Allocating climate adaptation finance: examining three ethical arguments for recipient control

A central question in international climate policy concerns how climate change adaptation finance should be allocated between recipient countries.^Footnote1 How should funds such as the Adaptation Fund or the Green Climate Fund allocate whatever finance they have at their disposal? Many answers are possible, ranging from utilitarian ones (the finance should go where it produces the greatest global benefit) to egalitarian ones (eligible countries should get an equal share). According to the United Nations Framework Convention of Climate Change (UNFCCC), however, the principle that should guide allocation is national vulnerability. The UNFCCC’s conception of justice in adaptation finance is that ‘developed country Parties take precautionary measures to assist developing countries to adapt to climate impacts by providing adequate, scaled up, predictable, balanced, and new and additional adaptation finance, with priority to those Parties that are particularly vulnerable’ (Ciplet et al. 2013, 55, emphasis added). Allocation on the basis of national vulnerability has also attracted the support of a number of scholars working on equity or justice in adaptation finance (Füssel et al. 2012; Grasso 2010; Paavola and Adger 2006).

The idea of basing allocation on national vulnerability invites several questions. One question concerns what it means for a country to be ‘particularly vulnerable’ to climate change. UNFCCC gives no more than rough guidance on this question, listing a set of geophysical factors that indicate that a developing country is particularly vulnerable.^Footnote2 A far more precise approach is needed in order to allocate finance on the basis of degree of national vulnerability. However, critics have questioned whether developing such an approach is feasible. Vulnerability is usually seen as a function of an entity’s probability of being negatively affected by climate change, its sensitivity to those effects, and its capacity to cope with them; since it is not obvious how each of these components is to be operationalized, nor how they are to be combined into an index, considerable scientific and/or political difficulties are involved in constructing an allocation scheme based on vulnerability (Hinkel 2011; Klein 2009).^Footnote3 In this regard, allocation based on, e.g., general level of development might be more feasible.

A second question, on which this paper focuses, concerns subnational allocation, that is, how finance is allocated within the countries that receive adaptation finance. This stage in the allocation sequence raises the same kind of questions as international allocation. Subnational allocation, too, deals with the allocation of scarce resources between competing claims (a country might have to choose between protecting urban and rural areas, for example, or between protecting agriculture and infrastructure). Choosing between such claims requires some sort of distributive principle just as much as choices about international allocation do.

Subnational allocation of adaptation finance has so far received limited scholarly attention, but there are a few empirical studies in the literature. Barrett (2014, 139) in a case study of Malawi finds that allocation tracks ‘accessibility, cost minimization, and economic functionality’ rather than vulnerability. Persson and Remling in a study of the Adaptation Fund find that the fund approves projects without an operational definition of ‘particular vulnerability’ at the project level, leaving it to ‘project proponents to justify why they should be awarded AF funding. As long as the justification satisfies the [Project and Programme Review Committee], the technical quality is satisfactory, and total national funding does not exceed the national cap, it appears that projects are approved’ (Persson and Remling 2014, 496–497). Thus, contrary to what would seem to be the spirit of UNFCCC, the empirical evidence we have so far does not suggest that adaptation finance is allocated to the most vulnerable communities or regions of the recipient country.^Footnote4

Is this cause for concern? From a normative perspective, this depends on how international allocation and subnational allocation should relate to one another, and here different answers are available. On one view, the principles of international allocation and subnational allocation should indeed be the same, because the adaptation finance regime would otherwise be internally inconsistent. For example, if adaptation finance should be allocated between countries on the basis of their level of national vulnerability (as the UNFCCC seems to suggest), then it must on this view also be allocated domestically in a way that prioritizes the most vulnerable communities or regions. But it might also be argued that the principles of international allocation and subnational allocation should be different. For example, it might be argued that adaptation finance should be distributed between countries based on their national vulnerability, but that another principle, such as securing the greatest social benefit for the entire population, should inform the selection of adaptation projects domestically.

According to a third view, however, there is a crucial difference between international allocation and subnational allocation which invalidates the very idea of prescribing substantive distributive principles in the latter case, namely that subnational allocation concerns the internal affairs of the recipient country, and as such is for the recipient country to decide (or more specifically its national government). Since prioritizing between claims in the context of climate change adaptation involves making very tough choices about internal affairs, this view holds, it is only appropriate that the national government gets to decide on the kind of allocation it wants to pursue. Someone who defends this view defends what I will call recipient control over subnational allocation. Recipient control obtains when it is up to the recipient country’s national government, not donors or climate funds or transnational institutions, to identify and choose between domestic adaptation projects. Such control comes in degrees and can manifest itself in different ways. In its strongest and clearest form, it takes the shape of direct national budget support, but it might also consist in donors providing finance earmarked for nationally endorsed adaptation projects. The opposite of recipient control is donor control, which is when finance is withheld unless the recipient abides by the pattern of allocation endorsed by the donor.

