The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation

Written evidence submitted by DfID, Defra and DECC

Introduction

1. This Memorandum is the UK Government response to the Environmental Audit Committee (EAC) Inquiry assessing the Impact of UK Overseas Aid on Environmental Protection and Climate Change Adaptation and Mitigation. The Memorandum is in two sections. The first provides an overarching narrative on the context, challenges and response to climate change and environmental degradation. The second provides responses to the specific questions asked by the Committee.

2. Current patterns of economic growth and development are depleting natural resources and degrading ecosystems. Many developing countries face resource scarcities which potentially threaten to undermine development and achievement of the MDGs. Developing countries and the poorest people are especially dependent upon natural assets. Their depletion reduces wealth and undermines prospects for future sustainable growth.

3. Climate change is an additional pressure to development and the hard won progress towards achieving the MDGs. Without adequate global action to reduce emissions, the projected impacts and costs of future climate change are potentially very large. Extreme weather events are predicted to worsen. Severe droughts and increased heat stress are likely to become more prevalent in some parts of the world, the combined effects of which may have serious effects on crop and livestock production.

4. However, as the DFID Secretary of State said in a recent speech on climate change ( [1] ) "Whilst we work tirelessly towards a global deal we must not be paralysed into inaction on the ground.  Helping developing countries adapt to the impacts of climate change – and to grow in a low-carbon way - will not only save lives but will also build the very confidence that can make a deal a reality."

Commitment

5. The Prime Minister has committed to make this Government the "greenest ever" and this has been demonstrated in the recent Spending Review. The Government’s domestic policies to create a domestic low carbon and green economy are complemented by a commitment to act internationally to promote sustainability, tackle climate change and conserve biodiversity.

6. As announced in the Spending Review, the Government is keeping the UK’s promise to give 0.7% of national income in ODA-eligible aid from 2013. £2.9 billion of the rising aid budget under the spending review has been allocated for a new International Climate Fund (ICF) that is leading the way for the world on climate financing. There will be joint oversight of the ICF by Ministers from DFID, DECC and Defra (the latter with respect to forestry finance) to ensure coherence across spending, value for money and to maximise leverage from other sources of finance.

7. DFID has primary responsibility for the majority of the UK’s international development effort and aid budget. On climate change and environment DFID works closely with DECC, Defra and FCO. DFID supports developing countries to make the international arguments for, plan and implement policies and programmes which will enable them to develop in a low carbon, climate resilient and environmentally sustainable way. DFID focuses on Results, Impact and Value for Money in all its overseas aid, including that on climate change

8. DECC is responsible for all aspects of UK energy policy, and for tackling climate change at home and abroad. Internationally, DECC is working to influence global political and economic conditions to facilitate agreement and action to limit greenhouse gas emissions. This includes working with DFID and Defra to help developing countries build low carbon and climate resilient economies.

9. Defra’s international objective is to "Support environmentally and socially sustainable economic growth, underpinned by food, energy, climate and water security; and mitigate the risks to growth from environmental degradation, in particular from climate change, unsustainable use of ecosystem services (including biodiversity) and unsustainable agriculture and fisheries". Defra seeks to deliver through multilateral organisations and bilateral relationships, including through the Darwin Initiative ( [2] ). Defra also leads for the UK on 20 Multilateral Environmental Agreements and their associated Protocols.

Policy

10. Since the EAC’s last report on "Trade, Development and the Environment: The Role of DFID" in 2005-06 there have been very significant changes in HMG’s and DFID’s engagement with environmental matters. There is now a high level of recognition of the challenges posed by environmental resource loss and climate change. Since 2006 DFID has increased the resources and attention devoted to these issues very substantially – for example DFID now has 70 accredited and affiliated climate and environment professionals compared with just 14 environment advisers in 2006.

11. DFID’s drive to ensure that research and evidence are at the heart of policy making was strengthened in 2009 by the creation of a Research and Evidence Division (RED) led by a Director and co-located with Policy Division. The Director of Research is also the Chief Scientific Advisor for DFID, helping to coordinate DFID’s science and research efforts with other Whitehall departments. In 2009 fourteen eminent researchers were appointed by DFID as Senior Research Fellows, four of whom are climate change and environment experts, including the Deputy Director of RED.

