ICMP planning budgeting report EN

Abbrevations BMZ German Ministry for Economic Cooperation and Development CA Commitment Appropriations CCD Climate Change Delivery CC&GG Climate Change & Green Growth CCVI Climate Change

CLIMATE RESPONSIVE

PLANNING AND BUDGETING

IN THE MEKONG DELTA

Monitoring Climate Targets through Budget Classification

Abbrevations

BMZ German Ministry for Economic Cooperation and Development

CA Commitment Appropriations

CCD Climate Change Delivery

CC&GG Climate Change & Green Growth

CCVI Climate Change Vulnerability Index

CPEIR Climate Public Expenditure and Investment Review

COP Conference of Parties

DAC OECD Development Assistance Committee

DARD Provincial Department of Agriculture and Rural Development DFAT Australian Department for Foreign Affairs and Trade

DoC Provincial Department of Construction

DoH Provincial Department of Health

DoLISA Provincial Department of Labor, Invalids and Soc Affairs DoNRE Provincial Department of Natural Resources and Environment DoST Provincial Department of Science and Technology

DoT Provincial Department of Transportation

DPI Provincial Department of Planning and Investment

EU European Union

GDP Gross Domestic Product

GEAP Gender Equality Action Planning

GHG Green House Gas

GIZ German International Cooperation

GoV Government of Vietnam

MARD Ministry of Agriculture and Rural Development

MoC Ministry of Construction

MoF Ministry of Finance

MoNRE Ministry of Natural Resources and Environment

MoIT Ministry of Industry and Trade

MoT Ministry of Transportation

MRV Measuring, Reporting, Verification

MPI Ministry of Planning and Investment

NCCS National Climate Change Strategy (Vietam)

NDC (Intended) Nationally Determined Contributions

NTP National Target Programme

ICMP Integrated Coastal Management Programme

ODA Overseas Development Assistance

OECD Organisation for Economic Cooperation and Development PEFA Public Expenditure Framework Assessment

PG Policy and Governance

PM Prime Minister

PPC Provincial People’s Committee

SEDP Socio-Economic Development Plan

SP-RCC Sector Programme to Respond to Climate Change

ST Science Technology

UNDP United Nations Development Programme

UNFCCC United Nations Framework Convention for Climate Change USD US Dollar

VGGS Vietnam Green Growth Strategy

VND Vietnamese Dong

Y1, 2, 3 Year 1, 2, 3

Contents

Abbrevations 2

1 Executive Summary 6

2 From Paris to the Mekong Delta – Climate Strategy Implementation and Reporting……… 8

2.1 The Paris Agreement and Enhanced Transparency……… 9

2.2 Vietnam’s Response to Climate Change……… 10

3 Methods to classify climate responsive investments……… 13

3.1 OECD- DAC Climate Markers……… 15

3.2 The CPEIR Typology in Vietnam……… 16

3.3 Which Budget? Plan vs Disclosure and Investment vs Recurrent…… 24

3.4 Approaches to Classification and Cooperation in the Mekong Delta……… 25

4 Ex-Post Classification of Investment Budget Plans in the Mekong Delta……… 27

4.1 Results from 4 Mekong Delta Provinces……… 28

4.2 Ca Mau province……… 32

4.3 Bac Lieu province……… 37

4.4 Kien Giang province……… 40

4.5 Soc Trang province……… 44

4.6 Summary of Findings and Conclusions Concerning the Mekong Delta Provinces……… 47

5 Iterative Steps and Recommendations for Future Planning……… 49

Bibliography……… 54

List of tables

Table 1: Task to implement the Paris Agreement (NDC, 2016) 10

Table 2: Connection between Vietnam’s already existing climate change approaches and NDC tasks 11 Table 3: CPEIR and CC&GG classification and weighting criteria 18

Table 4: Merging weighting criteria with investment typology 19

Table 5: Mekong Delta Climate Change Budget Classification 2013-2015 29

Table 6: Ca Mau’s climate change responsive investments 2015 according to source 33

Table 7: Ca Mau’s TOP line item climate responsive investments 2015 34 Table 8: Bac Lieu’s climate change responsive investment 2015 according to source 37

Table 9: Bac Lieu’s TOP line item climate responsive investments 2015 38 Table 10: Kien Giang’s climate change responsive investments 2015 according to source 41 Table 11: Kien Giang’s TOP line item climate change responsive investments 2015 42

Table 12: Soc Trang’s 2015 investments according to source 44

Table 13: Soc Trang’s TOP line item investments for climate change response in 2015 46

