The year 2015 is crucial in the fight against climate change.

From November 30 to December 11, representatives of 196 countries will meet in Paris to develop a new international climate change agreement. This meeting, the 21st session of the Conference of the Parties (COP 21) to the United Nations Framework Convention on Climate Change (UNFCCC), is particularly important because parties are expected to adopt an agreement that will lay the foundation for climate policy for decades to come. In advance of this conference, most countries have submitted targets for reducing or stabilizing their greenhouse gas (GHG) emissions towards the collective goal of limiting the increase in global average temperatures to 2°C above pre-industrial levels. Countries will also address issues of adaptation, loss and damage, financing, technology transfer and capacity building in developing countries.

This briefing note first offers a historical overview of understanding the climate change problem and putting in place a forum, the UNFCCC, to collectively address it. It then turns its focus towards providing a hands-on understanding of the means through which countries submitted GHG reduction and stabilization targets in 2015 ahead of the Paris Conference through their Intended Nationally Determined Contributions. It explores the various legal options suggested to the countries for the adoption of a Paris Agreement, before it addresses specific issues of adaptation, loss and damage, and climate finance. The note then briefly explores expected outcomes for COP 21.

L’année 2015 est cruciale pour la lutte contre les changements climatiques, alors qu’en décembre les représentants de 196 pays se réuniront à Paris dans le but d’adopter un nouvel accord international sur les changements climatiques. Cette rencontre, la 21^e session de la Conférence des Parties (CdP 21) à la Convention-cadre des Nations unies sur les changements climatiques (CCNUCC) vise à adopter un accord qui posera les jalons des politiques climatiques pour les décennies à venir. En vue de cette conférence, la majorité des pays ont soumis des cibles de réduction ou de stabilisation de leurs émissions de gaz à effet de serre (GES), qui collectivement visent à limiter la hausse des températures mondiales moyennes à moins de 2 °C, comparativement aux niveaux préindustriels.

Cette note d’information débute par un aperçu historique de la compréhension des changements climatiques comme enjeu et la formation d’un forum, la CCNUCC, qui vise à le combattre collectivement. Les contributions prévues déterminées au niveau national (CPDN), outil à travers lequel les pays ont soumis au cours de l’année 2015 des cibles de réduction et de stabilisation de leurs émissions de GES sont ensuite abordées. Enfin, cette note aborde les formes juridiques d’un accord de Paris qui sont actuellement suggérées aux pays, avant d’analyser d’autres enjeux précis au cœurs des négociations climatiques tels que l’adaptation, la finance climat et les pertes et préjudices. Une brève analyse des résultats escomptés lors de la CdP 21 conclut cette note d’information.

Jointly prepared by IISD, OCI and ODI, this country study and accompanying data sheet compiles publicly available information on fossil fuel production subsidies in South Africa in 2013 and 2014.

It is a background paper to the report Empty promises: G20 subsidies to oil, gas and coal production and provides a baseline to track progress on the phase-out of such subsidies as part of a wider global energy transition.

To download the related Sourth Africa Excel information click here.

In developing countries, international financing institutions (IFIs) often help finance key infrastructure projects, predominantly through hard currency loans.

Without the participation of IFIs, international commercial banks would typically be hesitant to participate in the financing of such projects. However, due to the nature of the international floating exchange rate regime, hard currency loans create currency risk, which in turn results in uncertainty and potential additional liabilities for the receiving countries. To avoid this situation, local currency financing would be preferable but may not always be available.

This paper analyzes the impacts of currency risk on infrastructure projects in developing markets and identifies ways that currency risk can be managed. It then proposes a two-pronged strategy for IFIs to address the issue of currency risk, focusing on improving local capital markets and developing local currency financing solutions. Based on this strategy, the paper then analyzes various financial tools that IFIs can use to stimulate local currency financing in order to help countries meet their development goals while limiting their exposure to currency risk.

This paper was funded by the Danish International Development Agency (DANIDA).

Optimal risk allocation is one of the key value for money (VFM) drivers in a public-private partnership (PPP) delivery model. In a conventional delivery model, most long-term risks are borne by the public agency.

A PPP model, on the other hand, allows the public agency to transfer risks to the private party, relieving it of bearing the cost of risks that it cannot manage—such as cost overruns during the construction phase, construction delays and long-term maintenance of the asset. For the public agency, efficient risk allocation is, therefore, key to creating a “good deal” for society. For the private party, efficient risk allocation is key to ensuring that the project is financeable and has an attractive risk-return ratio. Allocating risks in PPPs, however, is inherently challenging. Risk transfer to the private sector comes at a price, and transferring risks that the public agency is better able to manage is likely to erode VFM. In addition, project risks expected to occur 30 or 40 years into the future cannot be predicted with certainty, because risks are dynamic and change throughout the life of the project. This paper will aim to offer some guiding principles to improve the effectiveness of risk allocation and maximize VFM from a PPP deal.

