This report is one of five country studies that have been commissioned by the Capacity Development for Development Effectiveness (CDDE) Facility supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA and UNDP as part of a regional dialogue process also supported by the OECD DAC.
Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Agulhas Applied Knowledge Climate Change Financing and Aid Effectiveness: Viet Nam Country Analysis August 2010 Nigel Thornton Agulhas Applied Knowledge Table of Contents Table of Contents Acronyms Executive Summary 1.Introduction 2.Country context Following on from the earlier Partnership Group on Aid Effectiveness (PGAE), the Aid Effectiveness Forum (AEF) was officially established in February 2010 to provide the overarching architecture for governmentdonor co-ordination around aid (and now development) effectiveness issues The AEF is an umbrella body for twenty Partnership Groups (PGs), setting the overarching context for the relationship of the Government of Viet Nam to external funding partners The individual PGs deal with specific sectoral or thematic issues .10 In addition, the AEF (consistent with the spirit of the Accra Agenda for Action) brings Civil Society Organisations, the National Assembly and International Non-Governmental Organisations in to the dialogue with government 10 In interview, officials from the MOF said they were recommending that MONRE build on its role as set out in the NTP and develop a set of clear criteria for priority projects, which other line ministries should use to plan accordingly Line ministries and provinces should, it suggested, design their projects based on these priorities, and then submit projects to MONRE, MOF and MPI for approval (the latter being defined in this role as set out in decree 131) This is a step change since the current NTP process identifies that MONRE only set broad guidelines for ministries to set their own priorities and design their own activities 14 The issue is not just one of capacity, however The roles of the main bodies with an interest in climate change financing (MONRE, MARD, MPI, the Ministry of Finance and the provinces) have still to be fully resolved in practice Respondents in MPI and MoF expressed a concern that while it was perfectly acceptable that MARD and MONRE were in direct contact with funders over support to their policy, there was a need for further involvement of MPI and MoF in the discussions to ensure that financing was fully integrated with national plans, budgets and processes There is a concern that if the secretariat for climate change remains in MONRE (or is too closely identified with it), the climate change will remain an environmental issue, rather than a developmental one Similarly, respondents in MARD noted MONRE’s status made their policy coordination role difficult to carry out, and others outside government Agulhas Applied Knowledge commented on MARD’s apparent unwillingness to co-ordinate effectively with MONRE However, respondents within MARD noted that they were in regular communication with colleagues in MONRE and co-operation was good 16 Other line ministries have also been recipients of significant external funding that include climate change elements For instance, the Ministry of Infrastructure and Transport (MOIT) has received almost $600m from the World Bank to fund improvements in energy production and the move to renewable sources (see annex A), and provincial administrations also are expected to be significant beneficiaries Such funding highlights a challenge for all partners when considering what is, and is not, classified as climate change funding Arguably, such funding and responses need to be fully involved in the national response 16 Additionality 17 In Kyoto project-based mechanisms (i.e Clean Development Mechanism and Joint Implementation projects) additionality describes that a carbon dioxide reduction project would not have occurred had it not been for concern for the mitigation of climate change It is thus beyond a “business as usual” project To qualify funding, a project has to demonstrate additionality 17 Additionality for climate change financing can also refer to donors providing funds beyond “business as usual” ODA levels, in order to enable communities and countries to adapt to climate change impacts This means identifying the additional cost to development programmes and projects that adapting to climate change will require It is also an area of considerable international debate, since developing countries argue (as they did at COP15 in Copenhagen) that this financing should not be classed as ODA .17 Similarly, MOF prefers a modality of budget support over project financing for climate change, or if not that programme based approaches The Hanoi Core Statement (and Paris Declaration’s) preference for non-projectised modalities of assistance arguably works against the ready identification and reporting of additionality, which is a key requirement of climate financing mechanisms To achieve this will require the more complex marking of climate change spending within budgets, with considerable definitional and technical challenges 17 4.Alignment 18 5.Harmonisation .21 6.Managing for results 22 7.Mutual Accountability 23 8.Conclusions 23 Agulhas Applied Knowledge The views expressed in this report are those of the author alone Agulhas Applied Knowledge Acronyms AAA ADB AEF CDM COP D&D DSENRE GEF GoV HCS HIV LMDG MARD MOF MoIT MONRE MPI NGO NTP NTP-RCC OCCA ODA PD PG PGAE REDD SD&CC SEDP UN UNDP UNFCCC VN WB Accra Agenda for Action Asian Development Bank Aid Effectiveness Forum Clean Development Mechanism Conferences of the Parties Deconcentration and Decentralisation Department of Science, Education, Natural Resources and Environment Global Environmental Fund Government of Viet Nam Hanoi Core Statement Human Immunodeficiency Virus Like Minded Donor Group Ministry of Agriculture and Rural Development Ministry of Finance Ministry of Infrastructure and Transport Ministry of Natural Resources and the Environment Ministry of Planning and Investment’s Non-Governmental Organisation National Target Programme National Target Programme for the Response to Climate Change Steering Committee for Climate Change Adaptation and Mitigation Overseas Development Assistance Paris Declaration Partnership Group