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Module 2.

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Transmission Channels

In this module, the different transmission channels are evaluated with respect to their possible links to climate change.

The purpose of this module is to identify the main channels through which development programs could affect the capacity of a country to adapt to climate change and to reduce its GHGs in a cost-effective way.

The pathways by which macroeconomic and sectoral reforms can influence climate policy are complex and depend on the existing institutional framework. With appropriate institutions, one can ensure a high degree of consistency between development policy and climate policy, whereas in the absence of such institutional support there can be considerable dissonance. From a broad environmental viewpoint, a country's environmental management capacity can be assessed through the CIESIN's Environment Performance Index (EPI), (11) the World Bank's CPIA index, (12) or the GEF Resource Allocation Framework (RAF). (13) For climate policy, that assessment is important but it is not enough. In addition, an assessment should be made of the country's institutional capacity to address climate issues and the extent to which these have been mainstreamed into the government policy-making framework.

Since the capacity of the country to integrate development and climate policy are crucial to the effective design of development policy, we would recommend that all countries have such an assessment carried out and any gaps in the present arrangement noted. The aim should then be to help the countries to fill these gaps as part of present and future development policy lending programs. In the meantime, where capacity is weak, special measures may need to be taken to ensure that the development programs do not have any significant negative effects on the climate side. In the analysis of the transmission channels, we have attempted to indicate what these measures might be.

For each policy we divide the linkages into those related to adaptation and those related to mitigation. For each of the two we identify actions that should be taken to reduce any negative impacts, as well as actions that could be taken to enhance the positive impacts. Thus each development policy has four sets of linkages to climate policy. Of course, not all are equally important. To give an idea of their relative importance, we have used a color coding. A red color indicates that action is very important and should be given priority. Yellow is used to indicate that action is of moderate importance and green to indicate that there are no significant linkages and could indeed be positive effects on climate adaptation and mitigation.

The policies are divided as follows: Items 1-8 are macroeconomic or economy-wide reforms and 9-19 are sectoral reforms:

1. Ensuring macroeconomic stability

2. Improving the investment climate

3. Improving public financial management

4. Governance reforms

5. Social protection

6. Decentralization

7. Increasing competition and entrenching property rights

8. Modernizing the rural economy

9. Agricultural sector reforms

10. Forestry sector reforms

11. Mining sector reforms

12. Fisheries sector reforms

13. Environmental management reforms

14. Education sector reforms

15. Health sector reforms

16. Infrastructure reforms covering water, transport, and urban sectors

17. Energy sector reforms

18. Financial sector reforms

19. Tourism sector reforms

Climate Institutional Assessment

As noted above, each country should have made an assessment of the effectiveness of current arrangements to formulate and implement climate policy in an integrated way. Since the Bank has not yet carried out such an assessment, a rapid appraisal may be necessary. The key questions that need to be addressed in such a survey are given below (Table 2.1). These are divided into two groups: (1) the Key questions, and (2) a supplementary list provided for additional guidance.

Macroeconomic, fiscal, and Public Sector Reforms

Policies designed to ensure macroeconomic stability, improve the investment climate, improve public financial management, improve governance, social protection decentralization, increase competition and entrench property rights and modernization of the rural economy are included in the general class of macroeconomic, fiscal, and public sector reforms.

Ensuring macroeconomic stability

The broad objectives here are to improve fiscal performance and fiscal sustainability, reduce government debt and improve debt management, and expand and deepen international trade. The specific policies to ensure macroeconomic stability and their impacts are given in Table 2.2. The following comments should be noted:

a. Positive impacts on the environment are possible with a number of policies. In terms of mitigation, the countries should look at measures that promote energy efficiency and provide adequate resources for adaptation programs. Although much of the funding for such programs will come from donors, counterpart funds are crucial. A list of such measures is given in module 3. In defining priority spending, the relatively weak state of benefit-cost analysis for adaptation programs should not imply that they get summarily rejected. Rather, an effort should be made to strengthen capacity to estimate the benefits of such programs in a credible way. Generally, since environmental budgets (and a part of adaptation budgets probably come under this category) are often at risk, it is important to make a fair valuation of the expenditures in this area. Ministries of Finance often see the expenditures on the environment as a luxury, which they are not. But the capacity of the environment ministries to quantify the benefits and make the case can be weak. Ideally these adaptation programs should be integrated into traditional sectoral programs, where their benefits to the economy are properly quantified and accounted for.

b. In the area of fiscal reform, countries should be encouraged to explore the potential for energy taxes that provide incentives for low-carbon options. Examples of such taxes are given in module 3.

c. With fiscal devolution, there is a risk that support for mitigation and adaptation programs will fall, especially where the benefits of such programs are at the national level rather than regional. Measures should be included to prevent this.

d. The most risky area is with respect to trade reforms. Cases where deforestation has resulted from trade liberalization have been documented.

This acts to reduce carbon sequestration capacity. On the adaptation side, some export incentives can increase vulnerability to climate change. An analysis of the potential for such exports should be carried out and appropriate measures to prevent such exploitation should be introduced.

e. Regional trade agreements can have negative environmental consequences. Major agreements such as NAFTA have been subject to SEAs, which have identified the potentially damaging impacts of such agreements. It would be desirable to have some upstream work that has identified the problem areas.

Improving the investment climate

The broad objectives here are to improve investment procedures, promote privatization reform and liquidation of state-owned enterprises, promote private sector development generally, and facilitate trade. The specific policies and their impacts are given in Table 2.3. The following comments should be noted:

a. There have been problems with the speeding up of business start-up times and licensing procedures. Where the primary investment sectors and/or operations are likely to have major impacts in terms of energy use and adaptation measures, it is not appropriate to require these to be done hastily. This applies especially to areas such as mining and forestry and areas where change in land use is an integral part of the program. Proper procedures in these sectors will take time (as they do in industrialized countries); countries should not follow shorter processing times in such cases.

b. The promotion of FDI should also not be at the expense of energy efficiency standards and should be screened with respect to national adaptation plans. In general, foreign investors are only too willing to ensure compliance but they need to be well-informed about the requirements in these areas. Furthermore, it is not always the case that FDI seeks to be compliant. There can be an incentive for national authorities to accept lower performance standards or turn a blind eye to adaptation measures not complied with if it means getting a major job creation investment.

c. Privatization can be beneficial to energy efficiency, as often it is the state industries that are the least compliant with environmental standards. The new, more private-sector-oriented industrial structure will, however, need a larger and a different regulatory capacity with regard to the GHG and energy efficiency targets. The macroeconomic reform program should therefore be complemented with an environmental capacity enhancing program, as has been the case in a number of countries.

d. Policies to strengthen small businesses should include measures to help them to be more energy efficient and better able to comply with the requirements imposed by any adaptation plan.

e. Improving access to capital markets and raising funds through international bonds can help increase energy efficiency, as these markets now include standards of good practice in this area. They are also becoming more aware of the need to respect adaptation guidelines.

f. Reforms to land markets should recognize the need to restrict development in certain areas as a measure to address climate change

Improving public financial management

The broad objectives here are to strengthen budgeting and financial management, improve procurement, and initiate civil service reform. The specific policies and their impacts are given in Table 2.4. The following comments should be noted:

a. It is important that costs of adaptation measures be prepared as soon as possible and fed into the medium-term expenditure framework.

b. In improving control of government revenues the Bank and the Fund look to establish a consolidated set of budgetary accounts. This includes revenues from taxes that are earmarked. Sometimes the two institutions also ask for the taxes not to be earmarked. In the case of mitigation and adaptation measures, however, some earmarked taxes can be justified (e.g. a carbon tax that is allocated for an energy efficiency program or a land development fee that is used to finance expenditures on adaptation). Where this is the case, they should be allowed to remain as such, although the consolidation can still go ahead.

c. A number of countries also operate with environmental funds. Some of these have played an important role in financing environmental investments. Where the Bank engages in strengthening non-bank financial institutions, it should look to ensure that these are also operating under "good practice" rules (for example, the "St. Petersburg Principles" developed by the OECD (14)).

d. Government can provide strong incentives for energy efficiency through giving positive points in procurement evaluations for energy-efficient suppliers.

Governance reforms

The broad objectives here are to improve public administration, raise fiduciary standards, and implement judiciary and civil service reforms. The specific policies and their impacts are given in Table 2.5.

In general, policies that reduce corruption and make the judiciary and civil service more accountable and transparent should help ensure that the goals of mitigation and adaptation are implemented more effectively.

