How to channel climate funds to the local level: choosing the right delivery mechanism

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Overview

The Least Developed Countries (LDC) Initiative for Effective Adaptation and Resilience (LIFE-AR) promotes a shift in the way climate responses are delivered. The LDC- led, LDC-owned initiative drives a move away from ‘business-as-usual’ to a more effective and ambitious climate response, working to deliver the LDC 2050 Vision for a climate-resilient future.

This report outlines strategies for ensuring that at least 70% of climate finance reaches local communities in Least Developed Countries (LDCs). It presents three key delivery mechanisms—social protection for climate-resilient people, production systems for climate-resilient economies, and landscape management for climate-resilient ecosystems. The guide emphasizes aligning governance, planning, and financial systems to empower local decision-making and strengthen adaptation efforts. A case study on Uganda’s decentralized climate finance (DCF) model demonstrates how local-led approaches can effectively enhance resilience and sustainability.

What are delivery mechanisms?

In the context of LIFE-AR, delivery mechanisms are the governance, planning and financial channels and systems that enable at least 70% of funds to flow to the local level for community-prioritised climate action. This is all delivered in a way that is aligned with the LDC Offers and Principles.

Delivery mechanisms can combine different activities carried out by public, private and civil society institutions as needed. And they can be used to support the building of climate-resilient people, economies or ecosystems, or a mixture of all three. Delivery mechanisms are therefore more than climate finance projects. They include the systems for how money flows to the local level, the institutional capabilities to support the processes and the way investment planning and design are implemented.

A critical component is the governance arrangements for how funds are flowed and allocated to the local level, including how planning is carried out, decision are made and by which actors and institutions carried out, decisions are made and by which actors and institutions. The quality of this governance and decision making process is just as important as the quantity of finance flowing to the local level.

Delivery mechanisms seek to create or strengthen country systems for channelling 70% of climate finance to the local level and funding community prioritised investments. They are designed to be scalable, with the potential to cover the whole country, while being integrated into existing platforms or committees for coordinating climate responses from the local to national level.

Types of delivery mechanisms

In 2019, to inform the LDCs’ selection and design of delivery mechanisms, LIFE-AR carried out a comprehensive global review of available evidence on adaptation programmes. It summarised potentially effective adaptation and resilience-building initiatives that contribute to climate- resilient people, economies, landscapes and ecosystems.

To shape the review, the LDC Advisory Group identified nine criteria drawn from the Paris Agreement to guide understanding of what works in delivering adaptation and resilience.

The evidence review categorised delivery mechanisms into three types, according to their contribution to delivering either:

• Climate-resilient people, or
• Economies, or
• Landscapes and ecosystems.

Climate-resilient people: social protection

This mechanism integrates climate adaptation strategies into social protection programs to enhance the resilience of vulnerable populations. By aligning social safety nets with climate risks, it ensures that communities can better withstand and recover from climate-induced shocks, thereby safeguarding livelihoods and promoting sustainable development.

Climate-resilience economies: production systems

Focusing on strengthening local economies, this approach supports the development of climate-resilient agricultural and industrial practices. By investing in sustainable production systems, it aims to reduce vulnerabilities and enhance the adaptive capacities of economic sectors critical to LDCs, ensuring long-term economic stability in the face of climate change.

Climate-resilience landscapes and ecosystems: landscape management

This mechanism emphasizes the sustainable management of natural resources and ecosystems to bolster resilience against climate variability. By promoting integrated landscape management practices, it seeks to maintain ecosystem services, protect biodiversity, and support the livelihoods of communities dependent on these landscapes, thereby contributing to overall climate resilience.

Collectively, these delivery mechanisms are designed to ensure that at least 70% of climate finance reaches the local level, empowering communities to lead and implement adaptation strategies tailored to their unique contexts. 

How to select and develop a delivery mechanism in LIFE-AR?

Each LIFE-AR country independently decides which type of mechanism to pilot based on their country systems. Countries have taken different approaches to identifying their chosen mechanism, depending on their own internal decision-making context and processes.

The report outlines steps that have been applied in different orders by different countries. Some countries have placed more emphasis on task team and technical working group discussions, others on wider multi-stakeholder processes. Each LIFE-AR country platform has chosen an approach deemed to be most appropriate to the context, while seeking to address the LIFE-AR Offers and Principles. those steps include:

• Situation analysis;
• Task team or technical working group discussions;
• Multi-stakeholder workshops;
• Consultation.

Case study: Uganda

Uganda selected a mechanism focused on resilient landscapes and ecosystems called the Devolved Climate Finance Mechanism. This kind of mechanism uses public financial management systems to channel funds to local government authorities, and participatory planning processes to invest in local resilience. Drawing on its use in Kenya, Tanzania and Mali, the country sought to adapt the mechanism to Uganda’s particular institutional context, and build on recent legislation including Uganda’s National Climate Change Act (2021).

The decision process included a series of workshops with members of Uganda’s national platform. The national platform is a multi-stakeholder committee established to oversee LIFE-AR, chaired by the Ministry of Water and Environment, and including multiple government departments, CSOs and academia.

Uganda is now using the mechanism to guide climate risk assessments and the selection of adaptation investments to be implemented in pilot districts.