Global environmental facility allocation

Abstract

In this study, we have primarily focused on understanding GEF funds allocation under the new allocation system. We have drawn a comparative study of the differences from previous allocation framework and suggested areas of improvement if any. But at the same time the focus has been to understand contribution of private sector to these funds. This component of our research looks at several models to explain observed patterns in private sector participation. From our study, we have isolated two categories of models, i.e., donor interest model and recipient interest model. In addition to studying the implications of these models, we have also provided a detailed framework for analysis of the same. We have listed factors affecting each model and also included an application of the same on project ‘Urban Transport Development Strategy Partnership and Demonstration Program in China’. In APPENDIX, we have provided the leverage ratios for each focal area using top 15 projects by size. Another major component of our research was determining co-financing for GEF projects. We analysed data for all GEF projects. We have also summarised various models in practise that can explain low/high levels of leverage in GEF projects. We looked at different models explaining the current levels of leverage categorised on focal areas and project size. We also looked at several risk factors that can be considerations for private sector when deciding commitment. We then focused specifically on GEF projects in India. To effectively test our hypothesis, we decided to focus on Bio-diversity projects taken up in India. We have been successful in determining significant factors that can explain observed values of leverage. As we were constrained by limited number of data points we have kept the discussion to a qualitative understanding. Some of the factors we found to be significant were: Presence of strong lobby or interest groups, Decentralisation of process, geography of implementation and awareness of the cause. Through this study we have been successful in unearthing some of the subtle determinants of GEF funding at both initial funding as well as individual project stage. With this research we have developed qualitative models that can be tested for the same with real data but because of paucity of data we have refrained from the same in this report. Though this has been listed as possible future work, we would also like to do a comparative study on co-financing in different focal areas as well as explore the effect of financial instruments in determining leverage. Some of the key takeaways from this research would be to focus on early engagement of private sector, be more beneficiary friendly and focus on long term prospects instead of short term gains. Also, private sector should be treated in addition to dual roles of donor as well as recipient as provider of expertise. This can be done at all levels from international corporations to local community initiatives. At every step, private sector participation would prove crucial.