12. To support the Government’s results focus, a strong evidence base is essential. The outputs from the research programmes will inform the design and implementation of our programme portfolio, documented within individual project Business Cases (see para 13). This will help to identify how the finance allocated in the Spending Review can be used most effectively. DFID is therefore planning to strengthen its research portfolio in the following areas:

· adaptation in vulnerable environments;

· climate change impacts on food security;

· improving access to basic energy services, and reducing emissions;

· sustainable, low-carbon and climate resilient growth;

· resilience to key aspects of water scarcity and security.

13. At the start of 2011 DFID introduced a new Business Case process for approval of all new investments – bilateral or multilateral. A climate and environment assessment is integral to the Business Case, replacing the earlier environmental screening note. This will ensure that not only risks but also opportunities are given early consideration in project planning. The new approach will enable better integration of climate and environment within DFID’s portfolio of projects and programmes.

14. DFID is actively mainstreaming climate and environment in all country plans. We have strengthened our strategic planning by introducing Strategic Programme Reviews (SPR) for all country programmes. These are designed to allow DFID country offices to develop an understanding of the potential impact of climate change on national growth and development and help identify an appropriate response by DFID (and its development partners) in current and future programmes and investments.

15. To ensure that the UK aid programme delivers best value for money the Secretary of State has commissioned comprehensive reviews of DFID’s bilateral and multilateral programmes. The results offered through the Bilateral Aid Review are structured according to four thematic pillars drawn from the Structural Reform Plan. These include a specific "Climate Change" pillar.

16. The Multilateral Aid Review (MAR) has assessed the importance of individual multilateral institutions to the UK’s aid efforts and the contribution each makes to international development objectives, as well as a range of effectiveness criteria. The cross-cutting effectiveness criteria include climate change and environmental sustainability. The results of the review will guide decisions about future multilateral funding decisions.

17. We are working with DECC, HMT, Defra and FCO to agree strategic priorities, principal allocations and an implementation plan for the ICF, to be completed by the end of March.  All DFID climate spend , including bilateral spend , as set out in operational plans, will fall under ICF governance arrangements.

18. The government believes that investment decisions by the Multilateral Development Banks (MDBs) should strike a balance with social and environmental considerations. A set of Assessment Principles for coal fired power stations are being finalised. These will be used as the basis for decisions on whether we support individual investment proposals that come through the MDBs. DFID is consulting widely with other UK government departments and will ensure that the UK position in the MDBs is consistent with domestic policy, and the UK’s position in international climate negotiations.

19. The UK Government remains committed to using the best form of finance for climate change adaptation. The Pilot Programme for Climate Resilience (PPCR) is delivering transformational outcomes in a small number of pilot countries – Bangladesh and Niger to date. It provides these countries with grant finance and the option of taking highly concessional loans on top of this. The loans have zero or near-zero per cent interest rates, low administration and service charges and long repayment periods. Loan money from the UK repaid to the PPCR will be able to be used to finance further lending so a greater number of countries can benefit from adaptation finance.

20. We are playing an active role in improving the approaches and procedures for environmental protection followed by other UK agencies. The DFID Secretary of State announced in a statement to the House of Commons on 13th October and a speech on 12 th October ( [3] ), his intention to create a revitalised CDC with a great deal more clarity and ambition over what it does and where it works. In his recent evidence to the International Development Committee Inquiry into "the Future of CDC", the Secretary of State re-affirmed his aim to make CDC the best Development Finance Institution (DFI) in the world and said that the provision of patient capital was the unique niche that CDC should be bringing to the development architecture.  Whilst the sectors that CDC should be in going forwards were a matter for consultation, the Secretary of State identified agriculture, clean energy and infrastructure as areas that were highly relevant for CDC.

21. The Coalition Government in the document "Our Programme for Government" stated that they would "ensure that UK Trade and Investment and the Export Credit Guarantee Department (ECGD) become champions for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production." The DFID Secretary of State emphasised this commitment in his speech on climate change on 18th November 2010.

22. HMT is clear that all UK project appraisals, with significant carbon impacts, should factor in the carbon price. DECC has issued guidance and developed carbon values for the period 2010-2100. Up to 2020 the carbon values are based on a proxy of marginal abatement costs required to achieve the domestic and European targets and are therefore not entirely suitable for economic appraisal of international projects. The carbon valuation methodology is currently under revision and several options including the development of a new international price up to 2030 are currently under active consideration.

23. Unprecedented economic growth has also been accompanied by unprecedented draw down in natural resources. But this tension between growth and the sustainable management of natural assets can often be resolved when the economic value of natural assets, and costs of pollution (including carbon) are taken into account. Among the initiatives to which the UK contributes is the World Bank’s Global Partnership on Ecosystems Services Valuation and Wealth Accounting. This will seek to support developing countries to value their natural assets and incorporate them in their national accounts.

