As the world grapples with climate crisis, the cities have gained increasing recognition as battleground in the fight against climate change. Climate finance for cities and Urban Local Bodies (ULBs) are becoming more important than ever. A combination of national and international financial resources, drawn from public and private climate finance sources could be key enable for Urban Local Bodies ambition for climate action. It is therefore important for Indian ULBs to define its climate finance resources as crucial effort to meet goals on climate change.
The article is an effort to mainstream agenda of climate finance landscape, financing options and access modalities within Urban Local Bodies (ULBs) budgetary governance.
India has witnessed many instances of extremes of temperature, rainfall in recent years, for example Uttarakhand floods in 2013, Kashmir floods in 2014 & 2015, super cyclone Hud Hud in Odisha and Andhra Pradesh (2014). India faces huge losses due to climate change-induced disasters, its expense on adaptation increased from 2.6 percent in 2012 to 6 percent of countries GDP in 2014. The continual weather disaster and damage of urban disasters demands policy makers and local governments to augment financial resources to support climate action in cities and ULBs.
Where does Indian local government stand between rapid urbanisation and climate agenda?
For ULBs, climate change is a major challenge for developing countries like India that face large-scale climate variability and are exposed to enhanced risks from climate change. Though, India’s position on climate change has seen radical change in perception around issue of climate change policies and implementation arrangements, local governments have been mostly absent from strategic policy-making committees and actually considered only as implementation contractor.
India faces a formidable and complex challenge meeting the pressure of infrastructure deficit in view of development agenda in a set up of democratic process which demands for more equal and progressive society. Indian economy is facing a huge challenge of accelerating deployment of policies and programme towards ensuring a transition into developed economy through sustained growth investment and growth in industry and urban sector.
Almost all the macroeconomic models predict that anticipated needs and demands for natural resources in the future will belarge. High growth urbanisation will be a consistent economic trend and indicator for prosperity, about 40 percent of the population in 2030 would be urban as against 31% currently. As the population expands in the urban area, economy of country and income of individual grows, we could see exponential increase in demand for urban amenities like housing, urban space, streets, transport infrastructure, energy, water, and waste management and disposal facilities. It appears more alarming in a country where half of India of 2030 is yet to build.
Need for Urban Resilient Policies, Framework, and Infrastructure?
With the launch of transformational urban schemes Government of India has provided a clear mandate to Urban Local Bodies (ULBs) to create the new cities on Resilience Framework. Under the Smart Cities Mission, 100 smart cities are planned with the objective to develop new generation cities, which will provide core infrastructure and a decent quality of life to its citizens by building a clean and sustainable environment. But, the success of the programme will remain subject to scrutiny on indicators of urban resilience, new urban agenda, and SDGs. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities focuses on ensuring basic infrastructure services such as water supply, sewerage, stormwater drains, transport and development of green spaces and parks by adopting climate resilient and energy efficient policies and regulations. These schemes open the gateway to innovative arrangement between National and Local Governments to act on climate actions.
Indian Government has provided ULBs with tremendous scope to demonstrate leadership and climate statesmanship by implementing innovative projects through schemes of Swachh Bharat Mission (Clean India Mission), vision of Urban Transport Policies and Solid Waste Management Rules, 2016. Above all, The intended Nationally Determined Contributions I(NDCs) response to COP decisions 1/CP.19 and1/CP.20 for the period 2021 to 2030 acknowledges a number of mitigation and adaptation strategies and action with focus on cities and urban centers. India is committed to reduce the emissions intensity of its GDP by 33 to 35 percent by 2030 from 2005 level. India cannot fulfill the commitment without the contribution of ULBs.
India’s Domestic Climate Finance Instruments
Finance will remain a critical enabler for Urban Local Bodies for climate change action. Though, it appears very difficult to quantify the finance requirements for adaptation and mitigation for a country with so much diversity.Though the estimate from variety of studies varies, preliminary estimates indicate that India would need around USD 206 billion (at 2014-15prices) between 2015 and 2030 for implementing adaptation actions in agriculture, forestry, fisheries infrastructure, water resources and ecosystems. Apart from this there will be additional investments needed for strengthening resilience and disaster management.
An Asian Development Bank Study on assessing the costs of climate change adaptation in SouthAsia indicates that approximate adaptation cost for India in energy sector alone would roughly be about USD 7.7 billion in 2030s. The report also projects the economic damage and losses in India from climate change to be around 1.8% of its GDP annually by 2050. Mitigation requirements are even more enormous. Estimates by National Institution for Transforming India (NITI Aayog) indicate that the mitigation activities for moderate low-carbon development would cost around USD 834 billion till 2030 at 2011 prices.
India’s climate actions have so far been largely financed from domestic resources. While this would evolve over time, a preliminary estimate suggests that at least USD 2.5 trillion (at 2014-15 prices) will be required for meeting India’s climate change actions between now and 2030. Government of India’s climate finance instruments remain very limited with only dedicate funds at national level for mobilization of climate funds for mitigation and adaptation activities.
How Climate Funds can Help ULBs to Create Climate Resilient and Low Carbon Infrastructure
The cities in the world are facing critical challenges in planning and financing infrastructure in a manner which is climate safe and resilient. International public climate finance is fraction of total finance flows but has potential to play a pivotal role in helping Urban Local Bodies. This might mean crowding-in further finance for specific infrastructure investments, allowing local intermediaries to employ their own resources to greater effect, or improving the capacities of institutions at different levels to create policy, regulatory and technical environments that steer wider investment towards sustainable urban development.
There are growing trends in evolving of new institutions, mechanism, and instruments that can channel finance from climate funds and can create opportunities for engagement of ULBs. There is need to begin a larger debate on access modalities of climate funds from ULBs within Indian National Climate Fund Governance schemes. Urban Local Bodies shall encourage the wards to list the climate change activities into their annual plans with financial and accounting mechanism of local act.
The outcomes of discussion at COP 23 on the role of local governments in South Asian countries in climate action are:
- Local Government in South Asia shall call upon cities to have South Asian Cities Alliance on Nationally Determined Contributions (NDCs) as commitment to Paris Climate Agreement.
- Cities needs to demonstrate collaborative approach on 2030 Agenda’s Sustainable Development Goal 11, which is to make cities and human settlements inclusive, safe, resilient and sustainable. Local Government in South Asia shall come out with country and region-specific goals to achieve target and indicators.
- Cities shall participate in The City Resilience Program (CRP) which is an effort to assist city governments to build greater resilience to climate and disaster risks. CRP seeks to act as the bankers of the city and to facilitate strategic investments that address the vulnerabilities and risks that cities face in a holistic way.
The core domestic climate finance mechanism in India need to strengthen the governance mechanism towards creating a more consolidate and devolved climate finance in India. The future climate finance governance mechanism will be more decentralized to encourage local action. Moreover, the need of local government with regard to climate adaptation and mitigation should be given a priority and a percentage of budgetary allocation shall be marked as climate finance budget.
The devolution of decision making based on 73rd and 74th constitutional amendment could be included as primary mechanism in direct access of climate finance. And, the role of ULBs shall be strengthened by continued awareness and capacity building to be included to identify climate risks and implementing solutions to make cities safe and resilient.
Provision of allocation of financial resources allocated to municipal administration for climate resilience, the budget could be monitored and reviewed for effectiveness under larger architecture of Monitoring Reporting and Verification framework.