世界发展银行-Adapting-Fiscal-Decentralization-Design-to-Combat-Climate-Change_78页_20mb

Summary of "Adapting Fiscal Decentralization Design to Combat Climate Change"

Core Content

This paper explores how fiscal decentralization can be adapted to effectively involve subnational governments (SNGs) in climate change mitigation and adaptation. It argues that while many countries have not fully integrated SNGs into their climate strategies, the principles of fiscal decentralization—such as expenditure responsibilities, revenue assignments, transfers, and borrowing—can be restructured to better support climate action.

Main Views

• Climate Change as a Global Challenge: Climate change has significant direct and indirect impacts on nations and individuals, including extreme weather events, health issues, and food security. It is a pressing issue that requires coordinated action across all levels of government.

• Fiscal Decentralization and Climate Action: Fiscal decentralization involves the devolution of fiscal, administrative, and political power to SNGs. While this has been a major institutional shift, it has not yet been fully integrated into climate change strategies. The paper suggests that fiscal decentralization can be reformed to better support climate action.

• Key Fiscal Decentralization Pillars: The paper identifies four main pillars of fiscal decentralization that need to be adapted for climate change:

  1. Expenditure Responsibilities: The assignment of responsibilities for climate-related expenditures should be reconsidered to ensure that SNGs are empowered to take effective action.
  2. Revenue and Tax Authority: The design of tax systems and revenue assignments should be aligned with climate goals, such as carbon taxation and pollution-related levies.
  3. Transfer Systems: Fiscal transfers should be designed to incentivize SNGs to implement climate policies, including objective-targeted intergovernmental transfers.
  4. Subnational Borrowing and Fiscal Rules: Borrowing and fiscal rules should be restructured to facilitate subnational engagement in climate decarbonization and adaptation.

Key Information

• Emissions Sources: According to the Stern Review, GHG emissions come from various activities, including direct energy emissions (e.g., power generation) and non-energy emissions (e.g., agriculture, land use). SNGs typically have regulatory and taxing powers over a significant portion of these emissions, particularly in transport, buildings, land use, and waste management.

• SNG Roles in Climate Action:

  • Decarbonization: SNGs are responsible for land-use planning, water and power utilities, waste disposal, and transport systems.
  • Adaptation: SNGs are on the frontline of disaster response and must invest in resilient infrastructure for energy, transport, and water and sanitation systems.

• Challenges of Decentralization:

  • Decentralization may be less effective in dealing with externalities and spillover effects across government boundaries.
  • However, it can also provide a platform for innovation and experimentation in climate policy.

• International Practices:

  • The paper reviews both effective and less-effective practices in various countries, including the use of green bonds, fee-funded adaptation activities, and intergovernmental transfers.
  • It emphasizes the importance of shared responsibility, coordination, and the design of incentives to encourage SNGs to take climate action.

• Research Findings:

  • Theoretical models suggest that decentralized governance can lead to both "race to the top" and "race to the bottom" outcomes in environmental policy.
  • Empirical studies show mixed results, depending on the country and the specific policies in place.

• Recommendations:

  • The paper recommends adapting fiscal decentralization frameworks to better support climate change action.
  • It calls for the integration of climate goals into the design of intergovernmental fiscal relations, including functional assignments, tax powers, transfer regimes, and borrowing rules.
  • The goal is to enhance SNGs' capabilities to act independently and collaboratively with central governments to address climate change.

Conclusion

The paper concludes that there is significant potential for SNGs to play a more active role in combating climate change through adapted fiscal decentralization designs. It highlights the need for better fiscal frameworks that support both decarbonization and adaptation, while also addressing the challenges of coordination and externalities. The integration of climate action into fiscal decentralization is essential for achieving sustainable and effective climate policies at all levels of government.