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19 July 2021

Once poverty-environment objectives have been well integrated into national development plans, a critical next step in terms of the implementation of these objectives is to influence budget processes so that the funds necessary to implement these objectives are allocated and spent. Because it is mainly actions at the sector and sub-national levels that are necessary to implement poverty-environment objectives included in national development plans, it is necessary to influence budgets at national, sector and sub-national levels – a significant challenge. It is through such influencing that increased financial resources are allocated to generate substantive impact.

Initially, we used public environment expenditure reviews (PEERs) to track expenditures, which demonstrated that budget allocations at all levels were markedly less than what was required to implement Poverty-Environment objectives. While these findings were useful, PEERs are expensive, time consuming, backwards looking and are not systematically applied. These challenges led us to provide support for the design and application of different approaches, which has helped UNDP–UNEP Poverty-Environment Action for Sustainable Development Goals (Poverty-Environment Action) develop a recommended package approach for influencing budgets.

An approach that has great potential is the application of environment and climate budget coding – assigning codes to track different types of environment and climate change expenditure and integrating those codes into the budget system – which is a major focus of Poverty-Environment Action support in Mozambique to the Ministry of Economy and Finance. The codes need to be applied across the entire budget system both horizontally and vertically requiring a large amount of work and substantive capacity-building.

Besides enabling tracking of budget allocation and expenditure against defined indicators and objectives, budget coding combined with cost-effectiveness analysis of budget expenditure enables better targeting of financial allocation. The combination of budget tracking and demonstrated cost-effectiveness can also be very useful in convincing development partners to allocate more funds for sustainability and resilience.

While currently Mozambique is the only Poverty-Environment Action Africa country fully developing and applying such budget coding, as a result of country exchanges of experience – initially through physical workshops and currently through electronic means – Rwanda and Malawi have requested Poverty-Environment Action support to work with their Finance ministries to adopt environment and climate budget coding.

Poverty-Environment Action and United Nations Office for Disaster Risk Reduction (UNDRR) have combined efforts to set up a working group to promote the use of budget coding for environment, climate change and disaster risk reduction.

Photo: Albert Farran/African Renewal UN (2019).


The series Stories of Change 2021 was prepared by UNDP–UNEP Poverty-Environment Action for Sustainable Development Goals through the generous financial support of the Governments of Austria, Belgium, Norway, Sweden and the European Union.