24. This work builds on HMG support to The Economics of Ecosystems and Biodiversity (TEEB) study ( [4] ), which has quantifie d the global economic benefits of ecosystems and highlighted the very high value of biodiversity loss ($2 - 4.5 billion annually). Since the last EAC report DFID has also produced three internal briefing notes for economists on valuing natural resource assets.

Action and Impacts

25. DFID is already pursuing opportunities to ensure that business innovation is harnessed for development goals ( [5] ). We are exploring a range of new results-based financing options including Advanced Market Commitments (AMCs), output-based aid (OBA), and innovation prizes for pro-poor environmental technologies, to stimulate innovation and reward fresh thinking. For example, we will support local Climate Innovation Centres in countries such as India and Kenya, helping local entrepreneurs to turn new ideas and technologies into viable businesses and linking up green technologies.

26. We are also exploring two Public-Private Partnerships to overcome the market and government failures that discourage private sector interest in low carbon and adaptation responses in developing countries. For example, we are looking to promote low carbon infrastructure in Asia. In Africa, we are working with the Private Infrastructure Development Group (PIDG) to develop a potential new cash-on-delivery mechanism for large-scale renewable energy. These partnerships would use public money to leverage private finance and direct it to where it is most needed, aiming to secure up to £9 of private investment for every £1 of public money spent.

27. The UK has been at the forefront of driving international action on climate change. At Cancun we played a key role in many of the detailed negotiating groups, often leading for the EU. As the DECC Secretary of State reported to the House of Commons, "for the first time, there is an international commitment to ‘deep cuts in global greenhouse gas emissions’ to hold the increase in global average temperature below 2° Celsius" ( [6] ).

28. The conference also agreed the establishment of a Green Climate Fund to support policies and activities in developing countries and endorsed the commitment made by developed countries at Copenhagen to mobilise at least $100 billion per year by 2020 to address the needs of developing countries. Progress was also made on a framework for ‘REDD + ’ ( [7] ) , adaptation (where a new adaptation framework was established), technology and carbon market reform .

29. As the DFID Secretary of State outlined in his recent speech on climate change ( [8] ), the Coalition Government is already getting on with taking action to respond to the climate challenges. As part of the commitments made at Copenhagen, the UK is providing £1.5 billion in Fast Start finance for climate change from 2010 to 2012. This finance is already flowing, with £568 million approved for 2010-11. Some results expected from Fast Start-funded programmes include:

· Nine countries, including Niger, Mozambique and Nepal, supported to implement national plans for adapting to climate change;

· 500 million tons of CO2 emissions (equivalent to 192 million cars) avoided by deploying low carbon technologies;

· Low carbon and affordable transport for 18 million people;

· Deforestation reduced by 1 million hectares, avoiding 315–675 million tons of CO2 emissions.

30. 2010 marked the final delivery of the UK’s £800m commitments under the Environmental Transformation Fund (ETF) which had as part of its remit support for adaptation to climate change, provision of access to clean energy, and to help tackle unsustainable deforestation. The ETF has enabled the UK to play a pivotal role, as the second largest donor, in the design and governance of the Climate Investment Funds (CIFs). Launched in 2008, the CIFs have progressed to the implementation of 38 pilots in developing countries and transition economies around the world. The CIFs provide an important model to inform the design of the Green Climate Fund.

31. On adaptation, we spent over £200m in 2010 and aim to spend 50% of UK Fast Start on adaptation. The results of our support to date include:

· Raising over 90,000 homes in Bangladesh above flood levels;

· Providing food and cash to help 7.5 million people in Ethiopia protect their assets in times of food shortage;

· Helping to develop drought resistant crops in Malawi.

32. We have provided finance to establish the Climate & Development Knowledge Network (CDKN). CDKN provides access, for developing country governments and civil society organisations, to the best available climate change knowledge and research. CDKN also conducts research and analysis on critical knowledge gaps on the impacts of climate change and the implications of low-carbon growth and adaptation strategies for developing countries. CDKN is already supporting Rwanda, Ghana, and the Caribbean region to develop low-carbon growth and climate-resilient growth strategies.