1 EXECUTIVE SUMMARY

Vietnam is among the countries worldwide to be

most affected by climate change The

Government of Vietnam has therefore started to

focus on appropriate strategy formulation to

focus on both adaptation and mitigation As a

signatory to the 2015 Paris Agreement,

Vietnam’s Nationally Determined Contributions

(NDC) will be moved further in the limelight of

attention Pressure to therefore identify

approaches to ensure a visibility and connection

between policy and implementation on the one

hand and to monitor the associated flow of

funding on the other, will grow This survey

tries to shed more light on the question, how a

higher visibility of climate responsive funding

can be reached and potentially connected to

strategies As the country is characterized by its

high degree of decentralization, the center piece

of the survey is the assessment of climate

change investments at provincial level The

survey has been part of the cooperation

between the Government of Vietnam (GoV), the

German Ministry for Economic Development

and Cooperation (BMZ) and the Australian

Department for Foreign Affairs and Trade

(DFAT), embedded in the Integrated Coastal

Management Programme (ICMP), implemented

by the German International Cooperation (GIZ)

with focus on the Mekong Delta This most

southern Vietnamese region is featured by its

high vulnerability regarding the effects of

climate change, characterized by extreme

weather events, coastal erosion, saltwater

intrusion, floods and droughts With a

population of 17 million, it is Vietnam’s most

important agricultural region, producing rice

not only for the country itself, but large parts of

Asia

Based on the OECD-DAC Rio marker, a UNDP

driven Climate Public Expenditure and

Investment Review (CPEIR) method to classify

climate responsive investments has been

applied The results of the 3 year cooperation in

this field have shown that the 4 examined

coastal provinces spend amounts between approximately US$ 20-30 million per year for climate responsive investments Based on the use of the CPEIR typology, the bulk share of climate responsive classified investments reaches high degrees of relevance in which up to 100% of the overall amounts of single investments are accounted for adaptation The investments predominantly reflect the province’s vulnerability to sea level rise, floods, erosion and saline intrusion Response investments are hence mostly planned for dykes, dyke protection or the prevention of saltwater intrusion In this regard, it is remarkable that in all provinces, mostly funds from either national allocations or ODA and state bonds are being used Hence, it is a hypothesis, that equally high real climate change expenses in the 4 provinces are also rooted in similar response strategies and actions at national level

Results are so far based on investment plans only and apply a retrospective view To ensure a strengthened orientation towards the fulfilment

of the Paris Agreement, the introduction of a newly aligned process to incorporate classification methods during the annual planning process on the basis of cross-sectorial cooperation at provincial level will be a key necessity

Programme (ICMP) is a development programme funded by the governments of Australia, Germany and Viet Nam Its objective is to support the Vietnamese authorities in preparing the coastal area of the Mekong Delta for a changing environment and to lay the foundations for sustainable growth The programme works in six interlinked working areas: agriculture, aquaculture, coastal protection, forest,

management

2 FROM PARIS TO THE MEKONG DELTA – CLIMATE STRATEGY IMPLEMENTATION AND REPORTING

2.1 The Paris Agreement and

Enhanced Transparency

Since fall 2015 the majority of nations have

subscribed to a new global regime of climate

governance, based on the COP 21’s Paris

Agreement Based on the U.N Framework

Convention for Climate Change,

“[…] the Paris Agreement’s central aim is to

strengthen the global response to the threat of

climate change by keeping a global temperature

rise this century well below 2 degrees Celsius above

pre-industrial levels and to pursue efforts to limit

the temperature increase even further to 1.5

degrees Celsius Additionally, the agreement aims

to strengthen the ability of countries to deal with

the impacts of climate change To reach these

ambitious goals, appropriate financial flows, a new

technology framework and an enhanced capacity

building framework will be put in place, thus

supporting action by developing countries and the

most vulnerable countries, in line with their own

national objectives The Agreement also provides

for enhanced transparency of action and support

through a more robust transparency framework

(UNFCCC, 2016).”

After the ratification of 126 countries, the Paris

Agreement came into effect in December 2016 In

contrast to the Kyoto Protocol, the agreement is

not binding by international law and highlights

its voluntarily basis through the formulation of

Nationally Determined Contributions (NDC)

Article 3 of the Agreement states that NDCs have

to be ambitious and countries have to report to

UNFCCC every 5 years, including a principal

progression of formulated targets for every new

reporting time period In contrast to the

Agreement itself, the reporting process however,

is mandated in the so-called legally binding

“enhanced transparency framework for action and

support”, outlined in article 13 of the Agreement

Besides an emissions inventory and the tracking

of progress, the framework also governs to

provide information related to climate change

impacts and adaptation Regarding climate finance, mainly developed countries are accountable to classify their contributions while developing countries are required to provide information on needed capacity building as well

as needed and received financial support (UNFCCC, 2015:17) As a signatory country, Vietnam’s ambitious goals as formulated in its NDC will be also subject of the reporting process and the enhanced transparency framework for action and support Hence, the internationally agreed timeline and its milestones until 2028 will require Vietnam to align with this global regime, not only in terms of goal formulation, but also concerning new approaches towards strategy formulation and implementation of action as well

as evaluation

In 2018, a UNFCCC global facilitative dialogue is supposed to take stock of the collective efforts made so far Parallel, common modalities regarding procedures and guidelines on Measuring, Reporting and Verification (MRV) must be elaborated until 2018 and adopted by