Partnership Group on Aid Effectiveness Reducing Emissions from Deforestation and Forest Degradation in Developing Countries Sustainable Development and Climate Planning Socio-Economic Development Plan United Nations United Nations Development Programme United Nations Framework Convention on Climate Change Viet Nam World Bank Agulhas Applied Knowledge Executive Summary Background This report is one of five country studies that have been commissioned by the Capacity Development for Development Effectiveness (CDDE) Facility1 supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA and UNDP as part of a regional dialogue process also supported by the OECD DAC The purpose of the initiative is to develop a set of recommendations regarding the programming of climate change finance at the national level The initiative seeks to strengthen the management of climate change finance by beneficiaries and donors through a consideration of Aid Effectiveness principles Findings from the country studies will be discussed in a workshop to be held in Bangkok, October 19-20 2010 Interviews for this Viet Nam study were conducted with officials from key ministries and with the external funders who were available over a three day period This was thus a very rapid exercise, and is not a comprehensive study It can only begin to raise key issues and is meant to be a prompt for discussion The UNDP UNFCC, UNDP, the World Bank and the Stern Review have all assessed that Viet Nam is one of the countries particularly vulnerable to the adverse effects of climate change, notably sea level rise2 Viet Nam is a signatory to the UNFCCC and the Kyoto Protocol and has been an active participant in the Conferences of the Parties (COP) Viet Nam has associated itself with the Copenhagen Accord It is already benefiting from considerable external funding for climate change from both global climate change funds (such as GEF, CTF, UN-REDD), and bilateral sources (see Annex A) Viet Nam is seen as a leader in aid effectiveness, having established mechanisms for donor co-ordination in accordance with the Paris Declaration and Accra Agenda for Action principles as localised in the Hanoi Core Statement The Aid Effectiveness Forum (AEF) was officially established in February 2010 to provide the overarching architecture for government-donor co-ordination for ODA The Role of the Government There is a growing understanding of the potential impacts of climate change on Viet Nam among the country’s leadership Climate change does not feature in the current Five Year Socio-Economic Development Plan (SEDP) However, it is expected that it will be incorporated into the next plan (2011-15) The National Target Programme to Respond to Climate Change (NTP-RCC) has been designed to strengthen and consolidate capacity building and research as well to initiate action with sector ministries and provinces It is not a national plan with costed implementation projects, rather the NTP-RCC will lead to the identification of activities and funding requirements Ministries and provinces have been asked to develop costed action plans for the response, but this process is not yet complete In addition, other More information on the CDDE Facility can be found at www.aideffectiveness.org See Dasgupta, Susmita et al (2007): The Impact of Sea Level Rise on Developing Countries A Comparative Analysis World Bank Policy Research Working Paper 4136, February 2007, the UNFCCC 2007 “CLIMATE CHANGE: IMPACTS, VULNERABILITIES AND ADAPTATION IN DEVELOPING COUNTRIES”, Stern, Nicholas et al (2006): The Economics of Climate Change: The Stern Review Cambridge, Agulhas Applied Knowledge policies and programmes exist with an immediate bearing on climate change action that are however not obviously addressed under the NTP-RCC and the forthcoming action plans These include policies on natural disaster risk management, energy efficiency, renewable energy, and forestry, most of which have national-international coordination and dialogue forums An overarching strategy on climate change to address this and to ensure prioritisation of action does not yet exist but is expected to be developed Most of the climate change funding provided to Viet Nam to date does not appear on the government’s budgets, nor can it yet be fully captured using government systems Any reporting on financing for climate change, or its use, takes place through secondary mechanisms The Ministry of Natural Resources and the Environment (MONRE) is the focal point for climate change under the UNFCCC While the Ministry for Planning and Investment officially co-ordinates external financing and overall development planning and MOF is responsible for budgeting, MONRE is tasked with the co-ordination of the national response to climate change However, it does not possess the mandate to coordinate other ministries, and itself will not be the beneficiary of the largest sums of climate change assistance that are likely to be given to ministries such as the Ministry of Agriculture and Rural Development (MARD) the Ministry of Industry and Trade (MOIT), the Ministry of Construction (MOC) and the Ministry of Transport (MOT), and provinces This has resulted in a lack of institutional clarity that the GoV still needs to address The Role of Donors Although it has been the subject of some discussion in the AEF, there is no single forum for the co-ordination of donor funding for the national response to climate change Given the lack of a single strategy, donors are also not yet aligning behind government plans Neither are they implementing their plans in a fully harmonised way As a result they are not working in a way that is consistent with the Hanoi Core Statement External funders are using grants and loans, project and budget support modalities to support climate change activities These funds come both from bilateral programmes and from global funding sources, including the GEF Respondents from the Ministry of Finance noted they would prefer all assistance for climate change to be fully integrated into national plans and provided in the form of budget support It is recognised at present this is not achievable, but should be the objective, according to them However, whilst there are some notable exceptions (such as JICA and AFD assistance for the NTP), the majority of funding remains in a