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Influencing national public budget processes to integrate environmental sustainability

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This document discusses experiences from the UNDP-UNEP Poverty Environment Initiative (PEI) in integrating environmental sustainability into national public budget processes. It provides lessons learned from PEI work in 7 countries from 2005-2017. The key lessons are: (1) Engage ministries of planning and finance to influence economic plans and budgets; (2) Understand their objectives and offer practical tools; (3) Be prepared with evidence of economic and social benefits; (4) Engage in wider public finance reform processes; and (5) Identify and support champions across levels and sectors. Examples from Malawi and Rwanda show progress made in integrating environmental sustainability into sector plans, budgets, and increased related expenditures.

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Influencing national public budget processes to integrate environmental sustainability Experiences from the UNDP-UNEP Poverty Environment Initiative Alex Forbes PEI Africa Regional Team POVERTY-ENVIRONMENT INITIATIVE
Introduction Poverty Environment Initiative (PEI) : 2005 - 2017 • Integration of pro-poor environmental concerns into national, sub-national and sector planning, budgeting and monitoring. • Strengthen “bridges” between Ministries of Planning, Finance and Environment and key sectors in 7 countries (Burkina Faso, Malawi, Mali, Mauritania, Rwanda and Tanzania). • Programmatic approach, tools and experience – “Mainstreaming Environment and Climate for Poverty Reduction and Sustainable Development: A handbook to strengthen planning and budgeting processes” (2015) : www.unpei.org
The Budget Cycle: 1) Be aware of the timelines. 2) Identify the key structures 3) Identify key individuals 4) Familiarize with the “language”
1. Budget Formulation • MoF issues a budget call with sector ceilings and instructions. – Opportunity to influence budget call to require sectors to include pro-poor environmental sustainability. • Sector working groups elaborate annual budget and Medium Term Expenditure Framework (MTEF). Draw on: – Budgeting of cross-cutting issues such as gender, HIV/AIDS, and environmental sustainability. Env checklists / matrices – Programmes and projects contained in sector strategies & plans, and National Five Year Development Plans. – Programme and project appraisals: economic assessment (CBA), environmental appraisal (EIA), social appraisal.
1.a Revenue : Environmental Fiscal Instruments Incentivize use of environmentally beneficial behavior as well as generate domestic revenue to fund environment related expenditure: • Taxation on natural resource extractions which provide incentives for sustainable use. • Reform of subsidies (e.g. water and energy) • National Environment Funds – domestic and international financing.
2. Budget Approval • Public consultations with key stakeholders. • Parliamentary Review: • Sub-committee on environment and natural resources • Parliament endorses.
3. Budget Implementation • Challenge of budget commitments by MoF do not necessarily match actual sums available. • Need to work closely with budget holders on informing and influencing prioritisation and decision-making on release of funds. • Ensure compliance with the systems and procedures.
4. Budget Oversight • Opportunity to integrate pro-poor environment and climate in the monitoring and assessment of expenditures against budget commitments and policies. • Public Environment Expenditure Reviews (PEER) and Climate Public Expenditure and Institutional Reviews (CPEIRS): Analytical tools for engaging MoF to review linkages between planning and budgeting institutions, policies, resource allocation and expenditure on environment and climate change. • Strengthening System of National Accounts (SNA) to capture environment and climate expenditure through thematic coding in financial information management systems
Example: Malawi • Ministry of Economy Development Planning conduction economic analysis of sustainable natural resource use (2011). 1) Unsustainable natural resource use costing equivalent of 5.3% GDP; 2) soil erosion reducing agricultural productivity by 6%; 3) recovering this yield would life an additional 1.88 million people out of poverty. • Guidelines on integrating environment in budget process (ODI, ‘12) • 3rd consecutive FY that annual budget guidelines include chapter on environment, poverty and climate linkages. Ministry of Environment and Climate Change budget increased by $7.1 m between 2013 and 2014. For FY15/16: 7 sectors included environmental sustainability. • GoM in 2017 is looking to implement recommendations of the 2014 Public Environment Expenditure Review (PEER). • GoM Guide to Executive Decision-Making Processes Handbook (2015) – environmental sustainability chapter.
Example: Rwanda • Since 2011, Ministry of Finance and Economic Planning (MINECOFIN), with support from Rwanda Environment Management Authority (REMA), has issued an environment and climate planning and budget checklist as part of its annual Budget Call Circular. • Requires sectors to integrate pro-poor environmental sustainability measures in programmes and projects in accordance to checklist and subject to appraisal. • Interns / Environment officers placed in each sector / ministry. • A MoF/REMA sector performance assessment (2015) shows that all 14 sectors and 30 districts integrated poverty-environment linked initiatives into their annual plans and budgets. • In Rwanda, environment and climate related expenditure increased from 0.4% (2005-2008) to 2.5% (2008-2012) of the Government total expenditure.
Lessons learned and implications for biodiversity mainstreaming 1. Engage with Ministries of Planning (5 year economic plans) and Ministries of Finance (budget and expenditure – MTEF), and their respective sector working groups. – Understand their objectives: economic growth, job creation, etc. – Inform and influence Plan and Budget objectives, targets and indicators by drawing on NBSAP2 – Sustained engagement : e.g. environment units in sectors / ministries – Offer practical tools – matrices / checklists to guide integration in budgets 2. Be well prepared : evidence of economic and social benefits from investments. 3. Engage with wider public finance management reform processes. 4. Keep ahead of the timelines. 5. Identify and support “champions” at all levels. 6. Intra-sector “bridge” building within environment sector.
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Influencing national public budget processes to integrate environmental sustainability