One can draw attention in the awareness programs to the importance of carbon footprints of different lifestyles and of the measures needed to adapt to climate change more effectively. Such programs have been important drivers of a range of environmental reforms in many industrialized countries and economies in transition, as well as some developing ones.

It is also important to ensure society's participation in the adaptation programs that are being drawn up.

Finally, when introducing measures to increase equity in decentralized resource allocation, it is important to ensure that differences in adaptation costs of different zones are taken into account.

Social protection

The broad objectives here are to target policies for the poor, implement pension reforms, and bring in policies to encourage growth and development of small and medium enterprises. The specific policies and their impacts are given in Table 2.6.

In general, measures that directly act to reduce poverty should benefit the environment. There are some cases, however, where the measures may need to be looked at carefully--for example, removal of some subsidies to the poor, where these subsidies provide an incentive to use energy more efficiently. Most countries have some such measures, and a list is provided in module 3. Furthermore, some subsidies may be needed to promote adaptation (for example, cultivation of drought-resistant crops, or increased use of renewable energy). These should be evaluated carefully; if targeted payments are effective, they should be retained.

Decentralization of poverty reduction programs should take account of the differential access of individuals to noncommercial resources, including energy.

Credit supply to small and medium enterprises should be used to promote energy efficiency and to implement critical adaptation measures that have been identified in works carried out by the government.

Decentralization

The broad objectives here are to promote fiscal decentralization and to strengthen the capacity of local communities to deliver public services. The specific policies and their impacts are given in Table 2.7.

It is frequently the experience that local authorities are less well-equipped and less well-qualified in managing environmental resources than central governments. Any program of decentralization must therefore take account of the need to build capacity at that level. In the case of climate change, this applies to programs to promote energy efficiency and renewable energy use, as well as to programs to implement adaptation measures. It may be better to have some of these programs managed at the national level, or at least with strong central government support. Without adequate capacity, a serious risk exists of damage being done to the environment.

It is also important to ensure that enough resources are made available for adaptation programs once decentralization has been introduced.

Increasing competition and entrenching property rights

The broad objectives here are to liberalize the provision of key services, entrench property rights and secured transactions, and reform state-owned utilities. The specific policies and their impacts are given in Table 2.8.

Privatization of the railway and civil aviation industries should be supported by guidance on how future investments and operations will be affected by climate. Guidelines on taking account of climate impacts should be provided to the private sector.

It is important in drawing up privatization plans for energy-intensive industries to prepare at the same time a plan to meet certain carbon reduction or energy efficiency targets. Where appropriate, plans to adapt to climate impacts should also be prepared by the private enterprises. This will require the private sector to work with the government to ensure the targets are credible and in keeping with government indicative improvements in carbon efficiency.

In general, the involvement of the private sector should improve energy efficiency, but it will need some encouragement and monitoring to ensure that the full potential of the reforms is realized.

Sectoral Reforms

Sectoral reforms generally accompany investment programs in the relevant sectors. The policies supporting the investments, however, need to be mindful of possible climate impacts. The following are the key transmission channels:

a. In agriculture, there is a serious risk of deforestation and cultivation of land that is better not cultivated as a result of policies that increase the profitability of some crops. This has impacts on carbon sequestration that need to be addressed. On the other hand, measures that promote agriculture now need to take account of how the changed outputs from that sector will stand up to climate change. Some of them may make it more difficult to adapt to the new patterns of drought, flood, and temperature. These impacts should be allowed for when appraising agricultural polices. If necessary, additional instruments may be needed to ensure adequate and effective adaptation.

b. Many sectoral reforms offer a real opportunity to promote GHG mitigation and adaptation. For example, with the prospect of credits for avoided deforestation, governments and donor agencies should look to support programs that develop baselines, measure forest growth, and market carbon credits (see Bank support for this in module 3). These will indicate a reduction in the more conventional activities that affects forests such as logging and land clearance.

c. Investments in several sectors will be affected by climate change. These include agriculture, mining, energy, irrigation, transport, tourism, and urban development. Future investment plans should reflect climate impacts as much as possible. In some places, development should be restricted. In other cases, it should be undertaken in the light of altered land and water stresses. A tool to ensure that the environmental issues are taken into account at the strategic level is the strategic environmental assessment, or SEA. While promoting investment options in the infrastructure, energy, tourism, and other environmentally sensitive sectors, such options should encompass the possible climate impacts.

d. Promoting privatization and responding to climate change are not mutually exclusive; indeed, private sector development can help improve energy efficiency. But it does mean a different system of regulation and the greater use of indirect methods of control, often using market-based incentives. These should be developed in parallel with the sectoral reforms.

e. Development practitioners should be mindful of the need to ensure that the reforms do not cause hardship to the poor sectors of society. This is also important from a climate point of view. If people are unable to have access to resources they were previously using in a relatively benign way, they may turn to further damage forest and other resources that capture carbon. Social protection programs need to be aware of these possibilities and be designed to avoid them.

Agriculture

The broad objectives are to increase production and productivity, and increase competitiveness in specific commodities. There are also policies designed to stimulate farm incomes through extension services and research and development. The specific policies and their impacts are given in Table 2.9.

Because of its close links to adaptation, agriculture is a particularly vulnerable area where policy reforms with sound macroeconomic intentions can spill over into impacts that need to be addressed. Commentators have noted the pressures that some reforms may place on expansion of agriculture to areas that were previously forestland or marginal land unsuitable for cultivation. How much of this happens depends on the institutional arrangements for the protection of such lands. In other cases, too, reforms need to be accompanied by measures to ensure that environmental standards and requirements for good practices are respected. In the absence of such complementary policies, even the best designed reforms can have negative consequences for carbon sequestration and emissions of GHGs. This is important because--in the context of climate change--deforestation and expansion of agriculture reduces sequestration and releases GHGs.

The second concern is with respect to agricultural production and adaptation. Some crop expansion can make adaptation more difficult, as we noted in module 2. If the changes in trade regime result in a shift to crops that are less climate-resilient, it will make adaptation more difficult. This does not mean that such trade should not be promoted, but it does mean that care should be taken to ensure that adaptation strategies are modified to take account of the effects of the trade. In some cases it may even make sense not to encourage certain kinds of crops. This can be done through other instruments that complement the trade liberalization.

The third area is with respect to investment and maintenance of infrastructure, such as irrigation schemes or roads. These should be designed to withstand the climate changes that are foreseen. The government, with the aid of the donor community, can provide guidance in this regard. Development programs should ensure that such guidance is taken into account in infrastructure planning and management.

Finally, there is the possibility of improving tillage practices, use of fertilizers, etc. in a way that increases sequestration and reduces emissions of GHGs. Where agricultural reforms are being implemented, it could be desirable to include support for such measures where the costs and benefits justify it.

All areas of agricultural activity need research and extension support to facilitate adaptation and mitigation. The main themes that could be promoted are (a) techniques relating to carbon sequestration are promoted where appropriate, and (b) crop varieties that are able to adapt to climate are researched thoroughly. Although such research should be part of the climate program, these aspects should be given some prominence where the Bank is supporting development in agriculture and rural economy.

Forestry

The broad objectives are to (a) shift to the sustainable management of forest resources, (b) improve management of production forests and (c) increase conservation of biodiversity. The specific policies and their impacts are given in Table 2.10.

As in the case of agriculture, forest sector reforms are closely tied to the environment. On the mitigation side, the aim should be to manage logging so as to reduce carbon loss. It is also now becoming possible to certify carbon credits from avoided deforestation. In drawing up forest sector plans, it is very important therefore to include this option, which may generate greater income than logging or clearing land for agriculture. The mechanisms for getting financial support for this are discussed in module 3.

On the adaptation side, it is clear that forests will change in their composition with climate change. A careful assessment of these changes should inform policy on forest management, as well as plans for biodiversity protection, protection of wildlife, and conservation areas.

Measures to mainstream climate concerns into forest management are thus of crucial importance. The Bank should play a leading role in ensuring that this happens.

Mining

The broad objective is to develop the mining sector as a source of growth. The specific policies and their impacts are given in Table 2.11.

The mining sector has major environmental impacts, which need to be considered in any programs that expand the sector. As far as climate change is concerned, development programs should ensure that energy efficiency is given prominence in any operations that are being supported, and that EIAs of mining operations, which last over several decades, take account of the impending climate impacts. These could affect the stability of mining areas, the availability of water, etc.

The risks of regional authorities turning a blind eye to such concerns so as to attract private investors have to be addressed. Similar concerns apply for different reasons in the case of artisanal mines.

Fisheries

The broad objective is sustainable development of the fisheries sector. The specific policies and their impacts are given in Table 2.12.