project-based modality Indeed there is not yet a formal commitment from external funding partners to align with government activities for climate change or harmonise their activities beyond the umbrella of the Hanoi Core Statement There is no memorandum of understanding or Heads of Mission agreement that deals explicity with climate change Donors expect to include some elements of climate change financing within the next ODA framework that will coincide with Viet Nam’s next five year plan There is thus intended to be a higher level of formal coherence with national budgeting processes than at present The Nature of Climate Change Financing Viet Nam demonstrates the problem of defining what climate change financing is Some traditional ODA channels and activities, in part or in whole, deal with adaptation to or mitigation of climate change (for instance funding for renewable energy or disaster risk Agulhas Applied Knowledge management) For this ODA funding, provided as grants or loans by multilateral or bilateral partners, it is possible to debate whether elements of this funding are additional to ‘business as usual’ ODA Fundamentally, however, such funding would have to have been provided, in spite of climate change Alternatively some funds use specific channels, and to be accessed have to be identified as funding new and additional activities that will be necessary in order to adapt to or mitigate climate change impacts These funds are only required because of the detrimental effects on development that will result from climate change Such funding is seen not as traditional ODA, but additional ‘climate finance’ Furthermore, climate finance has introduced new modalities for funds transfers, with a range of different channels, including the opportunity for trading of carbon credits between institutions and countries It thus is arguable whether its operation should adhere to Aid Effectiveness principles at all However, whilst Vietnam is able to directly access such funding, it does so through traditional funding partners who manage such funding, and the funds in operation share many of the same characteristics as ODA Conclusions Viet Nam will require billions of dollars of external funding if it is to fully respond to the challenge of climate change The country is beginning to benefit from such funding, for a wide range of adaptation and mitigation activities Viet Nam does have the foundations in place for a coherent response to climate change in accordance with aid effectiveness principles However, clarity on what should be included when discussing climate change financing and the division of roles and responsibility within both GoV and among donors needs to resolved, if the full response is to be developed In particular, should all elements of climate finance be provided in accordance with Aid Effectiveness principles, even though it additional to ‘business as usual’ ODA? It is expected that the implementation of the next five-year SEDP will overcome some of this uncertainty, and lead to increased role clarity between line ministries Donors will need to improve their co-ordination, and in particular move to implement more fully their prior commitments to the Hanoi Core Statement Unfortunately, some of the difficulties result from the requirements of the international architecture, and the definitions and operation of funding mechanisms, that are outside Viet Nam’s control Agulhas Applied Knowledge Introduction This report is one of several that have been commissioned by the Capacity Development for Development Effectiveness (CDDE) Facility3 supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA and UNDP as part of a regional dialogue process also supported by the OECD DAC The purpose of the initiative is to develop a set of recommendations regarding the programming of climate change finance at the national level The initiative seeks to strengthen the management of climate change finance by beneficiaries and donors through a consideration of Aid Effectiveness principles Findings from the country studies will be discussed in a workshop to be held in Bangkok in October 2010, with a view to influencing the country and regional response The analysis seeks to prompt discussion and debate on the nature of financing for climate change, particularly in relationship to the principles for Aid Effectiveness articulated in the Paris Declaration (PD) and the Accra Agenda for Action (AAA) The findings will be synthesized with findings from similar studies in Bangladesh, Cambodia, Indonesia, the Philippines and Viet Nam It will be used as an input into a regional workshop to be held from October 19-20 2010 in Bangkok This report considers current external climate change financing mechanisms, specifically identifying whether and how aid effectiveness principles are being applied The process for the analysis included interviews with a limited range of stakeholders (donors and government) as well as consideration of other written material in country Whilst led by an international consultant, it benefited significantly from contributions from the UNDP funded project based in the Government of Viet Nam’s Ministry of Planning and Investment’s Department of Science, Education, Natural Resources and Environment (MPI/DSENRE), the Sustainable Development and Climate Planning (SD&CC) project, Mr Johan Kieft and Mr Le Duc Chung Any findings are the author’s alone Country context In the early 1990s, Vietnam was among the poorest countries in the world Two decades later, it has achieved Middle Income Country (MIC) status, along the way lifting nearly half of the population above the national poverty line.5 Vietnam began its transformation from a command to a market economy in 1986, when the 6th Party Congress launched the Doi Moi or ‘Renovation’ reform programme Though its impact has been dramatic, the transformation was a carefully managed process Economic transformation was accompanied by rebuilding ties with the international community In 1993, Vietnam resumed relations with the international financial institutions (World Bank, IMF and ADB) and bilateral donors, giving it access to large3 More information on the CDDE Facility can be found at www.aideffectiveness.org I.e., per capita GNI of more than US$995, which Vietnam achieved in 2009 According to some definitions, a