Mar 23, 2023
Climate finance can be instrumental in achieving wider social and economic development impacts.
This emerged from a new, independent evaluation commissioned by the Climate Investment Funds (CIF) to assess and analyze the broader development impacts it can derive from its interventions.
The report, Evaluation of the Development Impacts from CIF’s Investments, sets out the direct and indirect social, economic, environmental, and market development impacts that can make meaningful and positive improvements to employment, livelihoods, or health outcomes, to mention a few of the benefits the report puts forward.
The evidence draws on CIF’s extensive portfolio of climate investments and demonstrates how measurement and modeling can be used to assess high-priority development impacts that can then support more informed investment decisions.
Designing climate investment for development impacts
Daniel Kaufman is principal evaluator at Industrial Economics (IEc), the firm that conducted the independent study. He says there have long been questions on how or whether climate investments and development objectives are connected. This report, he says, provides the data and evidence that confirms the link and demonstrates the importance of intentionally designing programs to achieve development impacts.
“One of the key recommendations is to design projects with development impacts in mind and to include development impacts front and center when designing climate finance interventions,” says Kaufman. “That way, you won't be leaving any development impacts on the table. You will be able to plan for, monitor, and document those social, economic, and market development impacts.”
The evaluation uses a mixed-methods approach that captures qualitative and quantitative data, analyses CIF’s investment portfolio, catalogs modeling tools, and provides 13 original case studies that represent a cross-section of CIF programs, geographic regions, climate finance sectors, the technologies employed, as well as a spread of projects from CIF’s multilateral development bank (MDB) partners.
Climate resilience investments in Bangladesh led to a range of social and economic benefits, such as more jobs, expanded supply chains and opportunities for women.
Case studies demonstrate development impacts
The independent evaluation finds that, at both project and portfolio levels, CIF investments have significantly supported development impacts. The study is rich in examples drawn from more than 249 CIF projects with more than 62 development impacts including 11 subcategories ranging from livelihoods and wealth to inclusiveness and energy justice. To give a flavor of the richness in data and analysis, here are four examples of the insights the study provides:
- Social Impacts: As a reflection of the social benefits generated, in Brazil, sustainable agriculture successfully engaged women in the project, with 30 percent of the participating farms led by women.
- Economic Impacts: In the coastal agricultural sector in Bangladesh, predictive modeling suggests that, by 2032, nearly 25,000 jobs will be supported annually, of which 16,500 will be direct (of which 45 percent will be held by women), 4,750 supply chain (36 percent held by women), and 3,750 induced (33 percent held by women).
- Environmental Impacts: In building climate resilience, more than 312,000 rural producers in Niger adopted at least one sustainable land and water management (SLWM) practice. The country also saw an increase in crop yields in project areas, 59 percent on average higher than in crop yields at control sites.
- Market development Impacts: The technical assistance provided in Nepal for off-grid biogas promoted the adoption of new biogas technologies and allowed producers to sell bottled biogas, organic fertilizers, and biomass feedstock, thus diversifying production channels.
CIF’s Senior Technical Consultant, Nicole Pasricha explains that understanding how development impacts can flow from climate interventions can help a country better structure its climate investments. By widening the lens and seeing the bigger, broader picture of the potential benefits, a country can plan for and realize additional benefits that support its national social and economic objectives.
“This makes for a better case for climate finance,” she notes. “[I]t helps countries make decisions around tradeoffs. If countries have different investment opportunities and have specific social or economic objectives, they can add these objectives to the climate outcomes and decide which portfolio of investments will maximize these joint objectives.”
Maximizing impacts through climate finance
The study highlights CIF’s critical role in promoting and studying the links between climate finance and development impacts. As CIF’s Evaluation and Learning Initiative lead, Neha Sharma points out, the evaluation provides new evidence-based data and analysis as well as demonstrates how climate programs and those working in the sector more broadly, can strengthen their contributions to development objectives.
“We often hear that climate and development are inextricably linked,” she says. “For developing countries, this link is especially critical, as they try to maximize benefits from limited investments. This evaluation provides a new taxonomy to talk about such linkages and identifies several of the barriers limiting the achievement of climate and development goals. It is an important evaluation for anyone looking to maximize impact from climate finance.”
For more insights into this evaluation, please see:
