1. What is a Political Economy Analysis,
and what is its value for Climate Change Finance?
Thomas Tanner
Institute of Development Studies, UK

2. My own political economy journey
My own experience from LSE student, thru DFID, MoEF, thru IDS Bulletin
Seen view from student, donor, government implementation,
Dominant view: Cc as global problem requiring global solutions
But in-country politics and conditions dominate the reality
Too many international initiatives assuming a blueprint approach
Political economy as a route to smart use of climate finance
Tinyurl.com/pecc2011

3. Challenging Assumptions
Climate change is a largely technical challenge
Climate change governance requires capacity building
Climate change finance is an extension of ODA
political
Climate change is a largely technical challenge
Climate change governance requires capacity building negotiating institutions, interests and ideologies
Climate change finance is an extension of ODA implies transfers based on equity and responsibility

4. What is political economy?
Political economy variously interpreted as:
Production, distribution and accumulation of economic surplus within a class-divided society (Marx)
Relationship between the state and the market (‘Regulation’)
Process governing, and distribution of, power and wealth between groups (OECD)
Dominant role of power and ideology in affecting decision making processes and resource allocation (Clapp and Devergne; Tanner and Allouche)
Or could just use the OECD-DAC definition of PEA:
Political economy analysis is concerned with the interaction of political and
economic processes in a society: the distribution of power and wealth between
different groups and individuals, and the processes that create, sustain and
transform these relationships over time

5. What is political economy analysis?
Political economy analysis seeks to understand:
Interests and Incentives
Norms and Institutions (formal and informal)
Values, Culture, Ideas, and Ideologies
...and how these shape political action and development outcomes
Interests and Incentives (e.g. off-budget environment ministries securing projects; national leaders as international champions)
Norms and Institutions (formal and informal) (not following donor agendas; deals at the club; use of the project vehicle by which Minister)
Values, Culture, Ideas, and Ideologies (Markets versus the state; Water engineers in determining adaptation; )

6. What is political economy analysis?
Political economy analysis seeks to understand:
Interests and Incentives
...and how these shape political action and development outcomes
Interests and Incentives (e.g. off-budget environment ministries securing projects; national leaders as international champions)
Norms and Institutions (formal and informal) (not following donor agendas; deals at the club; use of the project vehicle by which Minister)
Values, Culture, Ideas, and Ideologies (Markets versus the state; Water engineers in determining adaptation; )

7. What is political economy analysis?
Political economy analysis deals with:
Interests and Incentives
Norms and Institutions (formal and informal)
...and how these shape political action and development outcomes
Interests and Incentives (e.g. off-budget environment ministries securing projects; national leaders as international champions)
Norms and Institutions (formal and informal) (not following donor agendas; deals at the club; use of the project vehicle by which Minister)
Values, Culture, Ideas, and Ideologies (Water engineers in determining adaptation; )

8. What is political economy analysis?
Market-liberals:
Forests, markets and economic growth
Institutionalists:
Forests and governance
Bio-environmentalist:
The ecological value of forests
Social greens:
Humans and ecology inseparable
Visions of REDD+
Political economy analysis deals with:
Interests and Incentives
Norms and Institutions (formal and informal)
Values, Culture, Ideas, and Ideologies
...and how these shape political action and development outcomes
Values, Culture, Ideas, and Ideologies (e.g. Water engineers in Bangladesh determining a techno-managerial approach to tackling adaptation problems; different visions of REDD+ playing out internationally and nationally (e.g. Brazil regions))

9. CorePEA Methods
Actor network mapping
Interviews and informal conversation (shadow networks)
Workshops, games, scenario exercises and trade-off analysis

10. Why is PEA useful for climate finance
Improved effectiveness
Baselines of actors, formal institutions and flows
Understand how change happens, what is feasible
Widen participation, improve accountability
Match different possible finance options to national conditions
Understand donor political economy too...

11. PEA Risks and challenges
Vested interests can resist and block change
Incentives range from cultural norms to illegal acts
Time-consuming: Trade-off urgency and effectiveness
Opening processes to wider voices can lead to contestation and conflict
BUT... Surely some PEA is better than making false assumptions?

12. tinyurl.com/tannerhorn
Thank you
More on political economy of climate change at:
tinyurl.com/PECC2013
Summary article at:
tinyurl.com/Incheon2013
NEW!
Climate Change and Development Book
tinyurl.com/tannerhorn