post-2015 sustainable development agenda. The report also found a great deal of variation in the approach to measuring targets at the national level. A standardised approach would make comparisons easier and hold governments more readily to account.

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Climate change, private sector and value chains: constraints and adaptation strategies

Climate change can have significant impacts on economic activity and value chains. Understanding how climate change impacts private sector incentives and activities, and markets, is vital to understand not only the overall economic impacts of climate change in semi-arid regions, but also the social and environmental effects in these areas. Private sector actors, including smallholder farmers and large multinational companies, are key agents of change. Though these actors can be heterogeneous and operate with varying rationalities, many of the constraints they face and that influence their decision-making – such as limited access to markets, finance or natural resources – are often similar. Crucially, these actors do not act independently, but interact directly or indirectly with value chains, or through the use of assets and resources. This report sheds light on these interdependencies, and highlights the interactions between sectors and activities, both horizontal and vertical. Doing so makes it possible to identify multiple dimensions in climate risks to business models and supply chains, as well adaptation requirements and their costs and benefits. This new knowledge can help to identify new market opportunities for the private sector, enhance capacity to respond and inform policy frameworks that encourage private sector adaptation and risk management.

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Low-carbon development in Sub-Saharan Africa: 20 cross-sector transitions

Sub-Saharan Africa is at a critical point, experiencing rapid population growth, particularly in urban areas, and a young and growing workforce. At the same time, the growing risk of catastrophic global climate change threatens to weaken food production systems; increase the intensity and frequency of droughts, floods, and fires; and undermine gains in development and poverty reduction. Although the region has the lowest per capita greenhouse gas emission levels in the world, it will need to join global efforts to address climate change, including through actions to avoid significant increases in emissions. This report reviews agriculture, forestry, energy, transport, extractives, construction and manufacturing, based on their importance to countries' economic development and their contribution to current and future greenhouse gas emissions. Based on this sector-specific analysis, we identify 20 cross-sector transitions that can be undertaken to promote low-carbon development in the region.

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Zero poverty, zero emissions: eradicating extreme poverty in the climate crisis

Eradicating extreme poverty is achievable by 2030, through growth and reductions in inequality. However, unless global emissions peak by around 2030 and fall to near zero by 2100, catastrophic climate change could draw up to 720 million people back into extreme poverty. Building on previous ODI research, this report looks at how poverty can be eradicated by 2030 and how, contrary to popular belief, low carbon development is compatible with the zero poverty agenda. Showing how policy incoherent it is for gas emitting countries to support poverty eradication without moving their economies towards zero net emissions, we lay out the path we need to take to reduce both poverty and emissions together.

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Empty promises: G20 subsidies to oil, gas and coal production

This research discovers that G20 country governments’ support to fossil fuel production marries bad economics with potentially disastrous consequences for climate change. In effect, governments are propping up the production of oil, gas and coal, much of which cannot be used if the world is to avoid dangerous climate change. This report documents, for the first time, the scale and structure of fossil fuel production subsidies in the G20 countries. The evidence points to a publicly financed bailout for some of the world’s largest, most carbon-intensive and polluting companies. It finds that, by providing subsidies for fossil fuel production, the G20 countries are creating a ‘lose-lose’ scenario. They are directing large volumes of finance into high-carbon assets that cannot be exploited without catastrophic climate effects. This diverts investment from economic low-carbon alternatives such as solar, wind and hydro-power. In addition, the scale of G20 fossil fuel production subsidies calls into question the commitment of governments to an ambitious deal on climate change.

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Bridging Costa Rica's green growth gap: how to support further transformation toward a green economy

Costa Rica’s track record on economic, social and environmental issues is second to none. It has strong comparative advantages, from its skilled and educated population to its political stability, and from its robust economy to its abundant natural resources. It has weathered numerous financial and economic storms and remains competitive on the global stage. Therefore, Costa Rica is regarded by many as an economic and environmental success story, with an admirable record of ‘green growth’—economic growth that minimizes pollution and uses and manages resources efficiently. Yet Costa Rica is also a victim of its own success: its leadership in some areas may have blinded it to its green growth gaps. As Costa Rica approaches a crossroads in its economic and environmental journey, its choices could provide the model for others to follow. ODI’s analysis highlights the deep structural challenges to the organisation of Costa’s Rica’s economy. We also, however, suggest some ‘quick wins’ that will propel Costa Rica towards long-term approaches to better align its economic and environmental performance. These include four primary recommendations.