country must reach this figure in consecutive years to qualify as a MIC, which would put Vietnam on the threshold MPI, “Midterm Review of the 2006- 2010 SEDP Performance”, 2008 Agulhas Applied Knowledge scale development assistance It became an ASEAN member in 1995 and signed a Bilateral Trade Agreement with the United States in 2001 In 2006, it became a member of the World Trade Organization, and embarked on an ambitious programme of economic reforms aimed to increase the country’s global competitiveness The Vietnamese economy responded rapidly to these reforms, growing at an average of 7.5% between 1990 and 2008 Over the last two years, growth rates have slowed as a result of the global financial crisis There have also been important changes in the nature of economic growth, linked to Vietnam’s achievement of MIC status As productivity has increased, higher value-added exports such as electronic products have become more important There has been a major real-estate boom (prices jumped 263% in 2007), with FDI shifting from industry into hotels and other real estate The shift towards MIC status has also affected the nature of the aid dialogue in Viet Nam Traditional aid partners (particularly bilaterals) are beginning to leave or reduce their programmes, and Viet Nam’s relationship with regional partners is becoming more important Government and donor commitment to aid effectiveness is strong in Viet Nam The 2005 Hanoi Core Statement (HCS) provides the framework for a highly organised engagement around the Paris and Accra principles The HCS brought together various reform initiatives and efforts underway for some years, including National planning processes, Public Financial Management, Public Administrative Reform, Deconcentration and Decentralisation (D&D), as well as Sector reforms and SWAP-type approaches The country’s engagement with donors is managed by the Ministry of Planning and Investment (MPI) in collaboration with the Ministry of Finance MPI leads on the implementation of the Hanoi Core Statement Following on from the earlier Partnership Group on Aid Effectiveness (PGAE), the Aid Effectiveness Forum (AEF) was officially established in February 2010 to provide the overarching architecture for government-donor co-ordination around aid (and now development) effectiveness issues The AEF is an umbrella body for twenty Partnership Groups (PGs), setting the overarching context for the relationship of the Government of Viet Nam to external funding partners The individual PGs deal with specific sectoral or thematic issues In addition, the AEF (consistent with the spirit of the Accra Agenda for Action) brings Civil Society Organisations, the National Assembly and International Non-Governmental Organisations in to the dialogue with government The AEF meets in the week preceding the Consultative Group meeting between external partners and government, allowing it bring aid effectiveness issues to the attention of senior figures on both sides of the development partnership 10 Agulhas Applied Knowledge Alignment The Paris Declaration envisions donors basing their support fully on country partner aims and objectives, and using government systems for disbursement Results of the 2008 Paris Declaration Monitoring Survey suggest that progress in this area is mixed in Vietnam Country systems are relatively strong and donors are increasingly using them, “even though lack of consensus regarding appropriate international standards remains an obstacle to greater use” In 2008, 80% of the US$ 2455 million ODA disbursed to government was reported on budget, and 63% of it used government Financial Management systems for reporting However, the monitoring report also noted that alignment of capacity building required stronger government leadership, and the need to strengthen procurement In spite of this general commitment, there does not yet appear to be a specific commitment from external funding partners to align their climate change activities with government plans It is arguable that since signatories to the Hanoi Core Statement are obliged to so where possible then, for donor funds at least, this should take place as a matter of course However, in this phase of implementation of the country planning process Viet Nam has yet to clearly identify all its needs Climate change (whether mitigation or adaptation) does not appear in the SEDP 2006-2010, but as set out above will appear in future plans As set out above, there it is not yet clear whether climate change funding should be integrated fully into the activities of line ministries or provinces (as indicated in the NTP), or be managed and reported as separate projects The creation of the policy framework through the NTP is still being implemented There is no comprehensive needs assessment, and line ministries are still developing their plans This provides a challenge to alignment since, as one respondent put it, donors cannot align if country plans are not clearly in place Since there are no developed plans for climate change financing, climate change funding does not yet help to fully reduce financing gaps that have been identified and costed into the national or sub national strategies Rather, the availability of the financing has led to funding opportunities being identified In July 2009, the NPT-RCC14 office issued a framework guiding ministries and provinces how to prepare action plans to respond to climate change However, this appears not to have been issued in time or provided clearly enough for some ministries For instance projects prepared by MARD and submitted to the NTP-RCC Standing Office were reportedly disqualified for consideration since they did not meet criteria It is reported that they also exceeded MOF allocations and did not identify from where additional resources would be provided Similarly, it cannot be said that all funding to date has been provided in response to identified need Whilst Decision 158 sets out that it aims for half an estimated total budget of $120m to be ODA (expected by the GoV to be in the form of grants), the approved $100m budget support loan from JICA for 2010 to support the implementation of the NTP (under its Support Program to Respond to Climate Change) exceeds the actual cost of implementation of the NTP for that one year The conditions for the JICA loan