The high level of awareness of the risks of overfishing means that policies designed to promote this sector are sensitive to this factor. The danger of promoting industrial fisheries is the impact it can have on small-scale fishers, who in turn can damage their environment as they seek alternative sources of livelihood.

As far as climate considerations are concerned, they will play a major role in the way fish stocks evolve and where and how sustainable fishing can be practiced. Any reviews of future prospects must include these factors. Fishery policy must be made in conjunction with climate adaptation policy.

Environmental Management

Policies covered in development programs that relate to environmental management include:

* Ensuring adequate financing for building capacity and investments for environmental management

* Adopting environmental impact mitigation plans

* Passing laws and decrees on environmental regulation and monitoring

* Streamlining environmental and forest impact assessments

* Decentralizing environmental management instruments and plans

* Promoting transparency and public participation in environmental management

* Developing fiscal instruments to promote environmental management and allocating more funds to promote sustainability

* Promoting decentralization and the role of communities in environmental management.

Such policies are generally supportive of climate change adaptation. In fact, climate change is one of the key areas that these reforms will address. As already noted, it is critical to ensure that management systems for the environment are strong enough to address the additional challenges posed by climate adaptation and mitigation. In Table 2.1 we have provided a guide to the questions that should be asked of such systems. Where there are weaknesses, development programs should include a component to overcome these shortcomings, or identify other components of Bank support to the country that will do the same. For the review in module 1, we saw that most countries are still weak in their capacity to address these new challenges. It is therefore important to give high priority to building up capacity in this area while supporting the government through development policy lending.

Education

Policies covered in development programs that relate to education sector include:

* Promoting a fiscal framework and increased sector financing

* Facilitating the transfer of resources to districts to meet the needs of education service delivery

* Increasing the transparency of financial management processes and strengthening provincial and district capacity for monitoring flows

* Improving transparency in procurement procedures and practices

* Improving efficiency of education expenditure

* Improving sector governance

* Enhancing monitoring of school performance by communities

* Strengthening monitoring and evaluation

* Improving teacher management

* Revitalizing Parent-Teacher Associations

* Developing an education management information system

* Promoting community oversight of educational programs

* Promoting equitable access to education and improving quality

* Reducing dropout rates, especially at lower levels

* Ensuring equitable access to education at all levels

* Encouraging participation of the private sector

* Promoting equal access to boys and girls

* Targeting poor and marginalized areas with the weakest education indicators

* Reducing regional disparities

* Improving the quality of education

* Improving teaching practices, with a focus on schools and student outcomes

* Reducing repetition rates and increasing completion rates

* Reinforcing the capacity of existing academic structures and administration

* Raising awareness of parents

* Increasing accountability of schools to both government and community

* Improving teacher quality via emphasis on teacher recruiting and training

* Reducing corruption and misuse of public resources

From a climate perspective, increasing awareness of climate impacts is probably the main link to educational reforms. Actions at the household, farm, and enterprise level to use energy more efficiently can provide highly cost-effective reductions in GHGs. Likewise, these can be implemented through publicity programs for the public, school curriculum additions, and demonstration packages. By including such measures in any educational sector program, the development programs will help mainstream climate change objectives into that sector's policies.

Health

The main objectives of sectoral health policies are to improve financing and the fiduciary environment, and better target healthcare to the poor. Specific policies and their impacts are given in Table 2.13.

The main links to climate change arise through alterations in the priorities for health spending and the links between the health and infrastructure budgets. As climate-related health burdens increase, more attention will need to be paid (in some places) to vector-borne diseases, such as malaria and cerebrospinal meningitis. Addressing these would involve both reactive as well as preventive measures. Some of the latter entail increases in infrastructure investment, for example in water management, making expenditures in the two areas related.

In some countries, changes in diet and exercise can also have not only health benefits but also benefits in terms of reduced emissions of GHGs. Such impacts, however, apply to those with relatively high incomes and are therefore less likely to apply across the board in poor countries.

Infrastructure

The broad objectives are to implement general transport sector reforms, urban sector reforms, development of ports, water sector reforms, and liberalization of the telecommunications sector. The specific policies and their impacts are given in Table 2.14.

Most infrastructure investments will have some implications in terms of future use of energy and therefore of GHG emissions. They will also often be affected by climate change, given the long life of such investments. Development programs for infrastructure development should therefore make sure that all investment plans incorporate a climate-impacts perspective. Furthermore, when designing policies for the provision of infrastructure, they should also take account of the implications climate change will have on the impacts of these policies. The most obvious one is clearance of land for urban development. This has to be done in the light of future water variability, sea-level rise, and so on. Less obvious are the impacts of transport systems for private vehicles, and distances that people have to travel to work. Options for urban development need to go through a climate assessment in terms of the relative energy demands they imply.

Where options that are more attractive from a climate perspective turn out not to be the lowest cost ones, the additional costs can often be justified in terms of the climate benefits. Moreover, funds are available to finance this gap, or at least part of it. Some of these sources were discussed in module 1. Module 3 provides further details of Bank and other initiatives in this area.

Energy

The broad objectives of energy sector loans are to implement tariff structure reforms, privatization, improvements in operational efficiency and fiscal sustainability of utilities, promotion of renewable energy, increased competition in the energy market, competition in the petroleum market, and improvements in social and environmental sustainability of energy reforms. The specific policies and their impacts are given in Table 2.15.

The energy reforms in development programs focus mainly on financial issues of cost recovery, institutional issues of privatization, and operational issues of efficiency improvement and financial sustainability. In addition, there has been some attention given in recent years to promoting nontraditional renewable energy.

As far as climate change is concerned, the last of these has a clear benefit in terms of mitigation of GHGs. There are several financial mechanisms to support the additional costs of adopting renewable energy, which are listed in module 1. It is crucial that the TTL be fully aware of all such possibilities and that any program of support for renewable energy be an integral part of the program of climate change mitigation. The additional link that development programs have to establish is that of providing the right incentives to the agents responsible for supply and using renewable energy, so that projects that are rendered financially viable through support mechanisms such as CDM do in fact deliver the reductions in GHGs that are promised.

The other areas of energy sector reform also offer some possible benefits for climate change if designed appropriately. In terms of tariff reforms, there is scope for green tariffs, as well as the use of feed-in tariffs to promote renewable energy. In terms of operational efficiency, one may be able to add to the financial benefits of reduced losses the benefits of reduced GHGs (converted into money flows). Finally, as far as subsidies are concerned, we may need to take a more nuanced approach, especially where removal of subsidies could result in increased deforestation, or where the subsidies directly support the adoption of clean renewable energy.

Financial sector

The broad objectives of development programs in this sector are to increase resilience and soundness of the financial system, implement reforms in the rural finance sector and reform the insurance sector. The main items included are the following:
Increase resilience and soundness
of the financial system

Restructuring and privatization of state banks

Reducing the stock of non-performing loans

Reforming financial institutions

Improving internal control and audit in banks

Modernizing the payment system, legislation to prevent money
laundering, and improving quality of financial information

Strengthening the fiduciary framework for public financial
management and corporate financial reporting

Increasing access to finance

Reforming the rural finance sector

Establishing a rural finance agency

Reforming the insurance sector

Improving the legal, regulatory and supervisory framework for the
banking sector and capital markets


While these reforms do not directly impinge on climate mitigation and adaptation, there is potential for including a climate overlay in the operations of banks so that they are aware of the need to undertake proper climate assessments when they make loans for infrastructure investments. Likewise, a rural finance agency should promote and support programs that involve adaptation and mitigation; if it is to do that, it must have adequate knowledge in that area. Finally, provision of insurance is an important part of the adaptation to climate change. Reforms in the insurance sector should include coverage of climate risks with support from the government to make the market work (excessive risks will not be covered by the private sector and its ability to provide coverage can depend on government policies for flood protection, etc.).

Tourism sector

The broad objective is to promote tourism and tourism revenue. Specific policies that have been supported include:

* Increasing the number of tourist destinations

* Establishing and implementing a set of benchmarks for good environmental practice in tourist facilities

* Promoting sustainable tourism

* Promoting environmental conditions, especially in regard to wastewater and solid waste at tourist sites.

Tourism strategies and investment have necessarily to look at the medium to long term. In this context, adaptation to climate change is essential. Much work has been done to estimate changes in flows of tourists as a result of climate impacts. Any country undertaking a development program in tourism should draw on the prior work on the impacts. It should undertake an SEA to configure the most effective tourist developments and the infrastructure support needed to implement the program.