This paper was funded by the Danish International Development Agency (DANIDA).

Accurately forecasting traffic demand is a key component in the planning process for a highway transportation project.

Traffic levels are particularly crucial in tolled highway projects, as they typically represent the main (and often sole) source of revenue for the project. Indeed, achieving a predefined revenue level is required to recover the investment costs and cover the costs of operating and maintaining the facility. This paper will seek to provide recommendations on how to address downside and upside revenue scenarios in PPP contracts. This paper will present two separate but related approaches:

1. The “revenue risk sharing” approach seeks to protect the concessionaire against lower than expected revenues (the “downside” scenario). The goal in revenue risk sharing is to create an optimal risk allocation between the government and the concessionaire, which in turn generates value for money (VFM).
2. The “upside revenue sharing” approach seeks to share any “upside” (or higher than expected revenues) between the two parties. The goal of revenue sharing is to avoid excessive returns for the concessionaire.

This paper was funded by the Danish International Development Agency (DANIDA).

Involving private parties in infrastructure projects—traditionally seen as “public goods” in economic theory—is not without controversy.

Concerns about investors reaping excessive private returns at the expense of the taxpayer, or about the public agency being forced to renege on policy objectives, continue to prompt governments to be cautious in recommending PPP delivery models. As a result, PPPs represent only a fraction of overall investments in infrastructure, even in mature markets. Although PPPs may not be a panacea to addressing all of the global infrastructure challenges, their ability to harness private sector expertise, innovation and financing can help governments confront complex challenges. A successful PPP should allow the public sector to not only safeguard, but even advance, its public policy objectives, while also allowing the private party to generate its required return. Building a successful partnership between the public and private sectors is inherently challenging; focusing on the right mechanisms, however, can result in a win-win for each party, while also creating the “best deal” for society.

This paper was funded by the Danish International Development Agency (DANIDA).

Many policy-makers and public-private partnership (PPP) practitioners view access to private financing as the main motivation for developing infrastructure projects through PPP contracts.

Instead of using public money—which may or may not be available— to build a road or power plant, for example, using private money to finance infrastructure projects allows projects to be implemented without delays, possibly freeing up public resources for other projects. Particularly, since the 2008 financial crisis, many governments face serious budget restrictions and/or (self-imposed) public debt constraints, which limit the amount of public resources available for infrastructure development. Under such conditions, leveraging private capital through PPPs to develop much-needed infrastructure can be an attractive alternative.

However, the role of private financing is only half of the story behind PPPs. The other, and arguably more important, half is what we call value for money (VFM). A well-structured PPP has the potential to cost less and bring more value to the public than a conventionally delivered project. To understand how PPP projects generate VFM, we need to understand the value drivers in PPPs.

This paper was funded by the Danish International Development Agency (DANIDA).

This policy brief explores the financial needs of agriculture in developing countries and the instruments available to address these needs.

We examine the challenges in obtaining financing for agricultural investments, the role of different actors, and the options for governments to enhance the legal and policy environment of the financial system to support agricultural development.

The IISD series of policy briefs on investment in agriculture is generously supported by the Swiss Agency for Development and Cooperation (SDC). 

Jointly prepared by IISD, OCI and ODI, this country study and accompanying data sheet compiles publicly available information on fossil fuel production subsidies in Russia in 2013 and 2014.

It is a background paper to the report Empty promises: G20 subsidies to oil, gas and coal production and provides a baseline to track progress on the phase-out of such subsidies as part of a wider global energy transition.

To download the related Russia Excel information click here.

Migration is playing a significant role in the deterioration of the Lake Albert ecosystem in Buliisa District. Migrants, mainly coming from neighbouring provinces in the Democratic Republic of Congo, are pulled to the region by the economic opportunities presented by the fishery, and are willing to work for wages lower than those demanded by the local population.

Expanding access to new markets, made possible by infrastructure investments linked to oil and gas exploration, have similarly increased demand for fish from buyers as far away as Kampala. These two forces—increasing demand for fish and increasing supply of labour—have resulted in a fishery dangerously close to collapse: larger species of fish are increasingly rare, while the fish caught are of increasingly smaller size across species. While the implications of this for local livelihoods are significant, current political incentives are aligned with maintaining the status quo. The fishery will continue to deteriorate unless effective and sustainable resource management systems are put in place and migration impacts are addressed.

This policy brief summarizes an assessment of the migration context in the Lake Albert ecosystem, as well as suggested response strategies. IISD, the Conservation Development Centre and the Wildlife Conservation Society conducted the research with the generous support of the MacArthur Foundation. The research is part of the Migration and Conservation in the Great Lakes Region project, which attempts to address migration and conservation issues by: (a) developing a methodology to better understand the drivers and impacts of migration on critical natural resources, ecosystems and livelihoods in the Great Lakes region; (b) identifying effective responses for policy-makers and practitioners working on these issues; and (c) catalyzing further research and policy engagement on the topic in the region.