Political economy of climate finance transparency: Evidence from the Paris Agreement

Climate finance is critical for developing countries to achieve the goals of the Paris Agreement. As a result, understanding the specific climate finance needs and priorities of developing countries is essential for international climate cooperation. The Nationally Determined Contributions (NDCs) that countries submit under the Paris Agreement are one of the most useful sources of information on national climate goals and sectoral priorities, and developing countries often include monetary estimates of climate finance needs in their NDCs. Although there is a huge body of literature on the transparency, governance, and policy implications of the NDC targets, less attention has been paid to the political economy of climate finance needs that developing countries communicate in their NDCs. Here, we propose a framework to measure the transparency of developing countries’ climate finance needs and build the Climate Finance Needs Specificity (CLIFS) data set manually analyzing 244 first- and updated NDCs from 133 developing countries. We combine political science literature on the varieties of climate governance and international relations to examine the underlying political economy forces that shape the representation of climate finance transparency in the context of the Paris Agreement. In particular, we highlight the different roles of international actors (e.g., donor countries, multilateral institutions) and domestic actors (e.g., bureaucratic process, federal competition). Our results show an increase in the specificity of climate finance estimates since the Paris Agreement at the thematic, sectoral, and sub sectoral levels. African countries are more likely to include climate finance needs in NDCs than countries from other regions. We estimate that climate finance needs range from $4,270 billion to $659 billion per year through 2030. We find that governance systems significantly influence the transparency of climate finance, and that different actors interact in multifaceted ways to negotiate approaches to international climate finance. Finally, we provide policy implications for various stakeholders, highlight the limitations of our study, and outline future research directions related to the international political economy of climate policy and cooperation.