Climate Public Expenditure and Institutional Review (CPEIR): a methodological note

Research reports and studies
August 2012
Neil Bird, Thomas Beloe, Merylyn Hedger, Joyce Lee, Kit Nicholson, Mark O’Donnell, Sudha Gooty, Alex Heikens, Paul Steele, Angus Mackay and Mark Miller

New and additional international finance is becoming available to assist country efforts in their response to climate change. How this finance is integrated into national policy, planning and budgetary systems is an important question that warrants attention. The challenge is to secure a comprehensive, cross-government approach that delivers a coherent national response to climate change involving both the public and private sectors. Such an approach has been termed a Climate Fiscal Framework.

A first step in building a Climate Fiscal Framework is to develop a methodology that reviews how climate change-related expenditures are integrated into national budgetary processes – which can be called a Climate Public Expenditure and Institutional Review. This analysis has to be set within the context of the national policy and institutional arrangements that exist to manage the response to climate change in each country. Hence, any analysis needs to take account of the three key spheres of policy development, institutional structures and financial management.

Three core aspects of the national administration in relation to climate change actions need to be explored:

  • An assessment of current policy priorities and strategies as these relate to climate change;
  • A review of institutional arrangements for promoting the integration of climate change policy priorities into budgeting and expenditure management;
  • A review of the integration of climate change objectives within the budgeting process, including as part of budget planning, implementation, expenditure management and financing.

These three elements – national policy, institutions and the budget – provide an essential governance framework for effective climate change actions.

This paper reviews experiences from case studies undertaken in Nepal and Bangladesh to further develop the metholodogy of the CPEIR for use in further SE Asia case studies in 2012.