allow the funds to be used for general budget support, not just climate change funding This has 14 It is notable that whilst not formally part of MONRE, MONRE hosts the Standing Office and MONRE staff dominate its establishment 18 Agulhas Applied Knowledge created the situation where MoF and others are considering how to use the monies that have been over-provided, and a reported difference of opinion between MONRE and MOF on how the funds should be used Equally the definitional complexity of additionality makes alignment problematic If funding is not ODA, should it be included in the donor funding framework? Whilst it appears that there is a desire that all funds should be provided in accordance with the principles of the Hanoi Core Statement, this has yet to be resolved Officials in MPI and MOF report that Government of Viet Nam systems are not yet able to track climate financing, except in terms of standard project reporting Also systems can not yet identify additionality This problem appears to be compounded because the NTPRCC housed by MONRE has been given the responsibility for this role, not the MOF or MPI who have greater technical expertise in budgets and financial reporting Donors expect to include some elements of climate change financing within the next ODA framework that will coincide with Viet Nam’s next five year plan There is thus intended to be a higher level of formal coherence with national budgeting processes than at present In reality, large external funds appear to have a degree of predictability However, provision is currently only partially synchronous, on the whole, with national planning, as the following table indicates Examples of funding periods For a sample of Climate Change projects in Viet Nam (see Annex A for longer list) Project Funder Implementer Total System Efficiency Improvement, Equitization, WB MOIT $347,900,000 Renewables Viet Nam Renewable Energy WB MOIT $239,400,000 National Target Programme on Climate Change GoV MONRE $143,878,788 Viet Nam Climate Change Framework Loan Europe/ODA MOF $140,000,000 Natural Disaster Risk Management Project WB MARD $86,000,000 Finance the completion of the GMS Southern Coastal ADB $75,000,000 Corridor (GMS-SCC) in Viet Nam Asian Cities Climate Change Resilience Network Rockefeller $70,000,000 Foundation Sector Budget Support to NTP: Adaptation Component Denmark/ODA MONRE $40,000,000 DSM management & Energy Efficiency WB/GEF MOIT $18,563,441 Urgent investment in improving forecast capacity of MONRE $18,375,000 hydrometeorology station for disaster preparedness, especial focus on storm forecast (including 12 subproject) Phasing out Incandescent Lamps through Lighting UNEP/GEF MONRE $10,975,000 Market Transformation in Viet Nam Hanoi Urban Transport Project WB/GEF Local $9,800,000 Governments Draws from the World Bank’s Matrix http://www.worldbank.org/vn/environment of CC studies and activities in Viet Nam, Start 2002 End 2009 2009 2009 2008 2006 2007 2014 2015 ? 2010 ? 2009 2009 2009 2003 2006 2014 2009 2010 2008 2014 2007 2013 see As can be seen above, external funders are using grants and loans, project and budget support modalities to support climate change activities These funds come from both bilateral programmes but also global funding sources, notably the GEF The total funds captured on the World Bank’s matrix amounts to US$1.56billion However, this data is not yet fully comprehensive nor available in a form that enables detailed and robust analysis of funding types (loans or grants) or expected utilization 19 Agulhas Applied Knowledge Respondents noted that alignment of some of the funding mechnsims that provide climate change adaptation and mitigation funds (such as CDM, GEF and UN-REDD) can be inhibited since their processes and the management of the funds is not fully delegated to the local offices of international agencies Rather fund administration takes place from headquarters offices and the processes of application have tightly defined procedures As a result, respondents noted that these funds were less sensitive to the needs for alignment or the operation of the Hanoi Core Statement in country than support developed with representatives from international agencies with more local delegation and flexibility Respondents in government, both in the central and line ministries commented that Viet Nam might benefit from further capacity to design and apply for external CC funds It would appear that, however, in comparison with many other countries, Viet Nam does have a relatively high level of skills However, the more specific application procedures (such as for REDD or GEF funds) requires additional support with specialist knowledge and experience in relation to these funds Such support can be periodic (such as in the case of REDD), or more constant (as is the case with the GEF) depending on the individual management arrangements of the funds Whilst the governance arrangements for donor funded activities arrangements allow for, and indeed encourage, the use of local systems for programme design, implementation, financial management and monitoring and evaluation, these systems are only partially developed as yet There is much still to The NTP-RCC support and the REDD readiness programme seek, in part, to build such capacity However, as discussed above the institutional and reporting requirements for much climate change funding hinder alignment by preferring a projectised modality In particular, respondents in Viet Nam noted that GEF funding, which uses its own procedures, is not based on Paris Declaration principles GEF internationally operates outside of “normal” aid channels, being accountable to the UNFCCC COP Whilst national dialogue is a feature of the engagement around GEF, in operation projects are approved the GEF Secretariat by the GEF council Similarly, earmarking of climate change funding that does not accommodate the integration of funds into broader sectoral responses, strategies and activties will alignment 20 Agulhas Applied Knowledge Harmonisation Harmonisation of aid delivery procedures and adoption of common arrangements help reduce duplication of effort and lower the steep transaction costs of managing aid The 2008 Paris Delcaration Monitoring Survey noted that “Vietnam’s donors have made some serious efforts to harmonise their activities