33. Forests play a crucial role as a store of carbon (17% of global carbon dioxide emissions come from deforestation), as a source of livelihoods for over a billion people, and as a home to between 50-80% of terrestrial biodiversity. But 13 million hectares a year (an area the size of England) are being lost - fuelling poverty, conflict, global warming and loss of biodiversity ( [9] ). Following the progress made at Cancun, the UK government has commissioned an independent assessment of the options for scaling up UK ’s programme of work to deliver REDD+. This work, headed by DFID, will link to projects being commissioned by DECC and Defra on the mechanics of delivering carbon mitigation and benefits for biodiversity preservation from the scheme.

34. , The UK will continue to support actions that reduce the illegal use of forest resources, including illegal logging and related trade. DFID is designing a new 10-year programme of work on forest governance and trade, in collaboration with the EU. This will support the EU Forest Law Enforcement Governance and Trade (FLEGT) Action Plan, in particular the recently agreed Illegal Timber regulation, which prohibits the first placing on the market of illegal timber in the UK. Evidence from the past (independent assessment by Chatham House ( [10] )) suggest that this could result in a reduction in illegal logging and related trade that could protect 17 million hectares of forest over the next decade.

35. The Defra Secretary of State led the UK delegation at the successful UN Convention on Biodiversity (UNCBD) Conference (COP10) that took place in October 2010 in Nagoya, Japan. Despite early setbacks and with UK help this secured some key agreements to address critical biodiversity issues, including: a Protocol on Access and Benefit Sharing on genetic material that will safeguard the interests of developing countries; agreement to developing a strategy to secure the right levels of finance and support to developing countries to reverse biodiversity loss; and a set of 20 ambitious global targets to complement the MDG7 biodiversity target. The aim of these targets is to mainstream biodiversity awareness across governments and societies and, alongside reducing direct pressures on biodiversity, help to build capacity for its protection as well as its sustainable and beneficial use by 2020.

36. HMG led by Defra and DFID is currently working on the programme of work to follow up Nagoya. An increase in funding for the Darwin Initiative from 2011-12 until the end of the current spending period in 2014-15 has already been announced.

Response to Committee Questions

Question 1 (i) - What key developments have there been in the way UK ODA is managed since the Environmental Audit Committee’s 2006 report (HC 1014, Session 2005-06)?

Response 1 (i) – The Secretary of State in setting out a vision for the DFID Business Plan states: "Our Coalition Government is determined to help reduce the inequalities of opportunity we see around the world today." "Results, transparency and accountability will be our watchwords and will guide everything we do. Aid is only ever a means to an end, never an end in itself. It is wealth creation and sustainable growth that will help people to lift themselves out of poverty. We welcome and encourage the creativity that the private sector can offer, and will work with business to open new markets, extend access to financial services, stimulate new technology and create new jobs."

"Our funding through multilateral bodies, such as the United Nations and the World Bank, will enable us to extend the scope and reach of our aid but will be based on the effectiveness of what they do, value for money and the results they achieve." "We will concentrate our efforts on supporting achievement of the Millennium Development Goals, creating wealth in poor countries, strengthening their governance and security and tackling climate change."

The priorities set out in the Business Plan are as follows:

1. Honour international commitments

· Honour the UK’s international commitment to spend 0.7% of gross national income on overseas aid by 2013, and support actions to achieve the Millennium Development Goals

2. Introduce transparency in aid

· Make British aid more effective by improving transparency and value for money

· Increase independent scrutiny and strengthening evaluation

· Re-orientate DFID’s programmes to focus on results

3. Boost wealth creation

· Make British international development policy more focused on boosting economic growth and wealth creation

· Make DFID more private sector friendly and review CDC to radically increase its development impact

4. Strengthen governance and security in fragile and conflict-affected countries

· Improve the coherence and performance of British international development policy in fragile and conflict-affected countries, with a particular focus on Afghanistan and Pakistan

5. Lead international action to improve the lives of girls and women

· Work to empower and educate girls, recognise the role of women in development and help to ensure that healthy mothers can raise strong children

6. Combat climate change

· Drive urgent action to tackle climate change, and support adaptation and low carbon growth in developing countries

· Make DFID programmes more climate smart

· Develop and launch the new Environment and Climate Assessment to ensure that environment issues are addressed in DFID projects

· Roll out Strategic Climate Reviews to ensure that climate issues are addressed in DFID country business plans

To ensure that the UK aid programme delivers best value for money the Secretary of State has commissioned comprehensive reviews of DFID’s bilateral and multilateral programmes. The results offered through the Bilateral Aid Review (BAR) are structured according to four thematic pillars drawn from the Structural Reform Plan. These include a specific "Climate Change" pillar.

