Strengthening disaster risk reduction and climate change adaptation finance

On December 19, 2023. The United Nations Office for Disaster Risk Reduction (UNDRR), supported by the International Institute for Environment and Development (IIED), organized two webinars sharing the lessons and tools from a 1.5-year-long work on Budget Tagging and Tracking for Disaster Risk Reduction (DRR) and Climate Change Adaptation (CCA). These webinars included a Global webinar in English and a Regional webinar in Spanish targeting Latin America and the Caribbean. 

Budget tagging for disaster or climate change means identifying, classifying, weighting, and marking relevant expenditures in a government’s budget system. This is fundamental to strengthening finance for DRR and CCA as it enables estimating, monitoring, and tracking those expenditures. Since these expenses are typically shared across several ministers and agencies, a table identifying which expenses to include (called a taxonomy) is necessary.

As part of the project, a review of existing budget tagging initiatives was conducted and compiled in Tracking the money for climate adaptation and disaster risk reduction. The publication showed that climate expenses are tagged more often than disaster ones and are rarely both tagged in a coordinated and routine manner. It also indicated that methodological differences make comparability challenging, and capacity constraints (especially at the local level) demand simple approaches. Among the multiple benefits of coordinating disaster and climate budget tagging, facilitating institutional coordination stood out. 

In response to these findings, the Budget Tagging for Disaster Risk Reduction and Climate Change Adaptation: Guide for Design and Taxonomy provides a series of practical considerations for countries developing their DRR and CCA Budget Tagging system. The guide includes a reference table of expenses relevant to DRR and CCA that countries can adjust to their context while maintaining a common reference necessary for comparability and aggregation purposes. 

During the webinars, presenters also shared the results from the forthcoming report “Risk Expenditure Landscape: Building comparability in reporting DRR and CCA expenditure”. This report summarizes the application of the DRR and CCA Budget Tagging system in three countries. The lessons from this pilot exercise are positive and found that the proposed methodology is useful in assessing DRR and CCA public expenses when the national budget is detailed enough. Applying the methodology to budget information from African countries also allowed the estimation of the financial gap to meet DRR and CCA objectives in these countries.

As for the next steps, UNDRR will focus on supporting the country implementation of the DRR and CCA Budget Tagging system as part of its overall support on catalyzing investment into resilience.