(11) An Initiative of the Yale Center for Environmental Law and Policy (YCELP) and the Center for International Earth Science Information Network (CIESIN) of Columbia University, EPI measures country-scale performance on a core set of environmental policy goals for which every government can be made accountable.

(12) The Country Policy and Institutional Assessment (CPIA) rates countries against a set of 16 criteria grouped in four clusters: (a) economic management; (b) structural policies; (c) policies for social inclusion and equity; and (d) public sector management and institutions. The environmental criterion assesses the extent to which environmental policies foster the protection and sustainable use of natural resources and the management of pollution. Assessment of environmental sustainability requires multidimensional criteria (i.e. for air, water, waste, conservation management, coastal zones management, and natural resources management). To ensure balanced assessments, World Bank staff members assess country policies and institutions by filling out a specific questionnaire.

(13) Under the RAF, GEF resources are being allocated to countries based on their potential to generate global environmental benefits and their capacity, policies, and practices to successfully implement GEF projects.

(14) OECD. 1995. "The St. Petersburgh Guidelines on Environmental Funds in the Transition to a Market Economy." OECD/GD(95) 108. Paris: OECD.
Table 2.1 Climate Institutional Assessment
Key Questions

How strong is the country's environmental capacity as measured by
its EPI/CPIA/RAF Score for the environment?

How well does the national focal point for climate function? Are
all communications with the UNFCCC and other bodies on time and are
other reporting obligations fulfilled?

Has the country prepared a NAPA and how well is this rated in terms
of completeness, analytical rigor, etc.? How complete are the
assumptions and methodology used in the GHG inventories reported in
the NAPA?

Are the inventories of GHGs reported in NAPA internally consistent
in all its elements, with inventories of other years? Has the
country prepared a climate mitigation strategy and how well is this
rated in terms of completeness, analytical rigor, etc.?

Additional Issues to be addressed

Are the estimates of emissions and removals reported in the
national reports comparable across parties?

Is the inventory complete in that it covers all sources and sinks
as well as all gases as in the IPCC guidelines for national GHG
inventories?

Does the country have a vulnerability assessment of the impact of
climate change and how well is the assessment done in terms of
completeness and rigor?

Does the country possess infrastructure and institutional systems
for meteorological, oceanographic and atmospheric/space based
systems for proper reporting of climate variables?

In which ministries other than environment is there a person with
some responsibility for integrating climate policy?

Has the country an active program for mitigation of GHGs that is
being monitored and how many tons of GHGs have been reduced as a
result of CDM and other projects and programs?

Has the plan for disaster and emergency preparedness been modified
to incorporate climate change related events?

Does the country have a national program for systematic development
and implementation of a climate change action program?

Are the responsibilities of the key stakeholders in developing and
implementing climate change policies well defined?

Do the key stakeholders, the participating ministries and
committees, have well-defined institutional linkages and
coordination mechanisms to fulfill the climate agenda?

Do the public and industry have sufficient awareness of climate
change issues? Are there enough mechanisms to better inform the
public and industry about the climate change challenges and
opportunities?

Does the climate change policy team have enough human resources to
implement the action agenda? Are the institutions supported by
enough public resources?

Do the institutions have enough technical resources such as data
access and management systems, information networks and means of
communication?

How well the activities are coordinated at the national and
regional levels?

Does the central agency command enough political power to develop
and implement sound policies and programs?

Are there options available in the country for insurance against
risk from climate change and natural disasters? (See Box 2).

Table 2.2 Transmission channels for policies designed to
ensure macroeconomic stability

Policy Mitigation

 Reactive Proactive

Improve fiscal performance and fiscal sustainability

Strengthen tax administration

Maintain sound expenditure Ensure proper
composition across sectors and support for
improve management of public energy
expenditure efficiency

Reduce primary spending

Improve transparency of fiscal
accounts and budget execution

Reform tax policy to increase Possible
revenue base introduction
 of a carbon or
 energy tax

Adhere to fiscal discipline,
meeting target and ensure
priority spending

Make tax system more equitable,
transparent and stable

Reduce tax based expenditure Risk of
 reducing
 support for
 energy
 efficiency

Budget management and fiscal
rules to ensure budget envelope
and ensure allocations to line
ministries are in accord with
preset ceilings

Set a fiscal framework,
identifying priority spending

Encourage increased and more
predictable revenues through
improved compliance, broader
tax base and reduction in tax
rates to improve investment

Create an operational fiscal
policy office with capability
and access to information
sufficient to provide analysis
of proposed tax, tariff and
financial market policies

Strengthen fiscal devolution Risk of reduced
 support for
 mitigation
 measures

Strengthen budget reporting
and planning

Increase equity in
intergovernmental transfers

Improve efficiency and impact
of public spending on national,
sub-national and sectoral
levels

Improve budget execution and
financial reporting

Improve treasury operation

Simplify expenditure management
and make it transparent

Strengthen public expenditure
management

Strengthen legislative
oversight on public finances

Phase out direct and indirect
subsidies to state owned
enterprises

Implement a Medium-Term
Expenditure (MTEF) to have
greater visibility of policies
and place budgetary allocations
in a medium term framework

Reallocate inefficient spending

Reduction of government debt/ improve debt management

Reduction of public debt

Assessment of civil service
pension liabilities and
possibilities for reform

Develop and implement a debt
management strategy

Improve debt management

Reduce subsidies to the These could
non-poor help reduce
 energy
 consumption

Make tax revenue administration
more efficient

Expand and deepen international trade

Trade policy reforms; Check impacts Can be a source
liberalization of trade regime, of reforms on of technology
tariff and non-tariff GHGs and on that reduces
regulations carbon loss via GHGs if so
 deforestation designed

Expand market access for
domestic exports

Implement complementary
measures to facilitate trade
and customs clearance

Implementation of regional SEA of policies
trade agreements should cover
 climate changes
 impacts of such
 agreements

Ensure compliance with
international conventions and
property rights

Reform to promote foreign Good practice Can be a source
direct investment should cover of technology
 energy that reduces
 efficiency GHGs if so
 designed

Policy Adaptation

 Reactive Proactive

Improve fiscal performance and fiscal sustainability

Strengthen tax administration

Maintain sound expenditure Ensure proper
composition across sectors and support for
improve management of public adaptation
expenditure programs

Reduce primary spending

Improve transparency of fiscal
accounts and budget execution

Reform tax policy to increase
revenue base

Adhere to fiscal discipline,
meeting target and ensure
priority spending

Make tax system more equitable,
transparent and stable

Reduce tax based expenditure Risk of
 reducing
 support for
 adaptation
 programs

Budget management and fiscal
rules to ensure budget envelope
and ensure allocations to line
ministries are in accord with
preset ceilings

Set a fiscal framework, Develop
identifying priority spending capability to
 show benefits
 of programs

Encourage increased and more
predictable revenues through
improved compliance, broader
tax base and reduction in tax
rates to improve investment

Create an operational fiscal
policy office with capability
and access to information
sufficient to provide analysis
of proposed tax, tariff and
financial market policies

Strengthen fiscal devolution Risk of reduced
 support for
 adaptation
 measures

Strengthen budget reporting
and planning

Increase equity in
intergovernmental transfers

Improve efficiency and impact
of public spending on national,
sub-national and sectoral
levels

Improve budget execution and
financial reporting

Improve treasury operation

Simplify expenditure management
and make it transparent

Strengthen public expenditure
management

Strengthen legislative
oversight on public finances

Phase out direct and indirect
subsidies to state owned
enterprises

Implement a Medium-Term Risk that
Expenditure (MTEF) to have programs on
greater visibility of policies adaptation
and place budgetary allocations cannot justify
in a medium term framework themselves on
 cost benefit
 grounds

Reallocate inefficient spending

Reduction of government debt/ improve debt management

Reduction of public debt

Assessment of civil service
pension liabilities and
possibilities for reform

Develop and implement a debt
management strategy

Improve debt management

Reduce subsidies to the
non-poor

Make tax revenue administration
more efficient

Expand and deepen international trade

Trade policy reforms; Ensure that
liberalization of trade regime, changes in
tariff and non-tariff output do not
regulations increase
 vulnerability
 to CC

Expand market access for
domestic exports

Implement complementary
measures to facilitate trade
and customs clearance

Implementation of regional Should not Use regional
trade agreements promote trade agreements to
 that makes ensure common
 adaptation more approach to
 difficult adaptation.