The Multilateral Aid Review (MAR) has assessed the importance of individual multilateral institutions to the UK’s aid efforts and the contribution each makes to international development objectives, as well as a range of effectiveness criteria. The cross-cutting effectiveness criteria include climate change and environmental sustainability. The results of the review will guide decisions about future multilateral funding decisions.

The Spending Review has confirmed a substantial financial commitment to climate change and environment. The £2.9bn settlement places the UK in a leadership position internationally. The way the funding is structured also shows a commitment to harness the capability of key delivery departments (DFID, DECC and Defra) to maximise the effectiveness of the UK’s efforts. The use of these International Climate Funds will be agreed jointly by ministers from these departments together with Treasury and Foreign Office ministers and others as appropriate.

DFID has significantly increased its capacity and capability to address climate change and environment issues in areas of research, policy and bilateral and multi-lateral programmes. We have also strengthened environmental screening procedures, and launched on 1 January 2011 a new assessment procedure (refer Q.13). And initiated Strategic Programme Reviews to assess the climate change and environment context for our programmes (refer Q.8).

Question 1 (ii) - What are the results of the research on ‘sustainably managed ecosystems that contribute to poverty reduction’, anticipated in the Government response to that Report (HC 197, Session 2006-07, [para 20])?

Response 1 (ii) - The Ecosystem Services for Poverty Alleviation (ESPA) research programme will deliver high quality and cutting-edge research that will improve our understanding of ecosystems in terms of the services they provide for poverty reduction and inclusive growth processes.

Four regional and two thematic situation analyses were conducted in 2007-2008 to define the main priorities for detailed investigations and inform the development of the programme. They identified the following thematic and regional priorities: water, health, forests, biodiversity, coasts and the political economy of sustainable resource management. A total of 13 awards were also made in 2008 to help strengthen the capacity of developing country researchers in anticipation of the main calls for proposal which were issued in December 2009 and September 2010. The programme is due to run until 2017.

It is too early for the research to have produced significant results. However, we expect it to provide evidence and tools to enable decision makers and end users to manage ecosystems sustainably and in a way that contributes to poverty reduction. The need for the type of knowledge ESPA will generate is increasingly important. Impacts arising from exogenous change, such as climate change and economic volatility, are accelerating ecosystem deterioration and presenting much more acute policy and management challenges. Such changes have the potential to initiate large-scale ecosystem collapse and irreversible change. ESPA will look at how to address these impacts, and will also conduct research to better inform international efforts to deal with these changes.

ESPA is run by a novel partnership bringing together DFID, the Natural Environment Research Council (NERC) and the Economic and Social Research Council (ESRC). This partnership brings development policy and science communities together, and is a unique opportunity to build a strong link between the natural, social and economic sciences and international development. The budget for the 2009-2017 period is as follows: DFID will provide a total of £27 million to fund ESPA , NERC £10 million and the ESRC £3.5 million

Question 1 (iii) - What are the results of the research on ‘how best to achieve environmental outcomes in the context of budget support’, also anticipated in the Government response (HC 197, Session 2006-07, [para 42])?

Response 1 (iii) – The Secretary of State has commissioned a budget support policy refresh to strengthen our judgements about which countries are right for budget support and achieve better results and also how we ensure stronger accountability through budget support. We will strengthen our assessment of the partnership commitments by using more robust evidence and giving greater visibility to domestic accountability. We will do this by making domestic accountability a specific commitment for  budget support, separating it out from the other commitments.

The second step is a clearer  framework to determine whether and which kind of budget support is the most effective modality to achieve the desired results. We will change how we engage on these issues with partner governments giving greater attention to the value for money of government spending including their procurement systems, to seek improvements on data collection systems, and use data generated by citizens. We will change the design of budget support by introducing whenever appropriate a performance tranche and/or a result compact to link more explicitly payments to progress/ results. We will  seek to  strengthen participation and citizen engagement by encouraging easily accessible publications of Performance Assessment Frameworks, annual review reports, budget support agreements and other relevant reports.

We will undertake a further Fiduciary Risk Assessment (FRA) in addition to the national FRA, for all financial aid instruments above an appropriate threshold, if the funds for that instrument are managed by a public financial management system significantly different from the national system.  We will require all budget support submissions to include a summary of how the budget support package will strengthen external audit and legislative scrutiny; and  we will  provide a stronger focus on monitoring progress in implementation of the government’s programme of public financial management reform.