  • 1. Influencing national public budget processes to integrate environmental sustainability Experiences from the UNDP-UNEP Poverty Environment Initiative Alex Forbes PEI Africa Regional Team POVERTY-ENVIRONMENT INITIATIVE
  • 2. Introduction Poverty Environment Initiative (PEI) : 2005 - 2017 • Integration of pro-poor environmental concerns into national, sub-national and sector planning, budgeting and monitoring. • Strengthen “bridges” between Ministries of Planning, Finance and Environment and key sectors in 7 countries (Burkina Faso, Malawi, Mali, Mauritania, Rwanda and Tanzania). • Programmatic approach, tools and experience – “Mainstreaming Environment and Climate for Poverty Reduction and Sustainable Development: A handbook to strengthen planning and budgeting processes” (2015) : www.unpei.org
  • 3. The Budget Cycle: 1) Be aware of the timelines. 2) Identify the key structures 3) Identify key individuals 4) Familiarize with the “language”
  • 4. 1. Budget Formulation • MoF issues a budget call with sector ceilings and instructions. – Opportunity to influence budget call to require sectors to include pro-poor environmental sustainability. • Sector working groups elaborate annual budget and Medium Term Expenditure Framework (MTEF). Draw on: – Budgeting of cross-cutting issues such as gender, HIV/AIDS, and environmental sustainability. Env checklists / matrices – Programmes and projects contained in sector strategies & plans, and National Five Year Development Plans. – Programme and project appraisals: economic assessment (CBA), environmental appraisal (EIA), social appraisal.
  • 5. 1.a Revenue : Environmental Fiscal Instruments Incentivize use of environmentally beneficial behavior as well as generate domestic revenue to fund environment related expenditure: • Taxation on natural resource extractions which provide incentives for sustainable use. • Reform of subsidies (e.g. water and energy) • National Environment Funds – domestic and international financing.
  • 6. 2. Budget Approval • Public consultations with key stakeholders. • Parliamentary Review: • Sub-committee on environment and natural resources • Parliament endorses.
  • 7. 3. Budget Implementation • Challenge of budget commitments by MoF do not necessarily match actual sums available. • Need to work closely with budget holders on informing and influencing prioritisation and decision-making on release of funds. • Ensure compliance with the systems and procedures.
  • 8. 4. Budget Oversight • Opportunity to integrate pro-poor environment and climate in the monitoring and assessment of expenditures against budget commitments and policies. • Public Environment Expenditure Reviews (PEER) and Climate Public Expenditure and Institutional Reviews (CPEIRS): Analytical tools for engaging MoF to review linkages between planning and budgeting institutions, policies, resource allocation and expenditure on environment and climate change. • Strengthening System of National Accounts (SNA) to capture environment and climate expenditure through thematic coding in financial information management systems
  • 9. Example: Malawi • Ministry of Economy Development Planning conduction economic analysis of sustainable natural resource use (2011). 1) Unsustainable natural resource use costing equivalent of 5.3% GDP; 2) soil erosion reducing agricultural productivity by 6%; 3) recovering this yield would life an additional 1.88 million people out of poverty. • Guidelines on integrating environment in budget process (ODI, ‘12) • 3rd consecutive FY that annual budget guidelines include chapter on environment, poverty and climate linkages. Ministry of Environment and Climate Change budget increased by $7.1 m between 2013 and 2014. For FY15/16: 7 sectors included environmental sustainability. • GoM in 2017 is looking to implement recommendations of the 2014 Public Environment Expenditure Review (PEER). • GoM Guide to Executive Decision-Making Processes Handbook (2015) – environmental sustainability chapter.
  • 10. Example: Rwanda • Since 2011, Ministry of Finance and Economic Planning (MINECOFIN), with support from Rwanda Environment Management Authority (REMA), has issued an environment and climate planning and budget checklist as part of its annual Budget Call Circular. • Requires sectors to integrate pro-poor environmental sustainability measures in programmes and projects in accordance to checklist and subject to appraisal. • Interns / Environment officers placed in each sector / ministry. • A MoF/REMA sector performance assessment (2015) shows that all 14 sectors and 30 districts integrated poverty-environment linked initiatives into their annual plans and budgets. • In Rwanda, environment and climate related expenditure increased from 0.4% (2005-2008) to 2.5% (2008-2012) of the Government total expenditure.
  • 11. Lessons learned and implications for biodiversity mainstreaming 1. Engage with Ministries of Planning (5 year economic plans) and Ministries of Finance (budget and expenditure – MTEF), and their respective sector working groups. – Understand their objectives: economic growth, job creation, etc. – Inform and influence Plan and Budget objectives, targets and indicators by drawing on NBSAP2 – Sustained engagement : e.g. environment units in sectors / ministries – Offer practical tools – matrices / checklists to guide integration in budgets 2. Be well prepared : evidence of economic and social benefits from investments. 3. Engage with wider public finance management reform processes. 4. Keep ahead of the timelines. 5. Identify and support “champions” at all levels. 6. Intra-sector “bridge” building within environment sector.