1. Recap Day 2

2. Key messages Day 1 Why CPEIRs? How they were done in different countries? Findings and recommendations Day 2 Questions and themes emerging from CPEIRs Everybody is still learning....

3. Sourcebook Introduction to the sourcebook – a tool for public finance professionals to conduct PERs on climate change Looks at ‘full toolkit’ of policies: information, regulation, taxation and expenditure

4. Climate change and budget process… Key role of budget and tools for integrating climate change with the budget system: (e.g. sector strategies, tagging, budget call circular, screening guidelines etc.) Not just ‘on-budget’ to consider, ‘off-budget’ also implications for climate change (e.g. green loans, PPPs energy or transport, tax expenditures) Use of country systems and modalities for international finance(e.g. NCFs vs. ‘virtual climate funds)

5. Defining Expenditures Technical challenges (embedded expenditures, co- benefits, splitting out ‘climate change’, data collection) Nationally led – possible refinements, but the process is important, brings institutions together and builds awareness

6. Broaden ownership of response… Linking to planning, budgeting, M&E systems not enough on its own, need to consider INCENTIVES Building political ownership (e.g. using the right language ‘green growth’, role of media, CSOs, engaging local politicians) Leveraging more money where it is needed (e.g. better understanding of costs and benefits – to help mobilize resources for investment plans) Alignment with values and knowledge (e.g. building on existing programs/poverty agenda)

7. Fiscal policy The role of public sector: market failures and public goods (i.e. infrastructures, R&D, new technologies) Mitigation: use of price based instruments to change incentives for private actions (i.e. ETS, carbon taxes) Adaptation: decision-making under uncertainty Considerations for fiscal instruments Cost effectiveness (i.e.Carbon tax vs cap and trade) Distributional impact and interaction with other policies and instruments

8. Local government Local response to climate change needs to be rooted in national realities of decentralization processes 2 way flow: (i) Sector provides guidance to local: but (ii) use local knowledge as inputs into planning CC initiatives to respond to local needs Build on financing modalities that allow for discretion at local level

9. Sector Issues around CPEIRs Scope for CPEIR analysis to be linked to key sector goals E.g. Indonesia CPEIR focus of forestry and energy sectors in mitigation Adaptation means different things to different sectors (transport, agriculture, water management) Sector goals may conflict (land concessions vs. conservation). Focus on ‘climate change policy’ insufficient Economics of climate change skills can play complementary role to CPEIR (e.g. Joint Adapt-Asia/UNDP program)

10. Incentivizing Private Sector Viet Nam’s Green Growth Strategy – area of particular interest in CPEIRs to date in MICs Need to understand barriers to investment Develop a range of policy instruments to overcome barriers Awareness building Seed capital Regulatory

11. Decision making under uncertainty Incongruence between short-term budgeting cycles ‘use it, or lose it’ Long-term uncertainty of effects and costs of climate change – may be optimal to wait and see ‘Invest now rather than later?’ Some emerging responses Philippines planning cycle (ST, MT, LT) Financing vehicles (insurance, catastrophe bonds)

12. Fiscal policy and disaster risk financing How can fiscal policy be used to manage fiscal risk of disasters? Matching the funding needs over time: time line for mobilizing resources in case of emergency Combine financing instruments to cope with climate disaster risk and reduce contingent liability Building tools to enable informed decision making about complex dynamics: cost and benefit analysis

13. And today.... Opportunity to bring this together and look forward...