Ensure compliance with
international conventions and
property rights

Reform to promote foreign Ensure that FDI runs through
direct investment a climate screen

Table 2.3 Transmission channels for policies designed to
improve the investment climate

Policy Mitigation

 Reactive Proactive

Improve investment procedures

Reduce uncertainty for Ensure that the supporting
investors by implementing the regulations include incentives
investment law and its to adopt energy efficient
supporting regulations and new technologies where possible
operating procedures.

Reduction in business start/ Ensure that this is not at
up time by simplifying and/or the expense of considering
eliminating unnecessary GHG implications of the
business licenses, procedures investments
and multiple registration
requirements.

Facilitate doing business by
streamlining registration
procedures

Establish one-stop center for
business registration

Ease entry of foreign Could help
professionals and skilled develop
workers efficient
 technologies

Strengthen arrangements for Should not be Can help bring
public-private partnerships an excuse for in new
 lower standards technology

Strengthen banking system

Strengthen non-bank financial
sector regulation and
supervision to minimize
chances of crisis

Speed up licensing of complex Can result in
operations such as forest overlooking of
concession, power plants, pulp GHG impacts.
mills, etc.

Improve access to Can help
international capital markets increase carbon
 efficiency
Establish a national
investment program

Issuance of international Can help
bonds increase carbon
 efficiency

Privatization, reform, and liquidation of state-owned enterprises

Sell or cancel state's State
minority shares in enterprises enterprises are
 often least
 efficient, thus
 it can help
 increase
 efficiency

Sell or liquidate companies
with majority state ownership

Sell state shares in shipyards

Sell or liquidate
agro-kombinants

Reduce state subsidies to Ensure that
enterprises efficiency
 standards are
Contain enterprise arrears not compromised

Privatization, restructuring Can provide an
and bankruptcy of state impetus for
enterprises increased
 energy
 efficiency

Reforms for private sector development

Reducing cost of factors like Costs of these services should
electricity, telephone, water, include at least an element for
transportation the cost of carbon generated

Facilitating transit of
import goods

Lowering administrative Ensure that
barriers for private investors this is not
 done at expense
Liberalize permitting and of meeting
licensing rules efficiency
 standards

Improve the rule of law for Can help ensure
private sector compliance with
 energy goals by
 private sector

Liberalization of labor
laws-less intervention by the
state

Improve functioning of land
markets

Increase private sector Finance should
access to finance not support
 bad practices

Improve functioning of
labor markets

Enforcement of standards for
goods exported, especially
WTO standards for food
products

Strengthen small business Should help
 improve
 efficiency

Promote export of handicrafts
by revising laws and taxes
(export tax) schemes

Trade Facilitation

Improve governance procedures
and promotion of e-government

Ensure compliance with
international conventions and
property rights

Simplification of customs
regulations, computerization
of customs procedures

Enhance team tariff through
improved governance procedure,
better IT, and research
capability

Policy Adaptation

 Reactive Proactive

Improve investment procedures

Reduce uncertainty for Investment guidelines should
investors by implementing the provide some advice on likely
investment law and its climate changes and adaptation
supporting regulations and new measures that the government
operating procedures. intends to implement

Reduction in business start/ This should not be done at the
up time by simplifying and/or expense of due diligence on its
eliminating unnecessary consequences for ongoing and
business licenses, procedures proposed adaptation measures
and multiple registration (e.g. location of plants in
requirements. areas to be affected by sea
 level rise)

Facilitate doing business by
streamlining registration
procedures

Establish one-stop center for
business registration

Ease entry of foreign
professionals and skilled
workers

Strengthen arrangements for Should not be
public-private partnerships an excuse for
 lower standards

Strengthen banking system

Strengthen non-bank financial
sector regulation and
supervision to minimize
chances of crisis

Speed up licensing of complex Can result in
operations such as forest ignoring
concession, power plants, pulp implications
mills, etc. for adaptation
 policy

Improve access to Can help
international capital markets awareness of
 CC risks

Establish a national
investment program

Issuance of international Can help
bonds awareness of
 CC risks

Privatization, reform, and liquidation of state-owned enterprises

Sell or cancel state's
minority shares in enterprises

Sell or liquidate companies
with majority state ownership

Sell state shares in shipyards

Sell or liquidate
agro-kombinants

Reduce state subsidies to
enterprises

Contain enterprise arrears

Privatization, restructuring
and bankruptcy of state
enterprises

Reforms for private sector development

Reducing cost of factors like Cost of water
electricity, telephone, water, resources
transportation should take
 account of
 costs of CC
 adaptation

Facilitating transit of Design of
import goods routes should
 allow for CC

Lowering administrative Ensure that
barriers for private investors this is not
 done at expense
Liberalize permitting and of ignoring
licensing rules need to adapt
 to CC

Improve the rule of law for Can help ensure
private sector adaptation by
 private sector

Liberalization of labor
laws-less intervention by the
state

Improve functioning of land Ensure markets
markets reflect costs
 of adaptation

Increase private sector Finance should
access to finance not support
 mal-adaptation

Improve functioning of
labor markets

Enforcement of standards for
goods exported, especially
WTO standards for food
products

Strengthen small business

Promote export of handicrafts
by revising laws and taxes
(export tax) schemes

Trade Facilitation

Improve governance procedures
and promotion of e-government

Ensure compliance with Rights should
international conventions and be limited by
property rights obligations to
 adapt

Simplification of customs
regulations, computerization
of customs procedures

Enhance team tariff through
improved governance procedure,
better IT, and research
capability

Table 2.4 Transmission channels for policies designed to
improve public financial management

Policy Mitigation

 Reactive Proactive

Strengthen budgeting and financial management

Improve budgeting through
future expenditure framework
with a system of clear forward
estimates

Improve controls and But earmarked
efficiency in treasury taxes may
management by consolidating promote energy
revenue and expenditure efficiency /low
accounts carbon
 operations

Increase accountability and
transparency in government
financial management

Improve the stability of the Banks should
financial sector by also adopt good
implementing good corporate practice
governance and risk management standards
standards, particularly in w.r.t. energy
state-owned banks. efficiency

Commercialization and
transparency of commercial
banks

Strengthen non-bank financial Special funds
institutions to develop a for energy
diversified financial sector. efficiency may
 be desirable

Improve Procurement

Implement transparent
procurement processes and
better procurement outcomes

Enhance efficiency of
procurement, e-procurement

Legal, regulatory, and Procurement
institutional framework in rules could
public procurement that include
complies with international efficiency
standards standards

Public procurement reforms to
increase transparency

Initiate Civil Service Reform

Pension reforms

Establish independent salary
commission that can propose
new pay designs for higher
level state officials

Civil service reform to
include a framework for
training, payroll
verification, pay and grading
policy

Setting up functional human
resource management office

Capacity of civil service to
ensure skills base and address
issues of retention and
sustainability

Efficient, transparent, and
fair policies regarding
personnel

Policy Adaptation

 Reactive Proactive

Strengthen budgeting and financial management

Improve budgeting through Estimates
future expenditure framework should include
with a system of clear forward costs of
estimates adaptation

Improve controls and
efficiency in treasury
management by consolidating
revenue and expenditure
accounts

Increase accountability and
transparency in government
financial management

Improve the stability of the Banks need to
financial sector by be informed on
implementing good corporate good practice
governance and risk management w.r.t.
standards, particularly in adaptation.
state-owned banks.

Commercialization and
transparency of commercial
banks

Strengthen non-bank financial Special funds
institutions to develop a for adaptation
diversified financial sector. may be
 desirable

Improve Procurement

Implement transparent
procurement processes and
better procurement outcomes

Enhance efficiency of
procurement, e-procurement

Legal, regulatory, and
institutional framework in
public procurement that
complies with international
standards

Public procurement reforms to
increase transparency

Initiate Civil Service Reform

Pension reforms

Establish independent salary
commission that can propose
new pay designs for higher
level state officials

Civil service reform to
include a framework for
training, payroll
verification, pay and grading
policy

Setting up functional human
resource management office

Capacity of civil service to
ensure skills base and address
issues of retention and
sustainability

Efficient, transparent, and
fair policies regarding
personnel

Table 2.5 Transmission channels for policies designed
to improve governance

Policy Mitigation

 Reactive Proactive

Improve Public Administration

Institution building at the
public administration sector
to affect financial
management, personnel
management and economic
decision making

Raise awareness of citizens Important to
about rights, rule of law, raise awareness
corruption on carbon
 footprints

Improve performance through
introduction of internal
auditing, evaluation, and
performance review