through co-ordination mechanisms such as the Six Banks, One UN and the EU Harmonisation Roadmap.” Donors in Viet Nam are seen as good performers, harmonizing their activities well However, there is no formal commitment from external partners to co-ordinate all climate change funding beyond the HCS There is no Heads of Mission statement or a Memorandum of Understanding that sets out the framework for the co-ordination of all external financing for climate change It follows that there is no clearly agreed division of labour between funders (albeit it might be argued it partially operates in practice) There is some awareness of this as an issue It was reported that a donors meeting in June, donors called for the UN to play a clearer role in co-ordinating thematic areas which were crosscutting, specifically in the areas of Climate Change and HIV The UN reports that climate change will feature as a key element of its One Plan for Vietnam Neither is there a forum when all external funders collectively discuss together, or with government, their climate change assistance At the first meeting of the AEF the Ministry of Natural Resources and the Environment (MONRE) made a presentation to donors on climate change and government and donors discussed priorities and the use of resources MONRE has, in the past, announced (without consultation with donors, it was reported) a donor forum to co-ordinate assistance which has yet to convene The AEF is currently working on three agendas of which one includes the incorporation of climate changecapacity development and other newly emerging issues under the theme of sustainable development However, while NTP-RCC suggests that there will be an annual consultation forum for climate change assistance, this is not formalized into the work of the AEF There is no Partnership Group for climate change per se, although there is a group of donors working as a partnership group who support the NTP-RCC JICA is providing a budget support loan of $100m for 2010, and with AFD, Denmark and the UNDP also providing assistance, they together comprise the Climate Change Policy and Coordination Group (CCPCG) The World Bank Headquarters are also, it is understood, considering providing a loan for the NTP In the recent period, this group has been Co-chaired by the UN resident Coordinator and the Ambassador of Denmark The group was created as a temporary working group under the informal Ambassadors forum During the last year, it appears that there have been periodic suggestions that this group should take the role as the co-ordinating forum for donor climate change assistance It will be noted that this is not a formal Partnership Group mandated by the Aid Effectiveness Forum Whilst nothing related to climate change is excluded from the CCPCG, it has not yet defined its relationship to all external climate change financing other For instance, REDD has its own technical groups, particularly in relation to the Forestry Sector Support Partnership The group does not include consideration of other, additional, climate change funding mechanisms such as CDM or climate change funds obtained through the GEF 21 Agulhas Applied Knowledge A Technical Working Group on Climate Change also exists which includes several bilateral donors, international NGOs and UN organisations A review is underway of donor coordination groups by the Aid Effectiveness Forum, with a view to improving rationalization It is not clear whether this includes the remit of climate change Other funding groupings, such as the Like Minded Donor Group are engaging with the agenda The United Nations are in the process of developing a new country strategy which will include climate change It is notable that the Like Minded Donor Group and the United Nations have recently completed a joint country analysis that has a chapter focusing on climate change All major donors appear, in one form or another, to be including climate change in their country strategies Respondents commented that not all donors might share the same incentives for increased harmonization of climate change assistance in line with the Paris Declaration and Hanoi Core Statement commitments Some external partners (such as the USA) have remained largely disengaged from aid effectiveness processes It would appear that the key donors in the different forums (such as the CCPCG, the Technical Working Group) have not yet resolved how to fully collaborate on the issue A matrix of climate change studies and activities was produced by the World Bank, in collaboration with the Government of Viet Nam, donors, and NGOs It is intended as a tool to facilitate collaboration and cooperation, and posted on the website of the World Bank.15 However, there is no single comprehensive programme and budget framework used for all sources of finance for climate change, although a process is underway to develop this by the SD&CC in the MPI, building on the World Bank’s matrix External funders have varying technical capacity on climate change in country, with some (such as the United Nations and World Bank) having more dedicated capacity than others Donors such as Japan are increasing their local climate change capacity in line with expanded funding commitments Incentives for harmonization of donor assistance varies within the Government of Viet Nam MPI and MOF desire a greater degree of harmonization to enable macro-level planning For line ministries, notably MARD, harmonization may work against strong bilateral relationships that enable the provision of funding Managing for results The Paris Declaration requires donors and partner countries to make a joint commitment to managing for development results It is recognized that identifying desired results and measuring progress toward them, as well as using information on results to improve decision making and performance requires capacity building Whilst Viet Nam has far to go in being able to a results culture, a monitoring and evaluation framework for the SEDP, structured around a logical results chain, has been developed in consultation with ministries and provinces Most external partners have agreed to align with this framework when it becomes operational 15 http://www.worldbank.org/vn/environment It is reported that updated, versions are also sent for posting to: i) MONRE's ISGE site at