The ODI Study (Changing Aid Delivery and the Environment, 2007) highlighted a number of areas where General Budget Support (GBS) can promote environmental objectives. Although it does not provide the space for a specialist environmental focus, GBS offers a high level platform for policy dialogue at the core of the government policy process. This can be explored to assist the much needed cross-sectoral visibility of environmental issues and the coordination of approaches across donor and government stakeholders. Given the prominent role played by Ministries of Finance and macroeconomists, the GBS framework constitutes an important entry point for a debate on environmental fiscal reform. It also creates an opening to mainstream the notion of environment as a development and growth opportunity (particularly in countries rich in natural capital) rather than a risk to be mitigated.

Another opportunity is the potential of Sector Working Groups (SWG). This policy dialogue forum has gained new impetus in the context of GBS and the harmonisation and alignment agenda. There are already examples of environment-specific SWGs in operation. They constitute an important forum for inter-sectoral and multi-stakeholder coordination. However, the Study also recognised that if environment-related departments are in a weak bargaining position within the government resource allocation process they are unlikely to benefit from the GBS flows.

Environment and Climate Assessment will continue to be an important part of DFID’s due diligence of both General and Sectoral Budget Support programmes.

Since 2006 DFID has supported an 11-donor multi-sector budget support programme in Ethiopia called Protection of Basic Services. This programme channels money through the government's block grant to local governments that are mandated to provide basic services such as health, education, watsan, rural roads and agricultural extension. Along with the block grant funding (where donors fund around a third of the cost of service provision) the programme also includes systems building for public finance, transparency, M&E and social accountability. DFID is currently in the second phase of the programme. As part of this programme, the government and donors are undertaking a major study to assess how the programme can be improved to improve environmental management and climate change outcomes. This will include looking at how:

a) Health units manage the safe disposal of spent medical materials.

b) Agricultural extension can help farmers to diversify and use more sustainable techniques to adapt to climate change.

c) Rural roads can help farmers diversify out of low-value rain-fed agriculture.

d) The pilot local investment grant (that is being piloted in 1 in 8 districts- and is NOT currently funded by DFID) - that ring-fences funds for capital investment - is ensuring environmental standards when planning and implementing new buildings and helping communities to plan investments that will help adapt to climate change.

As part of a multi donor programme in Ghana, DFID has provided sector budget support on forests, mining, environment and climate change. This stems from a recognition that degradation and unsustainable use of resources, compounded by rising climate pressures, are imposing high costs on Ghana’s development. It is channelled via the Ministry of Finance and Economic Planning to Ministry of Land and Natural Resources and the Ministry of Environment, Science and Technology and is complemented by support to civil society organisations. 

Major areas of progress under this sector support include work on a trade agreement with the EU on legal timber trade, planning to reduce deforestation and forest degradation, environmental management of a new oil and gas industry, accountability for mining revenues, validation of Ghana’s membership of the Extractive Industries Transparency Initiative and a national intention to extend this to forestry and oil and gas revenues. Shifts on climate change include the development of the first phase of a national climate policy framework, shared in Cancun, and the integration of climate issues as part of a coherent and systemic development response in Ghana.

Question 2 - What is DFID’s policy regarding the environmental impact/sustainability of its bilateral programmes? What instructions or guidance does it have on this, and how is this fed into the design of aid programmes and policy?

Response 2 – As noted in response to Question 1, Combating climate change is a key priority of DFID’s Business plan for 2011-14.

To ensure that DFID is ‘Climate and Environment Smart’ our spending departments have to assess the relevance of climate change and the environment to all programmes in country. DFID’s new How to Note on Climate and Environmental Assessment (Annex A) provides guidance on the climate change and environmental issues that should be considered in everything that DFID does. DFID procedures require that all Aid Programmes are developed in accordance with this Note. The approach is to both ensure that programmes ‘do no harm’ and also seek opportunities to positively impact climate change and environment outcomes.

Climate and environmental considerations have been an important factor in the BAR and MAR reviews as detailed in response to Question 17.

As an example of the principles that the UK adopts, as noted in response to Question 9, UK government departments are developing a set of principles by which the UK will evaluate future coal related projects that come through the MDBs.

Question 3 - What is DFID’s policy on balancing the tensions between boosting economic growth and ensuring environmental protection and sustainability? What relative weighting is given to these factors, and how does this differ between programmes?