2020 Until 2028 stock-taking, including financial tracking and the formulation of new pledges will continue As part of this roadmap, a capacity building initiative highlights i) to strengthen national institutions for more transparency, related to activities in line with national priorities, ii) provide tools and training to meet provisions in article 13 of the Paris Agreement, as well as iii) to assist in the improvement of transparency over time (UNFCCC, 2015:12)

In summary, as a signatory of the Paris Agreement, Vietnam will face the need to align its MRV modalities So far, related to climate finance, only article 13 of the Paris Agreement imposes the duty to report on received funding for climate change response Nevertheless, the requirement to also report on emission reduction and adaptation efforts foreshadow the necessity for better tagging and tracking of domestic climate finance as the fulfilment of

ambitious goals mainly rely on public funding

Taking the Agreement’s timeline until 2028 into

account, the need to principal progression and

the formulation of more ambitious goals over

time also implies that public spending to combat

climate change has to be increased

2.2 Vietnam’s Response to

Climate Change

For the period from 1996 until 2015, Vietnam

was ranked as the 8th most affected country in

the world related to climate change with an

average 0.62% GDP loss and with second

highest number (206) of extreme weather

events worldwide (Germanwatch, 2017:6)

Similarly, according to the Climate Change

Vulnerability Index, Vietnam is currently

considered one of 30 “extreme risk countries” in

the world (CCVI, 2016) The debate about

climate change, its consequences and

vulnerabilities for Vietnam has also influenced

the country’s policy formulation hence multiple

strategies, policies and actions plans addressing

the challenges of climate change have been

prepared by the Government of Vietnam in

recent years The most prominent ones are the

National Climate Change Strategy (NCCS), the

Action Plan to Respond to Climate Change and

Sea Level Rise, both from 2011, and the

National/ Vietnam Green Growth Strategy

(VGGS) from 2012 Further laws on natural

Disaster Prevention or Environmental

Protection are in line with the overarching national strategies (NCCS or VGGS) and offer further national funding opportunities for implementation In most cases, especially with regards to adaptation and more recently related

to mitigation, the above mentioned Action Plan

to Respond to Climate Change and the VGGS have also been disseminated to the provincial level The 63 provinces in Vietnam function as the second administrative tier with far reaching responsibilities and execute about 70% of the country’s total public budget (MPI, 2015:36) A translation and applicability of national policies

at local level has thus gained high priority This stock of vastly existing approaches on all levels in Vietnam has also paved the way to advance Vietnam’s aspiration for a successful contribution to the COP 21 in Paris And indeed,

in line with the 2015 Paris Agreement, Vietnam formulated the Intended Nationally Determined Contributions (INDC) After the agreement’s ratification in 2016, the INDC dropped the first letter and are now the Nationally Determined Contributions (NDCs) Probably the most important outlook for Vietnam’s actions for the future, the NDC and its annex, the “Plan for Implementation of the Paris Agreement” (2016) contains an annex with a list of compulsory, priority and encouraged tasks to be implemented until 2020 and 2030 The task matrix has a total number of 68 tasks, split into five main areas, as listed in table 1 below

Tasks to implement the Paris Agreement

1 Mitigation of greenhouse gas emission 10 tasks until 2020; 6 tasks until 2030 (#1-16)

2 Adaptation to climate change 9 tasks until 2020; 13 tasks until 2030 (#17-38)

4 Establishment of transparency system (MRV) 8 tasks (#52-59)

5 Development and revision of policies and institutions 9 tasks (#60-68)

(Author’s own table Adapted from Vietnam’s NDC annex “Plan for the Implementation of the Paris Agreement”)

Table 1: Task to implement the Paris Agreement (NDC, 2016)

VIETNAMESE STRATEGY NDC TASKS

National Climate Change

Strategy (NCCS)

#26 meteorological data modernization;

#27 guidelines for public infrastructure;

#28 SEDP climate change planning

#29 prevention of natural disasters (floods, etc.)

#38 complete coastal dykes, control of salinity intrusion

#40 climate change curricula development

#65 integrate cc into policies and plans of ministries and provinces

Action Plan to Respond to

Climate Change

#30 integrated water management

#31 sustainable forest development/ coastal forest

#32 sustainable maintenance of agriculture

#33 develop livelihoods suitable for cc conditions

#34 enhance insurance for climate risk

#35 ecosystems based adaptation

#36 …integrated coastal management

#37 resilient infrastructure, water supply, prevent flooding

#66 revision of admin functions Law on Natural Disaster

Prevention

#19 risk and vulnerability assessment

MRV for mitigation of GHG

emissions

#52- 57 establish MRV for relevant sectors until 2018

National Target Programme to

Respond to Climate Change

The first 16 tasks mainly focus on road mapping

and the development of modalities to ensure the

formulation of future stages towards GHG

emission reductions, first until 2020, but also in a

medium-term perspective until 2030 and beyond

Although connections to the VGGS seem obvious,

the first area does not highlight any direct connections yet The other four NDC task areas however, show clear linkages to 8 different Vietnamese strategies, action plans, laws and Prime Minister decisions as listed in the table 2 below