Improve performance of civil
service through incentives

Better fiduciary standards and public expenditure management

Transparency and
accountability in treasury
cash management

Regulations to prevent money
laundering activities

Strengthen Accountant
General's department

Set up public accounts
committee and records
management

Strengthen internal and
external audit

Transparency and equity in
decentralized resource
allocation

Improve accountability and
transparency of government
financing

Judiciary reforms

Improve transparency and
efficiency of judiciary

Improve financial situation of
the judiciary sector and
sustain the allocation

Strengthen institutional
capacity, promote broader
civil society participation,
and provide judicial services
in courts that are more
transparent, fair, equitable
and accessible

Prepare and implement action
plans to fight corruption and
money laundering

Strengthen institutional
capacity of the Ministry of
Justice

Set up anticorruption
commissions/committees

Regulatory and institutional
mechanisms to fight corruption

Civil Service Reforms

Rationalize employment in the
public sector

Reduce deficits in the pension
system and move the system
toward fiscal sustainability

Create a lean, effective and
efficient civil service free
of corruption

Develop a human resource
management system

Promote gender equality in
civil service

Improve human resource
management in the public
sector

Promote early retirement
options, redeployment of
staff, stabilization of civil
service staff

Policy Adaptation

 Reactive Proactive

Improve Public Administration

Institution building at the Important to
public administration sector include
to affect financial capacity
management, personnel building w.r.t.
management and economic adaptation
decision making

Raise awareness of citizens Important to
about rights, rule of law, raise awareness
corruption on adaptation

Improve performance through
introduction of internal
auditing, evaluation, and
performance review

Improve performance of civil
service through incentives

Better fiduciary standards and public expenditure management

Transparency and
accountability in treasury
cash management

Regulations to prevent money
laundering activities

Strengthen Accountant
General's department

Set up public accounts
committee and records
management

Strengthen internal and
external audit

Transparency and equity in Equity in
decentralized resource allocation
allocation should take
 account of
 adaptation
 requirements of
 different zones

Improve accountability and
transparency of government
financing

Judiciary reforms

Improve transparency and
efficiency of judiciary

Improve financial situation of
the judiciary sector and
sustain the allocation

Strengthen institutional Important to
capacity, promote broader include civil
civil society participation, society in
and provide judicial services drawing up
in courts that are more adaptation
transparent, fair, equitable strategies
and accessible

Prepare and implement action
plans to fight corruption and
money laundering

Strengthen institutional Should help
capacity of the Ministry of implement
Justice adaptation
 measures and
 ensure
 compliance

Set up anticorruption
commissions/committees

Regulatory and institutional
mechanisms to fight corruption

Civil Service Reforms

Rationalize employment in the
public sector

Reduce deficits in the pension
system and move the system
toward fiscal sustainability

Create a lean, effective and
efficient civil service free
of corruption

Develop a human resource
management system

Promote gender equality in
civil service

Improve human resource
management in the public
sector

Promote early retirement
options, redeployment of
staff, stabilization of civil
service staff

Table 2.6 Transmission channels for policies designed to target
policies for the poor

Policy Action Mitigation

 Reactive Proactive

Target policies for the poor

Replace consumer subsidies Some subsidies are useful in
with targeted programs for reducing carbon emissions and
poor, cash transfers, etc. energy use; they should be
 carefully evaluated

Improve monitoring and Include in this
analysis of information on the effects on
poverty and social well-being energy use

Encourage participation of
stakeholders in poverty
reduction programs

Decentralization of poverty Take account of dependence on
reduction programs non-commercial energy

Social security and universal
health insurance reform

Improve poverty orientation of
public spending

Pension Reforms

Increase pensions, pay
pensions on time, and improve
administration

Reform of pension scheme to
reduce the state expenditure

Policies to encourage growth and development of small
and medium enterprises

Provide access to credit, Make this a
technical assistance, and function of
capacity building to these their energy
enterprises efficiency

Promote the handicrafts
industry, reduce the skill tax

Policy Action Adaptation

 Reactive Proactive

Target policies for the poor

Replace consumer subsidies Removing subsidies may increase
with targeted programs for behavior that makes adaptation
poor, cash transfers, etc. more difficult if they increase
 vulnerability of those dependent
 on natural resources; however,
 some targeted subsidies could
 actually reduce the
 vulnerability of the poor

Improve monitoring and Include if
analysis of information on possible
poverty and social well-being changes that
 impact on
 adaptation

Encourage participation of
stakeholders in poverty
reduction programs

Decentralization of poverty
reduction programs

Social security and universal
health insurance reform

Improve poverty orientation of
public spending

Pension Reforms

Increase pensions, pay
pensions on time, and improve
administration

Reform of pension scheme to
reduce the state expenditure

Policies to encourage growth and development of small
and medium enterprises

Provide access to credit, Make credit
technical assistance, and available to
capacity building to these implement
enterprises adaptation
 measures

Promote the handicrafts
industry, reduce the skill tax

Table 2.7 Transmission channels for policies designed
to promote decentralization

Policy Action Mitigation

 Reactive Proactive

Promote Fiscal Decentralization

Improve resource allocation to It is important to take account
the local levels and of capacity in the regions and
strengthen intergovernmental communities to promote energy
fiscal relations efficiency and to develop
 projects for the carbon market,
 which is an international
 market

Strengthen capacity of communities to deliver public services

Improve decentralization by
issuing ministerial decrees
for blue-book and on-granting
procedures and improve the
framework for sub-national
government bond issuance and
work-out procedures.

Provide leadership, policy and
regulatory frameworks

Adequate and timely resources
for local institutions, and
capacity building

Policy Action Adaptation

 Reactive Proactive

Promote Fiscal Decentralization

Improve resource allocation to It is important to ensure that
the local levels and capacity for adaptation
strengthen intergovernmental planning and implementation is
fiscal relations adequate at the regional level
 before giving the regions the
 responsibility to manage
 programs in this area

Strengthen capacity of communities to deliver public services

Improve decentralization by
issuing ministerial decrees
for blue-book and on-granting
procedures and improve the
framework for sub-national
government bond issuance and
work-out procedures.

Provide leadership, policy and
regulatory frameworks

Adequate and timely resources This is
for local institutions, and critical for
capacity building adaptation
 planning

Table 2.8 Transmission channels for policies designed to
increase competition and entrench property rights

Policy Action Mitigation

 Reactive Proactive

Liberalization of Key Services

Liberalization of railway Include a plan for
services improvements in energy
 efficiency in the private
Liberalization of civil sector programs
aviation services

Liberalization of
telecommunication services

Strengthen capacity of communities to deliver public services

Strengthen creditor rights

Strengthen civil procedures
for debt recovery

Simplify procedure for
property transactions

Reform of State-Owned Utilities

Privatization of state-owned
utilities Should improve
 energy
Encourage private sector efficiency
participation

Policy Action Adaptation

 Reactive Proactive

Liberalization of Key Services

Liberalization of railway Ensure that plans for
services investment are screened for
 climate impacts
Liberalization of civil
aviation services

Liberalization of
telecommunication services

Strengthen capacity of communities to deliver public services

Strengthen creditor rights

Strengthen civil procedures
for debt recovery

Simplify procedure for
property transactions

Reform of State-Owned Utilities

 Should include
Privatization of state-owned plans to adapt
utilities to climate
 impacts
Encourage private sector
participation

Table 2.9 Transmission channels for policies designed to
increase production and competitiveness in agriculture

Policy Mitigation

 Reactive Proactive

Increase production and productivity

Improve access to markets Ensure that
(trade liberalization) measures do not
 lead to
 deforestation

Promote agronomic research

Support for infrastructure and
equipment

Strengthen performance and
productivity of the irrigation
sector

Increase access to micro
finance

Reform of land tenure laws and
land acts

Improve rural roads

Product price and input price Ensure that
reforms measures do not
 lead to
 deforestation

Maintenance and expansion of
irrigation

Increase competitiveness in specific commodities
(Coffee, tea, cotton, etc.)