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Piecing together the MDG puzzle: domestic policy, government spending and performance

Policy-makers in most of the developing countries surveyed report that the MDGs were influential in setting priorities domestically. Analysis of the education and health sectors suggests these statements are not merely tokenistic as countries reporting high influence saw increases in budget allocations. However while many countries experienced increases in government spending in social sectors over the MDG period, the majority still spend less than the recommended international benchmarks. Significant increases in government allocations will therefore be required to match the ambition of the SDGs. Recommendations for the SDG period include ensuring better data on domestic use of targets, government spending and performance are available to better assess their influence over the next 15 years and ensure the 'leave no one behind' agenda will be fulfilled.

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National MDG implementation: lessons for the SDG era

As we approach the deadline for the expiration of the Millennium Development Goals (MDGs), and the start of the Sustainable Development Goals, at the end of 2015, this paper asks: how did governments respond at the national level to the set of global development goals in the form of the MDGs? Using five case study countries: Indonesia, Turkey, Mexico, Nigeria and Liberia, to reflect a mix of regions, income classifications and MDG performance, the paper draws out common trends and suggests five lessons for the post-2015 era.

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Food and livelihoods in a changing climate: the role of climate finance for agriculture

Climate finance remains a newcomer to the agriculture sector, playing a minor role compared to wider official development assistance. It has grown slowly since 2002 and is poised to play an important role in this sector. This paper sheds light on its growing importance, and considers dedicated multilateral funds. It reflects on opportunities for international public climate finance to transform a high greenhouse gas emitting sector, into one with more climate compatible practices, resilient to the effects of climate change.

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Mobilising private climate finance in lower-income countries

Although there is increasing information on flows of public climate finance, studies of private climate finance are challenging given the paucity of data at the international level on current flows. Beyond large renewable energy projects, there is very little information available on private investment by climate-relevant sector and sub-sector, and country-level data are very limited beyond those for the Organisation for Economic Co-operation and Development (OECD) countries and the BRICS (Brazil, Russia, India, China, and South Africa). With the aim of supporting governments in their efforts to shift or direct additional private resources to climate compatible development (CCD), we have developed a methodology to: i) fill key information gaps about incentives and investment at country level in climate-relevant sectors, and ii) enhance understanding of the links between public incentives and private investment in CCD. Thus far, we have applied this methodology in the energy sector in Uganda, the agriculture sectors in Zambia and Ghana, and the transport sector and water and sanitation sector in Viet Nam. This report highlights five key recommendations based on the country studies for actors seeking to mobilise private climate finance in lower-income countries.

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Cultivating climate resilience: the Shea value chain

The economy of Burkina Faso is growing but is seen alongside high levels of poverty and a heavy reliance on the climate-vulnerable agriculture sector. This Working Paper outlines the importance of Shea in Burkina Faso both as a commodity for exporting and in providing subsistence for local communities. Although as a crop it is relatively resilience to a changing climate and is beneficial to the overall resilience of the ecosystem – through maintaining soil fertility and biodiversity of flora and fauna - the Shea tree is considered a vulnerable species, largely at risk from human practices. Measures such as soil and water conservation and management are being adopted to improve Shea tree conservation and management. Research and development focused on domestication and isolation of more adaptable varieties of Shea are being turned into on-the-ground applications. Furthermore, Organic and fair trade certifications sought by international brands in the cosmetic industry contribute to establishing appropriate rules for the safeguard of the resource and biodiversity in general, and the minimisation of negative environmental impacts during the production phases. While Shea production has what it takes to improve the resilience of local communities involved in different stages of the value chain, and measures are in place to reduce the risk of human practices, diversification of the crops cultivated by farmers is essential to ensure climate resistance and resilience of the ecologic and socio-economic system as a whole in Burkina Faso. More broadly, efforts that promote economic diversification are imperative in the light of a national agenda for sustainable development.

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Public spending on climate change in Africa: Experiences from Ethiopia, Ghana, Tanzania and Uganda

This publication describes the extent to which public expenditure responds to national climate change policy and the institutional demands required to implement such policy. The four countries of the study – Ethiopia, Ghana, Tanzania and Uganda – provide insights into the early mobilisation of climate change finance, as each country attempts to address the new challenges that climate change is bringing about. The report is divided into three parts. The first part introduces the concept of climate change finance and outlines the effectiveness framework used in each of the country studies. The methodological challenges associated with public expenditure reviews as applied to national climate change actions are also described. The second part provides in-depth country accounts for Ethiopia, Ghana, Tanzania and Uganda, on the level and nature of climate change-relevant public spending, set in the context of each country’s macroeconomic and public finance management systems. The final section concludes by drawing lessons for climate change policy development, institutional strengthening, local delivery of climate change finance and the monitoring of public finance, based on the insights gained from the country studies.