Table 2: Connection between Vietnam’s already existing climate change approaches

and NDC tasks

29 out of a total of 68 NDC tasks are linked with already existing legal approaches at both national, ministerial level and also provincial level in Vietnam The connectivity between the Paris Agreement and Vietnam’s NDC does not only highlight the country’s commitment for a global contribution, it also emphasizes the relevance of already existing national approaches for climate change response Even provincial Action Plans to Respond to Climate Change and Provincial Green Growth Action Plans as well as all related NTP funds disbursed

at provincial level appear in relation to the global agreement The connectivity also lays the groundwork for the need to monitor and evaluate the implementation and last but not least also track associated funding at all levels and from different sources Thus, NDC task #60

“Develop budget reports for responding to climate change, green growth to serve periodical evaluation of global efforts 2018, 2023, 2028” needs to be highlighted Although there is not yet any decision or policy formulated, MPI in conjunction with MoF will lead the implementation of the task This survey, with the objective to track and classify climate responsive investment at provincial level, is therefore to be seen as a first contribution to the establishment of a transparency system

The following chapter will further stress the methods and practices towards budget tracking and classification of climate changes expenses

3 METHODS TO CLASSIFY CLIMATE RESPONSIVE INVESTMENTS

Since the Rio Convention in the 1990s,

government strategies worldwide have been

developed to consider climate change and assign

public expenditures accordingly, whether for aid

to developing countries, to create incentives or

laws to reduce greenhouse gas emissions or

later to reduce climate related domestic

vulnerabilities of e.g public infrastructure

Although the environmental ministries have

taken over a lead function domestically but also

during international climate negotiations, and

especially in elaborating strategic medium and

long term approaches, the lion share of public

expenditures is mostly within the responsibility

of other sectors and government agencies In

fact, climate change is usually a cross-cutting

issue and touches the private as much as the

public spheres Regarding climate change,

environmental ministries are of course the main

regulators and responsible for the creation of

new legislation, which certainly affects e.g

private households and small and large

businesses Greenhouse gas reductions by

private emitters can also be put in a direct line

to environmental policies and laws Thus one

question is how difficult it is to install an MRV

system, which also tracks fund flows for

response implementation? As mitigation and

adaptation reflect the public domains of energy,

traffic and transportation, construction,

agriculture, forestry and coastal protection, a

multitude of government agencies, usually at

national and sub-national level are involved and

therefore responsible for expenditures And

there is not one single budget line, just to cover

climate change mitigation and adaptation In

addition, many countries with stronger

subnational government levels also possess the

fiscal autonomy to decide upon the use of public

resources As already mentioned in chapter 2, it

is estimated that up to 70% of all government

expenditures relevant for climate change in

Vietnam, are spent at provincial level

The effectiveness of international conventions

or agreements such as the 2015 Paris Agreement depend basically on national contributions, which are rolled out in a number

of strategies and action plans such as the NDC but also National Adaptation Plans (NAPs) or actions for Green Growth and mitigation Thus, expenditure tracking becomes not only a national necessity to monitor domestic efforts but a global requirement to prove that public spending fulfills the agreed international goals

As a cross-cutting issue with the above outlined multitude of different national agencies and ministries involved, this is however a difficult task And it needs to be mentioned that there has not yet been an internationally agreed methodology to assess the exact share of expenditures which contribute to climate change mitigation and adaptation A number of different types and methods to classify climate expenditures have been introduced in different countries and regions Intended to be in line with UNFCCC objectives, OECD-DAC, EU, World Bank and UNDP driven methods will be summarized in the following sub-chapters

3.1 OECD-DAC Climate Markers

Since 1998, the OECD Development Assistance

Committee (DAC) has monitored aid which

targeted the objectives of the 1992 Rio

Conventions The objectives are therefore also

known as the “Rio Marker” In 2009, OECD DAC

approved a new tagging or marker system which

tracks governmental aid to developing countries

in support of both climate change adaptation and

mitigation Ever since, the overall idea has been

to indicate the relation between donors’ aid

expenditures in relation to their own climate

policy objectives Since 2014, the OECD Joint

ENVIRONET/WP-STAT Task Team has worked to

improve the Rio Markers in accordance with

available environment and development finance statistics Main objectives have been i) the consistency to use the Rio Marker, ii) strengthened cooperation between OECD with Development Banks, including data availability, iii) the development of coherent options for the quantification of climate markers, and iv) strengthening trust to use the OECD method as a global reference for international MRV and climate reporting (OECD, 2014)

The OECD scoring system for climate markers in diagram 1 below explains the application The marker system is separated into three main categories or values: “principal objective (2)”,

“significant objective (1)” and “no target to the policy objective (0)”

(OECD, 2011:5)

Q1 What objectives are stated in the project/ programme document?