Provide better incentives and
institutional arrangements to
farmers to increase returns

Improve marketing arrangements
for improved seeds and
fertilizers

Improve processing facilities

Reform sector boards

Improve trade and marketing of
agro-processed products

Implement producer price-
setting mechanism

Privatize processing
facilities (e.g., cotton
ginning, coffee processing)

Policies to modernize the rural economy

Strengthen agricultural Ensure that part of the
research and development research program look at ways
 to reduce carbon loss through
Strengthen agricultural reduce tillage and other
extension services management practices

Provide private extension
advisory services

Provide stimulus to
agricultural research

Policy Adaptation

 Reactive Proactive

Increase production and productivity

Improve access to markets If trade increases exports
(trade liberalization) that make adaptation more
 difficult, adaptation policy
 should be adjusted and perhaps
 some exports discouraged

Promote agronomic research Should include
 research on
 resilience to
 climate change

Support for infrastructure and Equipment and
equipment infrastructure
 should be
 designed to
 withstand CC

Strengthen performance and Design of irrigation schemes
productivity of the irrigation should take account of climate
sector effects

Increase access to micro Design schemes so as not to
finance encourage mal adaptation

Reform of land tenure laws and Laws should
land acts enforce the
 right to limit
 development
 where CC will
 pose a risk

Improve rural roads Design of roads should allow
 for future climate impacts

Product price and input price Evaluate impacts on crops w.r.t.
reforms climate impacts

Maintenance and expansion of Design of irrigation schemes
irrigation should take account of climate
 effects

Increase competitiveness in specific commodities
(Coffee, tea, cotton, etc.)

Provide better incentives and
institutional arrangements to
farmers to increase returns

Improve marketing arrangements Promote adoption of seeds that
for improved seeds and are more resilient to climate
fertilizers change

Improve processing facilities

Reform sector boards

Improve trade and marketing of Ensure that this does not lead
agro-processed products to expended production that
 will make future adaptation
 more difficult

Implement producer price-
setting mechanism

Privatize processing
facilities (e.g., cotton
ginning, coffee processing)

Policies to modernize the rural economy

Strengthen agricultural Crucial that the research
research and development include a component on how to
 adapt to changing climate by
Strengthen agricultural developing drought resistant
extension services crops, etc.

Provide private extension
advisory services

Provide stimulus to
agricultural research

Table 2.10 Transmission channels for policies designed
to develop the forest sector

Policy Mitigation

 Reactive Proactive

Sustainable management of forest resources

Implementation and compliance Code should include adoption of
with forestry code measures to limit carbon loss

Encourage domestic processing Logging should
of logs be low impact
 w.r.t. carbon

Community engagement in Communities
forestry sector should be
 encouraged to
 adopt low-
 carbon-loss
 methods

Implement forest sector
monitoring

Streamline Environmental and Cover aspects
Forest Impact Assessment related to
 sequestration

Transparency in allocation of
forest permits

Sustainable forest management
plans and timely delivery of
services to the private sector

Effective enforcement of Seek, if
forest fiscal regime like possible, to
effective collection of forest develop market
taxes for carbon
 credits

Recruitment of internationally
reputed observer to monitor
logging activities

Decentralization, allocating a
share of forest revenues to
the local governments

Setting up national forest If a market for
observatory with GIS carbon credits
capabilities to track timber is to work it
flows and payment of related will need
fees effective GIS
 capability

Capacity building for forest
institutions

Reform forestry fund with
private sector and local
government participation

Biodiversity Conservation

Strengthen institutions for
management and administration
of parks, protected areas, and
wildlife

Promote local community
participation in
administration of protected
and sensitive areas

Systematic application of
environmental impact
assessment

Implementation of socio-
economic mitigation plans and
resettlement of indigenous
people

Measures to exempt nationally
protected areas from logging,
industrial mining, fishing, or
any activity that threatens
biodiversity

Management of production forests

Complete forest estate zoning
plan

Implement forest management Include if
policies and plans for possible carbon
production forests credits as an
 alternative to
Promote efficiency and value- logging and
added in timber product land clearance
processing and reduce wastage

Ensure control of forest
production field applications
and enforcement and
application of penalties

Valorize non-timber forest Especially
products carbon credits

Continue the plantation
development program

Encourage competitive bidding
of logging permits for natural
and planted timber

Develop a framework for
effective log tracking system

Enactment of sustainable
forestry law

Improve livelihood of natural
resource owners through
appropriate valuation of
forest resources

Policy Adaptation

 Reactive Proactive

Sustainable management of forest resources

Implementation and compliance
with forestry code

Encourage domestic processing
of logs

Community engagement in
forestry sector

Implement forest sector
monitoring

Streamline Environmental and
Forest Impact Assessment

Transparency in allocation of
forest permits

Sustainable forest management
plans and timely delivery of
services to the private sector

Effective enforcement of
forest fiscal regime like
effective collection of forest
taxes

Recruitment of internationally
reputed observer to monitor
logging activities

Decentralization, allocating a
share of forest revenues to
the local governments

Setting up national forest Changes in forest growth
observatory with GIS and forest products should
capabilities to track timber be incorporated into forestry
flows and payment of related exploitation plans
fees

Capacity building for forest
institutions

Reform forestry fund with
private sector and local
government participation

Biodiversity Conservation

Strengthen institutions for Management
management and administration should take
of parks, protected areas, and account of
wildlife climate impacts

Promote local community
participation in
administration of protected
and sensitive areas

Systematic application of
environmental impact
assessment

Implementation of socio-
economic mitigation plans and
resettlement of indigenous
people

Measures to exempt nationally
protected areas from logging,
industrial mining, fishing, or
any activity that threatens
biodiversity

Management of production forests

Complete forest estate zoning
plan

Implement forest management
policies and plans for
production forests

Promote efficiency and value-
added in timber product
processing and reduce wastage

Ensure control of forest
production field applications
and enforcement and
application of penalties

Valorize non-timber forest
products

Continue the plantation
development program

Encourage competitive bidding
of logging permits for natural
and planted timber

Develop a framework for
effective log tracking system

Enactment of sustainable
forestry law

Improve livelihood of natural
resource owners through
appropriate valuation of
forest resources

Table 2.11 Transmission channels for policies designed
to develop the mining sector

Policy Mitigation

 Reactive Proactive

Develop the mining Sector as a Source of Growth

Reform the legal, regulatory
and institutional settings in
the mining sector

Improve governance and
transparency

Improve private sector Ensure mining
investment in the mining practices are
sector as energy
 efficient as
 possible

Expand administration of all
mining licenses through
cadastral system

Improve the level and quality Cover energy
of mining extension services efficiency

Improve competition in the
mining sector

Update regulatory and
legislative framework to bring
governance and institutional
standards to international
levels

Design mechanism to share
mining revenues with local
communities

Build capacity in the mining
sector

Set up environmental
management policies and
guidelines for social and
environmental impact
assessment

Introduce better practices for
improved work and living
conditions in artisanal mine
sites Provide advice and support
 for energy efficiency in
Improve economic efficiency these operations
and transparency of the sector

Restructure mining right
titling system

Strengthen Environmental and
Forest Impact Assessment of
mining

Policy Adaptation

 Reactive Proactive

Develop the mining Sector as a Source of Growth

Reform the legal, regulatory
and institutional settings in
the mining sector

Improve governance and
transparency

Improve private sector
investment in the mining
sector

Expand administration of all
mining licenses through
cadastral system

Improve the level and quality
of mining extension services

Improve competition in the
mining sector

Update regulatory and
legislative framework to bring
governance and institutional
standards to international
levels

Design mechanism to share
mining revenues with local
communities

Build capacity in the mining
sector

Set up environmental EIA should include effects of
management policies and climate change on stability of
guidelines for social and mining areas, availability
environmental impact of water
assessment

Introduce better practices for
improved work and living
conditions in artisanal mine
sites

Improve economic efficiency
and transparency of the sector

Restructure mining right
titling system

Strengthen Environmental and EIA should include effects of
Forest Impact Assessment of climate change on stability of
mining mining areas, availability of
 water

Table 2.12 Transmission channels for policies designed
to develop the fisheries sector

Policy Mitigation

 Reactive Proactive

Develop the mining Sector as a Source of Growth

Establishing rules of a geo-
positioning system to monitor
industrial fishing

Implement transparency in
industry fishing activities

Comprehensive socioeconomic
and environmental review of
the industrial fishing sector

Design and enforce
conservation measures to
protect and or restore fish
populations in over-exploited
or fragile marine areas

Policy Adaptation

 Reactive Proactive

Develop the mining Sector as a Source of Growth

Establishing rules of a geo- This is crucial to effective
positioning system to monitor management of stocks under
industrial fishing changing climatic conditions

Implement transparency in
industry fishing activities

Comprehensive socioeconomic Such a review should include
and environmental review of the impacts of changing fish
the industrial fishing sector stocks resulting from climate
 effects (and others) on
 communities dependent on
 fishing; changes in permissible
 fishery should follow

Design and enforce Conservation and protection
conservation measures to measures should be influenced
protect and or restore fish by expected climate impacts;
populations in over-exploited thus adaptation policy and
or fragile marine areas fishery policy have to be made
 in conjunction with each other

Table 2.13 Transmission channels for policies designed
to promote better healthcare