Recipient control is a familiar and intuitively powerful position, and it seems to have exerted some influence over the adaptation finance regime that has emerged under the UNFCCC. The National Adaptation Programmes of Action (NAPAs) of the least developed countries and the ‘national adaptation plans’ of the Cancun Agreements are cases in point, as is the ‘direct access’ to finance allowed by the Adaptation Fund. These aspects of the adaptation regime are expressions of the norm of recipient control insofar as they suggest that recipient countries themselves should identify, rank, and implement various adaptation projects. However, it would clearly be an exaggeration to say that the world of adaptation finance is significantly guided by the norm of recipient control. Adaptation finance is in general the business of multilateral implementing entities (MIEs) such as the United Nations Development Programme and the World Bank. For example, UNFCCC funds such as the Least Developed Country Fund and the Special Climate Change Fund are administered by the Global Environmental Facility.^Footnote5 Indeed, even the Adaptation Fund—sometimes held up as a model for climate finance because of its funding mechanism and the composition of its board—falls short of living up to recipient control. The Adaptation Fund, too, often works through MIEs, and it is not committed to handing over the control over funding decisions to the recipient country—what in current policy discussions has been called enhanced direct access (CDKN 2013; Müller 2014).

Even though it remains far from a dominant norm in adaptation finance, there are still good reasons to investigate what normative basis there is for recipient control and closely related concepts such as enhanced direct access. First, recipient control seems a natural interpretation of the ‘country-driven’ approach that is currently discussed in the context of setting up the Green Climate Fund (CDKN 2013). Second, it is the longstanding ambition of the developing countries themselves (Persson and Remling 2014), and it garners the support of scholars and activists (see Müller 2014). For these reasons, it is important to investigate the merits and flaws of recipient control as an approach to subnational allocation of adaptation finance.

The existing literature falls short in this regard. There are very few analyses that systematize different normative reasons for recipient control and assess how well they stand up to critical scrutiny. As a result, it is unclear whether, and if so on the basis on what considerations, recipient control over adaptation finance deserves our support. To rectify this shortcoming, this paper distinguishes and examines three normative arguments for recipient control from an ethical and politico-theoretical perspective. The first is the epistemic argument that recipient countries are better placed to say where funds ought to go. The second is the entitlement argument. This argument holds that recipient countries are entitled to adaptation finance as compensation for prior injustice and that it is therefore only fair that they get to decide what to do with it. The third is the legitimacy argument, according to which recipient control is justified because foreign actors would otherwise inappropriately make decisions about civic protection.

The result of my analysis of these three reasons is a two-pronged conclusion: whether we should endorse recipient control depends on whether the recipient country is a rights-respecting electoral democracy. The force of the pivotal entitlement argument in particular depends on this. If a country is an electoral democracy, we could regard its national priorities as being collectively chosen or authorized by the citizenry. The intuition of justice that underpins the entitlement argument—that compensation should not come with strings attached—then establishes a pro tanto case for recipient control. However, since many of the most vulnerable countries are not democratic and rights-respecting polities, this conclusion is far from always applicable. In nondemocratic countries, I shall argue, the three arguments, even if taken jointly, do not succeed in establishing a case for recipient control.

It is important to put this conclusion in its proper context already at the outset. While the paper assesses three specific arguments for why recipient control is appropriate and finds them wanting for nondemocratic countries, this does not necessarily mean that recipient control is unjustified there. To assess the degree to which a justified adaptation regime should rest on recipient control requires that the relevant alternatives are also subjected to critical scrutiny, and this is not something I deal with within the confines of this paper. So I remain agnostic as to whether there might be a good all-things-considered case for recipient control even though the direct arguments for it often fail to convince. I offer a few brief remarks on this possibility in the conclusion.

Finally, before I get to the arguments, it is worth explaining why the paper focuses specifically on adaptation finance. After all, calls for recipient control are not unique to policy responses to climate change. The norm of recipient control has gained a strong standing in development circles in general where, following the experiences of the donor-controlled ‘structural adjustment programmes’ of the 1980s, the modus operandi has swung in favor of less conditionality and more local autonomy. This is visible in the Paris Declaration on Aid Effectiveness, which commits signatories to disburse aid in a way that ‘give recipient-country governments more scope to make decisions based on their own priorities’ (Hyden 2008, 259).^Footnote6 So why focus specifically on adaptation finance and not development aid in general? The answer is that adaptation finance is an unusually clear example of an international transfer that seems premised on, and at least partly justified by, prior or ongoing acts of injustice. This, some argue, makes development aid and adaptation finance disanalogous, and it renders recipient control especially appropriate for the latter.^Footnote7 Adaptation finance is thus not chosen because it is an important topic in its own right (although that is true too). Rather, it is chosen because it can be considered a ‘critical case’ for recipient control—if recipient control cannot even be supported here, it probably cannot be supported in other contexts either.