Q2 Do any of the stated objectives match “Criteria for eligibility” of climate markers

Yes No

Q3 Would the activity have been undertaken without this objective?

No Yes

2 Principal 1 Significant 0 Not targeted

Diagram 1: The OECD scoring system for climate markers

While “principal (2)” is scored when UNFCCC

objectives are fully promoted and also

documented, the latter “significant (1)” is reached

if the investment or activity had other primary

goals, but was also formulated to meet climate

change concerns Each investment must therefore

be assessed concerning its main objective first

and whether the given objectives match the

marker eligibility criteria Only with positive

answers, the “principal” or “significant” value can

be applied Aid activities for flood

prevention/control do not necessarily qualify for

the adaptation marker However, activities which

enhance flood prevention/control in such a way

that it contributes specifically to climate change

adaptation can be marked Examples include:

- “Restoring the function of floodplains in

combination with sound land-use

planning of watersheds and wetlands

thereby reducing the exposure to floods

and improving water availability in areas

affected by water scarcity and /or

variable rainfall patterns

- Flood control measures in areas which are

becoming increasingly flood sensitive (e.g

closing of estuaries, building of dikes and

protections) – wit due consideration for

the potential environmental

impacts of such measures (OECD,

2011:11).”

As mentioned before, it is also here again

important to mention that there is no

internationally agreed methodology yet

Therefore, assessing the share of expenditures

contributing to climate change mitigation and

adaptation remains subjective and has no

intention for being exact

Besides OECD-DAC also the European

Commission has adapted the method for

assessing programmed climate change

expenditures with the aim to devote at least 20%

of the EU budget to climate change, a sum of more

than € 200 billion It has to be underscored

however, that classification efforts in both cases (OECD and EU Commission) target investment budgets only OECD-DAC reflects ODA payments, mostly in financial and technical programmes while the EU Commission tracks all investment funds under the European Structural and Investment Fund (ESIF) Nevertheless, throughout the OECD and EU commission use, the method has been widely spread Although figures are not allowing exact quantifications, they give indications of whether policy objectives are being followed Before the survey will examine the question related to investment and recurrent budget classification in more detail in sub-chapter 3.3, sub-chapter 3.2 will shed more light

on the methodological debate in Vietnam and the use of the CPEIR methodology and typology

3.2 The CPEIR Typology in Vietnam

The Climate Public Expenditure and Investment Review (CPEIR) is a reporting approach mainly initiated through UNDP and respective Finance or Planning Ministries in Asian countries Between

2013 and 2016, a growing number of Asian and Pacific countries have officially published the reports, which analysed mainly the central government institutional set-up, its appropriateness in relation to climate policies and the results of pilot classifications concerning climate resilient and mitigation spending The Vietnamese CPEIR was approved in 2015 and covers an analysis of selected sector ministries such as MoNRE, MoIT, MARD, MoC and MoT as well as three pilot provinces

In comparison to other country CPEIRs, Vietnam also specified a methodological approach to i) review investments as well as to compile reports, and ii) to tag and track expenditures, using different coefficients to weight expenses and to also categorize along a typology which helps to better distinguish climate change expenses in line

with policies and priorities as it will be shown in

chapter 4

Similar to the explained OECD scoring system

above, the CPEIR also follows a 3-step system, in

which objectives and outcomes within the

investment portfolios are reviewed, depended on

the relevance, different percentage values for a

weighting apply In late 2016, the CPEIR method

in terms of weighting and criteria definition has

been adjusted for two reasons On the one hand,

the use of weighting coefficients was supposed to

be simplified, on the other a much stronger

emphasis on adaptation and Green Growth was

seized to clearly align with Vietnam’s most

prominent climate change strategies Table 3

below lists and compares both weighting

categories and associated criteria The dark

columns highlight the former original CPEIR method, clustered into 5 categories of “complete relevance (100%)”, “high relevance (75-99%)”,

“medium relevance (50-74%)”, “low relevance (25-49%)”, and “marginal relevance (1-24)” The white columns in between are part of the adjusted new method called “Climate Change and Green Growth (CC&GG)” The differentiation is less specific with only two main groups Similar

to the CPEIR, also here Group I classifies expenses with 100% Below the 100% level, Group II rates everything below 100% and further distinguishes between high (H), medium (M) and low (L) relevance H makes up a coefficient range between 51-99%, M of 50% and

L and range below 50%

CPEIR/

CC&GG CATEGORY

CLIMATE CHANGE RELATED EXPENDITURE

CC&GG Group I 100%

Projects which either (i) state predominant CC or GHG reducing objectives, or (ii) deliver concrete results/ benefits which contribute directly to benefits in A or M to CC, or (iii) sit within a governmental programme dedicated exclusively to climate change, green growth

or sustainable development goals (e.g NTP-RCC/ GG) Projects may satisfy one or more criteria to qualify

