As the climate changes, Bangladesh is also changing.

This is most obvious in terms of biophysical changes — stronger hurricanes, harder rainfall and more salinity — but it is also affecting the government’s budget, institutional systems, and the way it manages its finances.

The question is as climate change accelerates, can Bangladesh change fast enough?

There are many changes from climate change, but is Bangladesh just a victim?

How can climate change — and climate change finance — provide incentives for positive transformation?

How can climate change provide new opportunities for Bangladesh to transform into a more democratic and economically diverse society with climate finance an incentive and lubricant to drive this transformation?

In Bangladesh, the government spends almost $1 billion a year on adapting to climate change — of which three quarters of this funding is from the government’s own budget — with donors only providing a quarter. Much of this $1bn finance is for climate proofing large scale infrastructure such as waterways, roads, and bridges.

The institutions and machinery of government to adapt to climate change and manage climate finance are also changing in Bangladesh. Climate change and climate change finance is shifting from the edge of government under the Ministry of Environment into the heart of economic decision-making within the Ministry of Finance and the Planning Commission.

But climate change is also driving change across the homes and families of Bangladesh. Even more than government funds, more is being spent by poor women and men to address long term gradual climate changes as well as the increased sudden climate shocks.

Families and farmers must change crops in the face of climate related salinity, raising plinths to stop houses being flooded and even worse — selling their goods and labour after hurricanes and cyclones hit.

In Dhaka and many urban areas, many of the rickshaw pullers have changed their livelihoods and lives to move to the cities from the most vulnerable climate change areas — where making a living has become almost impossible due to runaway climate change.

So the government of Bangladesh must play a role to listen to the priorities of the people of Bangladesh. Still, too many climate projects are financed with a focus on large infrastructure — which is vital to adapt to climate change, but it tends to overlook the need for local level finance that helps people to adapt within their own lives and homes.

Local level climate finance can be increased in three ways — more climate finance linked to social protection, more climate finance channelled through local government, and more climate finance for local entrepreneurs and small and medium scale enterprises.

Social protection combined with climate finance can help families adapt to climate related disasters before it strikes and to provide relief post climate disasters.

Local governments are constrained, but the more responsive they become and the more they reflect local priorities, the more effective they can be for channelling climate finance to where it is needed most.

Small business that engages in both adaptation such as insurance and climate mitigation such as solar technologies need finance to be supported. This requires both support from the formal and informal banking and finance sector.

So where does international climate finance fit in all this?

There are good reasons why least developed countries like Bangladesh need to be compensated by those countries who have caused climate change the most. But international climate finance like development finance has many shortcomings.

International climate finance may be more driven by external priorities and not fully embedded in national priorities and systems. The recent cuts in global aid budgets will only increase the drive for priorities to be set externally; and not by poor women and men themselves.

So the role for international climate finance is to complement and top up the fund that Bangladesh’s households, government, and business are already spending to adapt to climate change. So international climate finance needs to be designed in collaboration with the people of Bangladesh according to their priorities. The government of Bangladesh needs to solicit these local priorities and build them into interventions that will benefit the poor.

So international climate finance will not be most effectively designed and managed by global funds based in Korea and Washington. Funding decisions needs to be delegated to national and local levels as much as possible. Interventions needs to be designed by women and men supported by their local representatives and civil society groups.

International donors may be cautious due to concerns over transparency and corruption — and this is an important concern. But there are systems and institutions to reduce corruption.

These include greater local level consultation and transparency, a dynamic media and improved public financial management with oversight provided by parliament, the auditor general, and by civil society.

But will these changes be enough — and can climate finance and climate change itself be more of a positive driver of positive social, political, and economic transformation?

There are at least seven ways in which climate finance could drive this transformation:

1. Bangladesh can harness its skills with IT to create and spread an app to track climate finance at all levels through mobile technology.
2. Bangladesh can strengthen its local government’s institutions to really provide an effective channel for pro-poor climate finance
3. Bangladesh can reform its extensive social protection schemes to really integrate climate finance to empower poor women and men
4. Bangladesh can move away from a bias on large scale infrastructure for climate resilience to really empower poor families to respond to climate change including ecosystem based adaption
5. Bangladesh can finance Dhaka and other cities to design climate resilient urban ecosystem adaption that meets the need of all its citizens
6. Bangladesh can embed climate finance within its national planning and budget process
7. Bangladesh’s government can strengthen its public financial management systems to ensure international donors to devolve climate funding decisions down to the national and local level

If these seven opportunities can be seized, climate change could provide the incentive to change and transform Bangladesh for the better.

Originally this article was published on March 09, 2017 at Dhaka Tribune, The author Paul Steele is the chief economist, Shaping Sustainable Markets at International Institute for Environment and Development (iied).
Email: Paul.Steele@iied.org

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