http://www.isge.monre.gov.vn/; ii) NGO Resource centre (http://www.ngocentre.org.vn/ccwg) 22 Agulhas Applied Knowledge There is no results framework yet in Viet Nam for measuring the impact of externally provided climate change finance When climate change becomes incorporated in the national planning process, a results framework for national climate change programming is expected to be put in place This is likely to happen with the implementation of the 20112015 Five Year Plan MPI is implementing a process to monitor financial flows for climate change However, there is no network or agency in place yet that is capable of monitoring all results of CC activities funded by external donors MONRE is meant have the overarching role for this, but monitoring and evaluation is not collated and remains project or programme based, linked to the funding conditions Clarity on how the results of climate change financing will take place has yet to emerge A Monitoring and Evaluation mechanism for the NTP is in place, but this is only monitors the implementation of the programme itself, not Viet Nam’s response to climate change It is not clear yet what will be the implications for national results frameworks resulting from international standards for measureable, reportable and verifiable actions (MRV) on climate change At present, reporting on such actions (and others, for instance under REDD) takes place in parallel to other development reporting and is provided to the relevant international bodies through the focal points Mutual Accountability The 2008 Paris Declaration Monitoring Survey noted that “Aid is more effective when both donors and partner country governments are accountable – to their respective publics and to each other – for the use of resources and management to achieve development results The Paris Declaration calls for donors and partner countries to jointly assess (through existing country-level mechanisms) mutual progress in implementing agreed commitments on aid effectiveness, including commitments made under the Paris Declaration.” Much needs to be done to strengthen the mutual accountability for climate change The lack of a single forum for engagement between the GoV and external partners is a key deficit Where government has made commitments, it is on a case by case basis Signatories to the Hanoi Core Statement are committed to predictable financing In reality, external providers of climate change finance have no direct accountability to citizens in Viet Nam Whilst some international NGOs have limited capability to monitor the implementation of climate change financing in Viet Nam, the media and local bodies are not yet playing such a role If the National Assembly becomes more engaged with climate change planning and implementation, this may offer the greatest potential as a domestic accountability mechanism Conclusions 23 Agulhas Applied Knowledge Viet Nam will require external funding to respond to the challenge of climate change The country is beginning to benefit from such funding, for a wide range of adaptation and mitigation activities These funds are not yet being managed in accordance with the principles of the Paris Declaration and Accra Agenda for Action, or indeed the Hanoi Core Statement Viet Nam does have the foundations in place for a coherent response to climate change in accordance with aid effectiveness principles However, there is a degree of institutional dysfunction confusion that needs to be overcome within both GoV and among donors, if the full response is to be developed This is particularly relevant to the role of MONRE which, as a junior ministry, is tasked with co-ordinating the national response Unfortunately, some of this dysfunction results from the requirements of the international architecture, and the operation of funding mechanisms, that are outside Viet Nam’s control Equally, international debates relating to additionality, what is and is not ODA, have an impact on whether climate change funding should be fully under the HCS Perhaps most notably, international funding mechanisms, which provide the bulk of the potential funds available, are almost all projectised and difficult provide in a budget support modality, which is the preference of the MOF and MPI The next SEDP provides an opportunity for Viet Nam to more clearly articulate the roles and responsibilities of the different Ministries, and in particular MONRE’s relationship with line ministries A key issue that requires resolution is whether MOF, MPI and MONRE should set an overall funding envelope that ministries plan within, or whether ministries should seek to identify their own funding for climate change activities It would appear that having a parallel budget process for climate change would be counterproductive to best aid effectiveness practice To enable full integration, the mechanism of reporting the additionality of climate change financing needs to be resolved Equally, the reporting the impact of financing remains an important challenge Once the mechanism for national planning and funding for climate change is finalised, then external funders will be more able to align behind it This will also drive improved harmonisation However, it would be useful for external funders to formalise their approach to external funding, through a Heads of Missions Statement or joint MoU Equally, it might be useful for a standing forum to be created where climate change funding can be more effectively co-ordinated, under the remit of the AEF 24 Agulhas Applied Knowledge Annex A: Indicative list of Climate change projects over $1m Theme or subtheme Mitigation-Energy Mitigation-Energy AdaptationGeneral Strategy Financial MechanismsGeneral Adaptation-Natural Disasters AdaptationMekong Delta Adaptation-Urban Mitigation-General MitigationAgriculture REDD International CooperationGeneral Measures AdaptationMekong Delta Mitigation-Energy Adaptation-Natural Disasters Capacity StrengtheningIndustry Mitigation-Energy Mitigation-General Mitigation-Urban MitigationTransport Adaptation-Natural Disasters Mitigation-Energy Capacity StrengtheningNatural Disasters Mitigation-Energy Capacity StrengtheningEnergy WB Implementing Agency MOIT Funds allocated $347,900,000 WB GoV MOIT MONRE $239,400,000 $143,878,788 Nationwide Support for Response to Climate Change (2010) Viet Nam Climate