CPEIR High

relevance 75-99%

Projects which have (i) one or more of the primary objectives to improve climate resilience

or mitigation, or (ii) deliver significant and specific results/ outcomes that improve climate resilience or contribute to mitigation Projects may satisfy one or both criteria to qualify CC&GG Group II Les 100% Projects which relate to CC – GG at certain levels (H, M L); the relevance level based on the

objectives and contents of the components in project files to identify

CC&GG Group II.1 H: 51-99%

Projects which set (i) at least one goal to enhance the climate resilience or reduce GHG emission, or (ii) deliver significant and specific results to promote climate resilience or mitigation effects Projects may satisfy one or more criteria to qualify

CPEIR Medium

relevance 50-74%

Projects which either (i) have secondary objectives related to building climate resilience or contributing to mitigation, or (ii) some results/ outcomes of the project are related to building climate resilience or contributing to mitigation, or (iii) mixed programmes with a range of activities that are not easily separated but include at least some that promote climate resilience or mitigation Projects may satisfy one or more to qualify

CC&GG Group II.2 M: 50%

Projects which either have (i) secondary objectives related to building climate resilience or have mitigation effects, or (ii) mixed programmes with a range of activities which are not easy to separate but include at least some activities to promote the climate resilience or mitigation effects Projects may satisfy one or more criteria to qualify

CC&GG Group II.3 L: Under 50%

Projects which have (i) primary or secondary objective or results/ outcomes which are irrelevant to promoting the ability to adapt or to mitigation CC but include activities which can deliver indirect benefits in the field of A or M, or (ii) activities that are indirectly or theoretically relevant to climate resilience, even benefits from response to CC are not stated explicitly in objectives or results of projects

CPEIR Low

relevance 25-49%

Projects that include activities that display attributes where indirect adaptation and mitigation benefits may arise but climate change benefits are not explicitly listed in project objectives or the stated results/ outcomes

CPEIR Marginal

relevance 1-24%

Projects that include activities that have indirect and theoretical links to climate resilience, although climate change benefits are not explicitly listed in projects objectives or stated results/ outcomes

(adapted from the CPEIR methodological guidebook, 2015 and the newly adjusted weighting method 2016)

Table 3: CPEIR and CC&GG classification and weighting criteria

What completes the methodological approach is

the linking of the investments not only with

classification criteria (in percentage) but also with

a typology Table 4 below displays the CPEIR

developed typology, divided into three parts PG

(Policy and Governance), ST (Science and

Technology) and CCD (Climate Change Delivery)

All three typologies on the left hand side of the table are further divided into a number of sub-typologies with giving examples The two columns

on the right hand side are the associated weightings or coefficients based on the former CPEIR classification and on the far right hand side with the newly adjusted CC&GG coefficients

Typology Sub-typology Provincial

investments CPEIR coefficient CC&GG coefficient

Policy & Governance

e.g Provincial Action Plan to Respond to

implementation

e.g budget classification

PG 2: Comprehensive

national mitigation

policy framework

PG 2.1 Establish policy, tax and incentive structure for clean energy, low GHG emissions