Response 3 - . The report of President Sarkozy’s ‘Commission on the Management of Economic Performance and Social Progress (CMEPSP)’ prepared by the Nobel laureate’s Joseph Stiglitz and Amartya Sen, together with French macro-economist Jean-Paul Fitoussi (2009) [11] argued that:

"What we measure affects what we do; and if our measurements are flawed, decisions may be distorted. Choices between promoting GDP and protecting the environment may be false choices, once environmental degradation is appropriately included in our measurement of economic performance. So too, we often draw inferences about what are good policies by looking at what policies have promoted economic growth; but if our metrics of performance are flawed, so too may be the inferences that we draw".

Since the last EAC report the growth team in Policy Division has produced internal guidance for economists on valuing natural assets and incorporating this analysis into macro-economic analysis.  This will be taken forward initially through work with the World Bank targeted on selected countries, as referred to below.  The growth team has also advanced our understanding of the ways in which existing growth policies need to be amended and supplemented to ensure that economic growth is of patterns that are lower carbon more climate resilient. This is starting to influence growth thinking in a number of partner countries who recognise the need to start to grow in lower carbon ways.

A reason for the apparent tension is that the economic value of natural resources and the cost of pollution are often ignored in assessments of how to achieve sustainable economic growth. It can often be resolved when the economic value of natural assets, and costs of pollution (including carbon) are taken into account. A forest, for example, besides providing wood and other resources has a role in sequestering carbon, regulating the local water cycle, reducing air pollution, providing pollination services, preventing soil erosion and in providing recreational and aesthetic enjoyment. Deforestation results from a failure to value those goods and services which are not traded on the market and therefore not taken into account in the decisions of individuals.

Among the initiatives DFID contributes to is the Global Partnership on Ecosystem Services Valuation and Wealth Accounting, which will seek to value natural assets (resource stocks and services flows) and incorporate them in national accounts and decision-making. How this valuation impacts on decision-making will be context-specific. It could be through some form of taxation or user fee for using natural resources or the allocation of permits (including tradable permits) to limit the extent of use. Alternatively, systems can be devised for landowners or communities to receive payment for the "ecosystem services" provided by their land or local area, giving them an incentive to conserve the local environment (Reducing Emissions from Degradation and Deforestation (REDD) is an example of payment for ecosystem services). All these approaches can help to resolve the apparent tension.

A further driver of natural resource loss and degradation is corruption linked for example with mining and deforestation. DFID supports the Extractive Industries Transparency Initiative (EITI) and the Forest Governance and Trade (FLEGT) Programme to address these issues.

Decoupling economic growth and environmental damage - While the short-term effect of the policy measures discussed above should be to achieve a balance between environmental damage and economic growth, the long-term aim should be to weaken the link between increased economic activity and environmental degradation.

The most common context for this sort of debate is greenhouse gas emissions, which have historically correlated strongly with economic activity. In the future, all countries will need to shift to a model where the carbon intensity of production drops if the world is to avoid the most serious effects of climate change.

Synergies between growth and environmental protection – It is also important to note that economic growth and environmental protection are not always in tension – it depends on the context. There are, for example, a number of "negative cost" methods for reducing carbon emissions, like improving the efficiency of energy use, which would save money as well as carbon. Solutions of this nature have not been adopted to date because of market failures, and tackling them should offer a double dividend of environmental and economic benefits.

The UK Government has provided input to the OECD’s work on a strategy for "green growth" – economic growth that avoids environmental degradation – which will be delivered next year. The OECD’s interim report suggests a policy mix with pricing carbon and other negative environmental impacts at its core – be it through taxation or tradable permits – supplemented by regulation, the provision of information, and direct action by governments (e.g. commissioning R&D).

The UK is also preparing for Rio+20, which will discuss the green economy in the context of sustainable development and poverty eradication as one of its key themes. At this stage delegates are considering what Rio+20 may deliver in terms of a common understanding of the concept of a green economy, and the possible development of a roadmap and toolbox of policies and approaches.

Question 4 - Which of your programmes have an explicit aim of environmental protection or climate change mitigation/adaptation?

Response 4 – (See also response to Question 5) A number of DFID programmes which have an explicit aim of environmental protection or climate change mitigation/adaptation are highlighted below:

The UK has pledged a contribution of £210m for the fifth replenishment of the Global Environment Facility (GEF) for the period 2010-14. The GEF provides grants to developing countries and countries with economies in transition for projects related to a wide range of environmental concerns such as biodiversity, climate change and land degradation. £84m of this will address climate change and together with commitments from other donors, this support is expected to result in 500 million tons of CO2 equivalent avoided, 3–4 innovative technologies in 10–15 countries and 0.5 gigawatts of new renewable energy capacity. The balance of £126m will result in broader environment and biodiversity outcomes.