Change Framework Loan JICA Europe/ODA MONRE MOF $120,000,000 $140,000,000 Nationwide National Natural Disaster Risk Management Project (NDRMP) (P073361) Finance the completion of the GMS Southern Coastal Corridor (GMS-SCC) in Viet Nam Asian Cities Climate Change Resilience Network (ACCCRN) Mitigating the Impact of Climate Change and Land Degradation through IFAD's COSOP for Viet Nam Mitigating the Impact of Climate Change and Land Degradation through IFAD's COSOP for Viet Nam Mitigating the Impact of Climate Change and Land Degradation through IFAD's COSOP for Viet Nam Sector Budget Support to NTP: Adaptation Component WB MARD $86,000,000 Nationwide Name of Project Source of Funds System Efficiency Improvement, Equitization & Renewables (P066396) Viet Nam Renewable Energy (P103238) National Target Programme on Climate Change ADB $70,000,000 GoV $56,500,000 IFAD GoV $56,500,000 IFAD GoV $56,500,000 Denmark/ODA MONRE $40,000,000 WB MARD $39,100,000 WB/GEF MOIT $18,563,441 MONRE $18,375,000 Viet Nam Coastal Wetlands Protection and Development Project (P042568) DSM management & Energy Efficiency (P071019) Urgent investment in improving forecast capacity of hydrometeorology station for disaster preparedness, especial focus on storm forecast (including 12 sub-project) Providing special loans for promoting cleaner production and energy efficiency in industry VEPF Phasing out Incandescent Lamps through Lighting Market Transformation in Viet Nam Asia Least-cost GHG Abatement Strategy (ALGAS) Hanoi Urban Transport Project (P085393) Hanoi Urban Transport Development Project GEF component (P085393) Quang Ngai Natural Disaster Mitigation Project Promoting Energy Conservation in Small and Medium-sized Enterprises (PECSME) Community Resilience to Natural Disasters in the Mekong Delta VN-GEF Rural Energy II (P080074) Quang Ninh $75,000,000 Rockefeller Foundation IFAD Location Nationwide National and Quang Nam, Ben Tre Mekong Delta 28 coastal provinces $12,121,212 UNEP/GEF MONRE $10,975,000 UNDP/GEF $10,000,000 UNDP/GEF MONREIMHEN Local Governments Local Governments Local Governments GoV Australia/AusAID CARE $5,425,500 WB/GEF Switzerland/ODA MOIT VNCPC $5,250,000 $5,000,000 WB/GEF WB/GEF Australia/AusAID 25 $9,800,000 Hanoi $9,800,000 Hanoi $8,134,820 Quang Ngai $5,500,000 An Giang, Dong Thap, Long An Provinces Mekong region Agulhas Applied Knowledge Theme or subtheme Capacity StrengtheningGeneral Adaptation-Areaspecific Mitigation-Energy REDD REDD Adaptation-Natural Disasters AdaptationMekong Delta Capacity StrengtheningNatural Disasters Mainstreaming Adaptation-Coastal (general) REDD Mitigation-Energy Mitigation-Energy MitigationAgriculture Mitigation-Industry AdaptationForestry (mangroves) Adaptation-Energy REDD Mitigation-Energy MitigationAgriculture Financial MechanismsGeneral Mitigation-Energy Implementing Agency MONREIMHEN Funds allocated $4,660,000 Germany/ODA Germany/ODA $4,500,000 WB/GEF GoV $4,500,000 Soc Trang Province National Finland/ODA MARD $4,300,000 National Multi-donor UNDP UN/Other MARD $4,300,000 $4,000,000 National National Australia/AusAID MRC $4,000,000 UNDP MARD $3,985,594 Mekong Delta Coastal UNDP MPI $3,600,000 ADB/GEF GoV $3,500,000 Netherlands/ODA MARD $3,314,000 UNDP/GEF Sweden/SIDA ADB/GEF VAST GoV MARD $3,000,000 $2,800,000 $2,600,000 UNDP/GEF MOST $2,600,000 Sustainable Management of Forest Ecosystems for Coastal Protection in Bac Lieu Province Project National Hydropower Masterplan Study – Stage The national trial PES policy (Decision 380 of the Prime Minister in 2008) Energy Efficiency Improvement in the Public Building in VN Viet Nam National CFC & Halon Phase Out (P083593) Small Grants Programme of Global Environment Facility (b) Germany/ODA Germany/ODA $2,240,000 Norway/ODA MPI $2,000,000 USA/USAid Winrock $2,000,000 UNDP/GEF MOC $2,000,000 WB MARD $1,500,000 UNDP/GEF Local Governments $1,500,000 Wind Energy Germany/ODA Germany/ODA $1,400,000 $1,125,000 Binh Thuan and Ninh Thuan Provinces Nationwide $1,089,450 Coastal Name of Project Source of Funds Strengthening national capacities to respond to climate change in Viet Nam, reducing vulnerability and controlling GHG emissions Management of Natural Resources in the Coastal Zone of Soc Trang Province System Efficiency Improvement, Equitization & Renewables Project (GEF Renewable Component) (P073778) Development of Management Information Systems for the Forestry Sector (FORMIS) UN-REDD Disaster Risk Management portfolio: UNDP Climate Change Initiative Framework of the Mekong River Commission Support to the Disaster Management System in Viet Nam Mainstreaming CC into socio-economic development planing Climate-resiient Infrastructure Planning and Coastal Zone Development Rehabilitation of Mangrove Forests in the Mekong Delta Energy-Efficient Public Lighting Phase DSM Program Transfer and Demonstration of Medium to Large Scale Biogas Digesters in Viet Nam (proposed) Waste Heat Recovery for Power Generation (HRPG) in Viet Nam’s Cement Industry (proposed) Adaptation-Water Build flashflood zoning maps Capacity StrengtheningCommunity-level AdaptationAgriculture Community based disaster preparedness project Europe/ODA MONREIMHEN VNRC Helping poor farmers in rice-based systems in the Mekong delta of Viet Nam adapt to climate change Livestock Waste Management in East Asia Project (P079610) Australia/AusAID ACIAR MARD $1,000,000 National Coastal areas Southern National Bac Lieu Province: Lam Dong Nationwide $1,000,000 WB/GEF Location MitigationAgriculture 26 Regional Agulhas Applied Knowledge Theme or subtheme Mitigation-Energy Name of Project Viet Nam Energy Conservation Program Source of Funds Netherlands/ODA 27 Implementing Agency GoV Funds allocated $1,000,000 Location ... in Viet Nam Asian Cities Climate Change Resilience Network (ACCCRN) Mitigating the Impact of Climate Change and Land Degradation through IFAD''s COSOP for Viet Nam Mitigating the Impact of Climate. .. the Impact of Climate Change and Land Degradation through IFAD''s COSOP for Viet Nam Mitigating the Impact of Climate Change and Land Degradation through IFAD''s COSOP for Viet Nam Sector Budget Support... implementation of climate change financing in Viet Nam, the media and local bodies are not yet playing such a role If the National Assembly becomes more engaged with climate change planning and implementation,