Policy Mitigation

 Reactive Proactive

Improve financing and fiduciary environment for health

Increase and sustain
government spending to
healthcare

Increase allocative and
technical efficiency of
healthcare spending

Decentralization of delivery
and public oversight

Improve monitoring and
evaluation

Targeting healthcare to the
poor

Increase access to affordable
healthcare

Improve quality and equity

Decentralize health services,
primary and secondary level
services

Planning, budgeting at the
central, state, regional,
district and peripheral levels

Strengthen partnership with Lower meat
private and NGO sectors diets benefit
 health and
 reduce
 emissions from
 agriculture;
 similar double
 benefits from
 reduced motor
 transport

Policy Adaptation

 Reactive Proactive

Improve financing and fiduciary environment for health

Increase and sustain Increased Immunization
government spending to spending to programs
healthcare address Investment in
 increases in infrastructure
 incidence of to respond to
 vector-borne disease
 diseases outbreak

Increase allocative and Increased incidence of malaria,
technical efficiency of cerebro-spinal meningitis, and
healthcare spending cholera in some places should
 imply a modification of
 priorities in health spending

Decentralization of delivery
and public oversight

Improve monitoring and
evaluation

Targeting healthcare to the
poor

Increase access to affordable
healthcare

Improve quality and equity Access to
 improved water
 and food will
 reduce
 susceptibility/
 exposure to
 vector- borne
 diseases and
 weather
 extremes

Decentralize health services,
primary and secondary level
services

Planning, budgeting at the
central, state, regional,
district and peripheral levels

Strengthen partnership with Health
private and NGO sectors education can
 reduce risk of
 climate-
 related
 infectious
 diseases

 Table 2.14 Transmission channels for policies designed
to improve infrastructure

Policy Mitigation

 Reactive Proactive

Implement general transport sector reforms

Rehabilitation of rural tracks
and roads in production
centers

Development and maintenance of Design should
road network take account of
 need to reduce
 energy use

Modernize and streamline trade
and transport logistics
practices

Increase private sector Incentives for
participation in rail and road low- carbon
services programs should
 be included

Sustained development of a System should
safe, secure, and efficient discourage long
national highway system work journeys

Catalyze institutional reforms
in order to develop a
sustainable toll highway
system

Reduce costs for port users
and enhance management
accountability

Secure, safe, economical, and
efficient civil aviation
system

Develop air transport Consider
 internalizing
 carbon costs

Increase resource generation
and attract private capital

Implement urban transport sector reforms

Lanes fully dedicated to
public transport Benefits are even greater if
 we take account of reduced
Congestion pricing GHG emissions

Reduction of fleet and taxi
services

Rationalization of public Take account
transport supply of GHG impacts

Measures for financial
sustainability of urban
transport sector

Promote citizen's
participation in government-
sponsored infrastructure
projects

Establish air pollution Reduced air pollution also
reduction targets provide reduced GHGs

Coordinate management of land
use and land use planning for
urban transport

Development of ports

Privatization of core services

Private sector participation
in port development

Water sector reforms

Improve access to improved
water and sanitation services

Increase waste water
treatment capacity

Improve water use productivity
in irrigated lands

Foster integrated water
resource management reform
for sustainable water use

Improve financial
sustainability of water
services

Improve monitoring and
evaluation

Promote hand washing

Measures for water pollution
control

Promote cost recovery in
water utilities

Promote private sector
participation in water
utilities

Remove subsidies in water This can have benefits when CC
sector impacts are taken into account
 via reduced energy demand

Develop spatial water
availability data

Develop a water rights
registry and implementation
of water rights market

Enforce water rights and
permits for establishment of
more efficient water markets

Liberalize Telecom Market

Encourage private sector Reduce demand
participation for travel

Urban Sector Reforms

Repeal urban land ceiling
regulation

Rationalize stamp duty in
land transactions

Reform rent control laws to
stimulate private investment
in rental housing and
development

Introduce of computerized land
registration process

Reform property taxes so they
become a major source of
revenue for urban and local
bodies

Reform user charges by urban
local bodies

Policy Adaptation

 Reactive Proactive

Implement general transport sector reforms

Rehabilitation of rural tracks
and roads in production Design should
centers take account
 of climate
Development and maintenance of impacts
road network

Modernize and streamline trade
and transport logistics
practices

Increase private sector
participation in rail and road
services

Sustained development of a Design should
safe, secure, and efficient take account of
national highway system climate effects

Catalyze institutional reforms
in order to develop a
sustainable toll highway
system

Reduce costs for port users
and enhance management
accountability

Secure, safe, economical, and
efficient civil aviation
system

Develop air transport

Increase resource generation
and attract private capital

Implement urban transport sector reforms

Lanes fully dedicated to
public transport

Congestion pricing

Reduction of fleet and taxi
services

Rationalization of public
transport supply

Measures for financial
sustainability of urban
transport sector

Promote citizen's
participation in government-
sponsored infrastructure
projects

Establish air pollution
reduction targets

Coordinate management of land Land use has
use and land use planning for long-term
urban transport impacts on GHGs

Development of ports

Privatization of core services

Private sector participation
in port development

Water sector reforms

Improve access to improved These have important health
water and sanitation services benefits that increase with CC

Increase waste water This can reduce adverse health
treatment capacity impacts from open sewers, etc.

Improve water use productivity
in irrigated lands This should be done taking
 account of changes in rainfall
Foster integrated water due to CC
resource management reform
for sustainable water use

Improve financial
sustainability of water
services

Improve monitoring and
evaluation

Promote hand washing

Measures for water pollution
control

Promote cost recovery in
water utilities

Promote private sector
participation in water
utilities

Remove subsidies in water Benefits will arise from
sector reduced demand that can be part
 of adaptive response to CC

Develop spatial water
availability data

Develop a water rights
registry and implementation The price of water should
of water rights market reflect increasing scarcity
 and higher costs of management
Enforce water rights and of variable flow
permits for establishment of
more efficient water markets

Liberalize Telecom Market

Encourage private sector
participation

Urban Sector Reforms

Repeal urban land ceiling
regulation

Rationalize stamp duty in
land transactions

Reform rent control laws to
stimulate private investment
in rental housing and
development

Introduce of computerized land
registration process

Reform property taxes so they
become a major source of
revenue for urban and local
bodies

Reform user charges by urban
local bodies

Table 2.15 Transmission channels for policies designed
to promote better energy use

Policy Mitigation

 Reactive Proactive

Tariff Structure Reforms

Reform of tariff structure to Promote green
reflect costs, cover costs of tariffs
generation

Privatization

Develop rules and procedures Promote feed-in
for entry of private sector tariffs,
 incentives for
 clean energy

Government programs to deal
with the debt of electric
utilities as they are being
privatized

Improve operational efficiency and fiscal
sustainability of utilities

Reduce transmission and Take advantage
system losses of carbon
 benefits

Increase tariff rates to cover
operating costs

Improve operational efficiency
of electric utilities

Reduce corruption in power
sector

Increase collection rate

Remove subsidies to utilities Subsidies for
in the power sector production of
 green
 electricity may
 be justified

Improve fuel quality with Possible CC
respect to sulfur content, impacts should
lead content be accounted
 for

Promote use of renewable energy

Reform legal environment to
promote use of renewable
energy

Communication to increase Inform public
public awareness on benefits of
 clean energy

Develop institutional Take advantage
arrangements for operation of of carbon
renewable energy projects benefits

Policy Adaptation

 Reactive Proactive

Tariff Structure Reforms

Reform of tariff structure to
reflect costs, cover costs of
generation

Privatization

Develop rules and procedures Allow for fact
for entry of private sector that water
 availability in
 future will
 impact energy
 production

Government programs to deal
with the debt of electric
utilities as they are being
privatized

Improve operational efficiency and fiscal
sustainability of utilities

Reduce transmission and
system losses

Increase tariff rates to cover
operating costs

Improve operational efficiency
of electric utilities

Reduce corruption in power
sector

Increase collection rate

Remove subsidies to utilities
in the power sector

Improve fuel quality with
respect to sulfur content,
lead content

Promote use of renewable energy

Reform legal environment to
promote use of renewable
energy

Communication to increase
public awareness

Develop institutional
arrangements for operation of
renewable energy projects
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Title Annotation:POLICY AND INSTITUTIONAL REFORMS TO SUPPORT climate change: ADAPTATION AND MITIGATION IN DEVELOPMENT PROGRAMS: A PRACTICAL GUIDE
Publication:Climate Change: Adaptation and Mitigation In Development Programs - A Practical Guide
Date:Jan 1, 2008
Words:12455
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