e.g based on Green Growth Action Plan

P-PG 2.2 Develop sectoral plans and coordinate among departments

e.g Climate sensitive Provincial Gender and Equality Action Plan

PG 2.3 Manage and monitor

implementation of mitigation policies

Monitoring of Green Growth Action Plans

P-PG 3: Action Plan

Impact Assessment

PG 3.1 Action and Sector Plans

PG 3.2 Climate Change Impact assessments

PG 3.3 Climate Change capacity building

e.g capacity building workshops

PG 4: Legal

framework to

implement CC policy

PG 4.1 Mitigation instruments

e.g development of the Provincial Green Growth Action Plan

PG 4.2 Adaptation instruments

e.g adjustment of the Action Plan to Respond to CC

Table 4: Merging weighting criteria with investment typology

PG 4.3 Mitigation and adaptation

PG 5.2 Effective management and coordination of foreign and domestic investments

e.g through investment budget classification

e.g disaster risk mapping

ST 1.2 Early warning system

ST 1.3 Biologic &

genetic resource strengthening

ST 1.4 CC surveys

ST 1.5 Technology for energy efficiency

ST 2.2 post school education

ST 3: Develop

community capacity

for responding to CC

ST 3.1 Livelihood building for communities

ST 3.2 Capacity across whole community in climate change response

CC Capacity building programmes 1-24%; 25-49% Less than 50%

Dyke construction 75-99% Less than 100%

Dyke rehabilitation 100% 100%

Wave breaker/

Mangrove rehabilitation 100% 100%

Sluice gates 75-99% (87%) 51-99%

Coastal resources 50% (unclear) 50%

CCD 1.2 Saline Intrusion

Anti-drought and saline intrusion programmes/

irrigation, sluice gates and alternative rice production

CCD 1.3 Irrigation Irrigation systems 50-74% (67%) 51-99%

CCD 1.4 River dyke embankment

River dyke construction 75-99% (87%) 51-99%

Canal/ river embankment 75-99% (87%) 51-99%

Urban embankments 75-99% (87%) 51-99%

River dredging 25-49% (37%) Less than 50% CCD 1.5 Water

quality and supply Fresh water reservoir 100% Less than 100%

Fresh/ clean water supply 100% Less than 100%

CCD 1.6 Rural development and food security

Rural development and food security programmes

unclear (10%) Less than 50%

CCD 1.7 Forest development Fire protection 25-49% (37%) Less than 50%

(Protection) Forest rehabilitation 100% Less than 100%

Forest ranger equipment 50-74% (50%) 51-99% CCD 1.8 Fisheries and

aquaculture

Aquaculture irrigation 50-74% (67%) 51-99% CCD 1.9 Biodiversity&

conservation

e.g Plant varieties projects 50-74% (50%) 51-99% CCD 2: Resilient

Society

CCD 2.1 Public Health

Health support projects (CC connection)

1-24% (12%) Less than 50%

CCD 2.2 Education and Social Protection

Education projects (CC connection) 1-24% Less than 50%

CCD 2.3 City area resilience

Schools, admin

buildings, cemeteries (e.g CC proofing)

1-24% Less than 50%

Construction site levelling (CC proofing)

25-49% (unclear) Less than 50%

Resettlements (CC relevance) (unclear) 75-99% 51-99% Climate proof

housing support 25-49% Less than 50%

CCD 2.4 Transport Climate proof roads,

streets 1-24%; 25-49% Less than 50%

Roads and drainage 25-49% Less than 50% CCD 2.5 Waste

management and treatment

Waste water treatment 25-49% (unclear) Less than 50%

(adapted from CPEIR Vietnam, 2015)

In this table, however, only coefficients have

been inserted wherever appropriate examples

could be found in the pilot cases in the Mekong

Delta provinces From the table it already

becomes obvious that the main typology to be

connected with provincial climate investments

is CCD On top of that, it is now also possible to

directly link the typology with Vietnam’s NDC

As table 2 (chapter 2) has shown, 24 of 68 NDC

tasks are directly linked with national strategies,

laws or NTPs

Both methodological systems clearly indicate

gaps While the OECD-DAC classification method

has the advantage to appear as rather simple

and easy to apply, the CPEIR and adjusted

CC&GG method claim to be more accurate

Although the use of coefficients differs, the

criteria of whether expenses are related to

climate change intervention fields are similar

And yet, both criteria leave room for

interpretation and in some cases require precise assessments

The OECD-DAC method is mainly based on a decision whether an investment is mainly, partly

or not relevant for climate change The CPEIR/ CC&GG on the other hand has for Vietnam developed a typology of 3 main categories and associated sub-categories Such a typology helps

to identify investment areas assigned to ministries and public sectors Of course the CPEIR/ CC&GG typology suggests a coefficient percentage or percentage range, indicating the investment’s relevance for climate change The sub-typology “Climate Change Delivery (CCD 1.1)” on “Coastal Protection and Sea Dykes” is e.g rated with a 100% coefficient It has to be noted that many OECD or EU countries would rather rate the up-grading or heightening (e.g

30 cm according to sea level rise) costs to be accounted for 100% relevant

Solid waste treatment 1-24% Less than 50% CCD 2.6 Disaster

specific infrastructure e.g Storm shelter 100% Less than 100%

Strengthening disaster risk reduction

Disaster risk reduction

CCD 3.2 Energy efficiency

Infrastructure and construction

CCD 3.4 Industry and trade

CCD 3.5 Tourism Tourism investment

projects (CC relevant) unclear Less than 50%

According to the CPEIR/ CC&GG this distinction

does not exist, as long as

“Projects which either (i) state predominant CC or

GHG reducing objectives, or (ii) deliver concrete

results/ benefits which contribute directly to

benefits in A or M to CC, or (iii) sit within a

governmental program dedicated exclusively to

climate change, green growth or sustainable

development goals (e.g NTP-RCC/ GG) (MPI,

2015:55).”

In fact, most dykes in the Mekong Delta cannot

be compared with those to be found in the

Netherlands or Germany Many coastal transects

either never had dykes or were not designed to

withstand for a longer duration and especially

not regarding the effects of climate change In

addition to the vast inland waterways, irrigation

and population growth over the last century, all

coastal protection in the Mekong Delta can be

seen as “works of Penelope”, projects without

end (Biggs, 2012: 82) The entire CCD 1.1 thus

justifies a 100% coefficient as the majority of

interventions and investments are based on a

total continuous make over

Another conclusion is that a less distinct

differentiation of coefficients offers greater risks

to blur or even manipulate and green wash

results On the other hand, broader range

coefficients probably allow less special expertise

which makes the entire approach more

applicable (especially at local or provincial

level) and therefore also much faster, e.g during

an annual budgeting process and not by

hindsight only

3.3 Which Budget? Plan vs

Disclosure and Investment vs

Recurrent

Budgets should and can function as an indicator

of whether intended policies and strategies are

being followed and implemented As in most

countries, Vietnamese budgets are separated into both budget plans and budget disclosures, as well

as recurrent and capital or investment budgets The former are the results of the annual budget planning process at national but also at local level, namely province, district and commune These budget plans are usually approved within the political process at the end or at the beginning of the fiscal year, followed by its execution between January and December of the current fiscal year The annual statement of accounts is done by the Treasury Departments at national and provincial level The final product of these account statements are the budget disclosures which are, in most cases in Vietnam, only available 2 years after the end of the actual fiscal year period A timely evaluation of the execution of the planned budget and whether e.g provincial climate strategies were implemented

is thus difficult (PEFA, 2013)