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Rethinking power markets: capacity mechanisms and decarbonisation

This report introduces capacity mechanisms, a policy instrument for power markets, to a non-expert audience and considers their implications for meeting parallel objectives of security of supply and decarbonisation. It focuses on capacity mechanism developments in the EU and is directed at those who want to advance climate objectives, but who have a limited background in power markets. Our review suggests that capacity mechanisms risk undermining parallel energy and climate objectives by locking in dependence on high-carbon, inflexible power generation assets. The introduction of these tools is often politically motivated and not based on a rigorous analysis of their need. Finally, the uncoordinated introduction of capacity mechanisms risks undermining wider efforts to integrate energy markets, which, paradoxically, are meant to ensure a more efficient use of resources and improve security of supply. As a number of EU member states are moving ahead with the design and implementation of domestic capacity mechanisms the European Commission has launched an investigation into these developments. Its findings will feed into its electricity market redesign proposals for the end of 2016. This is therefore a key moment to influence this process.

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Projecting progress: the SDGs in Latin America and the Caribbean

This paper presents Latin America and the Caribbean’s (LAC) likely progress across the Sustainable Development Goals (SDGs) agenda, if trends continue on their current trajectories. There are significant disparities across the globe in progress both between and within countries; LAC is no exception. There are a number of disparities across sub-regions and there are disparities within countries – ethnicity, for example, is a crucial factor in determining whether someone is likely to benefit from development gains. During the Millennium Development Goals era considerable gains were made in a number of countries in LAC. However, already strong outcomes in some areas compared with other developing regions will make continued progress towards the new goals difficult.

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A thirsty future: water strategies for Ethiopia's new development era

This report discusses the costs and benefits of investments in water resources management to sustain Ethiopia’s economic growth, while ensuring that no-one is left behind. Our research shows that investments in infrastructure development to harness the potential of water resources and mitigate against climate risks need to go hand in hand with investments in institutions, the rules of the game, that set out the terms and conditions under which different groups can access and use water. Water scarcity resulting from over-exploitation and pollution risks otherwise reducing the profitability of investments and leading to competition between sectors and users, as it is the case in the Awash River Basin. Only with better, sustainable and inclusive water resources management can Ethiopia can continue to harness its water for the new development era.

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Africa’s new climate economy: economic transformation and social and environmental change

Africa’s 'growth miracle' in the 21st century has reversed a long-standing narrative of pessimism about the region. GDP growth reached around 5% annually from 2001-2014. Rates of extreme poverty fell substantially. Yet big challenges remain. Growth slumped in 2015 and 2016. The region lags far behind on most measures of human development. Climate change is also taking an increasing toll on many countries: the region is warming faster than the world as a whole, and many areas will experience more frequent and intense droughts and floods. The economic impacts of climate change are expected to be severe, with agriculture and poor people especially at risk. This report lays out five key action areas for economic transformation and social and environmental progress in Africa: 1) getting the fundamentals right; 2) transforming agriculture and land use; 3) diversifying into manufacturing and other high-productivity sectors; 4) unleashing the power of urbanisation; and 5) fostering a modern energy transition.

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Climate finance briefing: Small Island Developing States (SIDS)

The 39 Small Island Developing States (SIDS) together bear little responsibility for climate change: in 2012, all the SIDS combined accounted for just 1% of global carbon dioxide emissions. Despite this, the SIDS’ geographical, socio-economic and climate profiles make them particularly vulnerable to the impacts of climate change. For example, Tuvalu and the Maldives do not reach higher than 5 metres above sea level, making them highly susceptible to flooding. This briefing explores the amount of climate finance the SIDS have been granted thus far, and to what extent this support meets the SIDS’ needs.

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Unexpected allies: fossil fuel subsidy reform and education finance

Despite the urgency of transitioning to low-carbon societies, global fossil fuel subsidies are still significant – estimated at $646 billion in 2015. At the same time, governments have made high-level commitments to increase public spending on working towards the Sustainable Development Goals (SDGs), including that on education. The government spending gap to reach universal, good quality education in low and lower-middle income countries by 2030 is estimated at $39 billion a year between 2015 and 2030. Although the need for subsidy reform and elements of its processes have received extensive attention from the research community, the specific procedures for mitigating the adverse impacts of reform and using the fiscal space created through subsidy phase-out have received less attention. This is particularly important, as removing fossil fuel subsidies is likely to have a negative impact on the purchasing power of low-income households if parallel measures to protect the poorest are not undertaken. These measures include increased public spending on social protection, education and health. However, few studies have reviewed whether the promises made in the reform process, including those related to education, have been met, and if so, how. This report therefore evaluates the links between fossil fuel subsidy reforms and promised increases in expenditure on education, in particular in Angola, Ghana, Egypt, Indonesia, Morocco, Niger, Peru and the Philippines. Further, it provides two case studies of experiences that Ghana and Indonesia have had with linking subsidy reforms to increasing expenditure on education and other measures that have had indirect benefits for education, such as (conditional) cash transfers.

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