The other important separation of budgets in Vietnam goes along capital or investment and recurrent budgets The former is within the responsibility of the Ministry of Planning and Investment (MPI) and its provincial Departments

of Planning and Investment (DPI) Whereas in most countries worldwide only the Ministry of Finance (MoF) is in charge of the entire budget, in Vietnam the MoF and its provincial Departments

of Finance (DoF) subscribe to the responsibility for the recurrent budget, including all wages and salaries as well as operations and running costs The average share of the investment budget is currently at an average of 18% nation-wide, with less wealthy provinces to even undercut 18% (MPI, 2015:18)

Although it is the aim to analyze the provincial investment budget plans in an ex-post manner, it should be a long-term goal to also provide appropriate recommendations which help to better refine the actual budget planning process

in terms of its aimed climate responsive actions

To accomplish that additional goal as also

described in the CPEIR, data analysis of budget

disclosures seems to be a necessary requirement

As recurrent budgets account for an average of

80% of the overall expenditures, it seems to go

without saying that recurrent budgets can make

up a great difference in assessing the overall

climate expenditures

However the typologies introduced in chapter 3.2

are more difficult to align with e.g salaries and

other recurrent costs The debate on climate

finance (with the exception of taxation) has been

Chapter 3 has so far introduced the different

classification methods, either used

internationally or in Vietnam This sub-chapter

3.4 briefly introduces how the above explained

Map 1: Five Mekong Delta provinces

mainly steered by MPI Hence, this survey concentrates on the investment budget only, captures an ex-post consideration of previous budget plans and will forecast recommendations

to adjust the planning process for an ex-ante climate change investment planning It will be a future challenge to create recurrent classification techniques and to encourage more MoF involvement on the other hand

methods were introduced in the Mekong Delta provinces of Ca Mau, Bac Lieu, Kien Giang, Soc Trang and An Giang (as shown on the map below)

(Source: GIZ, 2014)

3.4 Approaches to Classification and Cooperation in the Mekong Delta

The most southern province in the Mekong

Delta, Ca Mau, has been the first local entity in

Vietnam to be introduced to the OECD-DAC

marker classification The method was first

applied during two training courses and another

international short-term mission in 2013 (GIZ,

2013) Back then only official budget

documents, published online by the Ministry of

Finance, were used and analyzed However, only

a very limited number of investment examples

were shown As the bulk share of investments

remained hidden, only a fraction of investments

could be tagged according to the OECD method

The idea of assessing a ratio of planned climate

change investments compared with the overall

investments thus remained approximate at best

In the aftermath of a UNDP conference in

Bangkok in 2014, where DPI Ca Mau and DPI An

Giang were also introduced to the CPEIR

method, further approaches to undertake more

refined pilot classifications of the provincial

investment budget were started Ca Mau was

then the first province to provide the entire

investment budget plans for the years 2011

until 2015 The creation of a “task force” inside

DPI was steered by DPI’s Deputy Director Along

the seven investment budget sources, i)

Provincial Level Budget, ii) National Budget

Allocations, iii) ODA funding, iv) State Bonds, v)

Lottery, vi) State Credits and Loans, and vii)

Other Budget Sources, the task force team

supported mainly by the planning division

inside DPI assessed each investment in

accordance with OECD-DAC marker criteria

The DPI task force investigated all detailed

investment proposals, which were approved for

funding at the end of each budget year Those

proposals are annually elaborated by all

provincial sector departments which seek for

rolling and multi-year investments As the

documentation of the proposals lack

pre-determined classification regarding climate

change, the DPI experts also engaged in further

interviews with responsible officers from the

sector departments to better conclude whether investments showed any relevance regarding climate change as suggested in either OECD’s or the CPEIR’s 3 step approach As already mentioned above, the strength of the OECD-DAC marker method is its simplicity Nevertheless, DPI Ca Mau chose to further differentiate the OECD weighting At a later stage, the GIZ ICMP team also synthesized the approach with the CPEIR typology and applied both CPEIR and the later the “CC+GG” coefficient In 2016, Bac Lieu, Soc Trang, Kien Giang and An Giang all followed and were analyzed

4 EX-POST CLASSIFICATION OF

INVESTMENT BUDGET PLANS IN THE MEKONG DELTA