The results expected from the overall $1.2 billion allocation to biodiversity under the fifth replenishment of GEF 5 include: Conservation of 170m ha of protected areas; Sustainable use/management of biodiversity in 60m ha of production landscapes and seascapes; Sustainable management of agriculture, range and forests (100m ha in agriculture, 0.2m ha of forests, 175m ha other).

The Climate Change Adaptation in Africa (CCAA) programme supports action research that informs policy processes with science-based evidence on vulnerability and adaptation. CCAA research partners work with policy institutions at the local, national and/or regional levels. These partnerships increase local ownership of the research and make it more likely that the options identified through research will be implemented and sustained. They also increase the chances that successful project outcomes will be scaled up.

The CCAA programme, launched in 2006, supports 46 projects in 33 countries on issues related to health, urban, coastal, water and agriculture impacts from climate shocks and trends. The programme is providing evidence for the design of National Adaptation Plans of Action (NAPA). One of CCAA’s key partners in West Africa became the first National Implementing Entity accredited by the Adaptation Fund (AF), as well as the first recipient of an AF grant).

CCAA also supports a range of targeted capacity building initiatives across the continent – including the African Climate Change Fellowship Programme, which in 2008 alone supported 45 early to mid-career African professionals to pursue advanced studies related to climate change and adaptation. A number of CCAA research fellows have recently been invited to contribute as authors to the next IPCC assessment report, thus contributing to filling an important gap in the global evidence base on vulnerability, impacts and adaptation.

DFID is already pursuing opportunities to ensure that business innovation is harnessed for development goals ( [12] ). We are exploring a range of new results-based financing options including Advanced Market Commitments (AMCs), output-based aid (OBA), and innovation prizes for pro-poor environmental technologies, to stimulate innovation and reward fresh thinking. For example, we will support local Climate Innovation Centres in countries such as India and Kenya, helping local entrepreneurs to turn new ideas and technologies into viable businesses and linking up green technologies.

We are also exploring two Public-Private Partnerships to overcome the market and government failures that discourage private sector interest in low carbon and adaptation responses in developing countries. For example, we are looking to promote low carbon infrastructure in Asia. In Africa, we are working with the Private Infrastructure Development Group (PIDG) to develop a potential new cash-on-delivery mechanism for large-scale renewable energy. These partnerships would use public money to leverage private finance and direct it to where it is most needed, aiming to secure up to £9 of private investment for every £1 of public money spent.

DFID supports UNEP to manage the joint UNEP / UNDP Poverty and Environment Initiative (PEI). The aim of PEI is to build the capacity of developing countries to integrate climate change and environment into their national development and poverty reduction strategies. The primary objective of the PEI is to improve the management of the environment and natural resources in developing countries by improving coherence between development and environment objectives.

DFID and DEFRA have supported Th e Economics of Ecosystems and Biodiversity (TEEB) study , which quantifies the global economic benefits of biodiversity, highlight the growing costs of biodiversity loss and ecosystem degradation, and to draw together expertise from the fields of science, economics and policy. We are now supporting practical action to take this forward through support to the Global Partnership on Natural Resource Wealth Accounting. This is an open architecture initiative co-ordinated by the World Bank, but including United Nations Environment Programme (UNEP), Global Legislators Organisation for a Balanced Environment (GLOBE) and a range of other formal and non formal agencies. It will seek to value natural assets and incorporate them in national accounts – initially piloting in 6 countries. It will seek to include the economic value of the environment in national decision-making to provide the broad base for more sustainable future policy making. India has signed up to this programme, which has attracted some press attention: http://www.guardian.co.uk/environment/2010/oct/20/india-natural-wealth-accounts.

Together with DECC, DFID also supports multilateral efforts to reduce deforestation and forest degradation and promote sustainable forest management, including for communities and indigenous peoples. It contributes to the newly established Forest Investment Programme and Forest Carbon Partnership Facility, as well as the global Programme on Forests and the Congo Basin Forest Fund. These work in a range of forest nations, including Burkina Faso, Laos, Peru, Indonesia, Mexico, Brazil, Guyana, Laos, Panama, Madagascar and Tanzania, as well as ten Congo Basin countries.

The Malawi Climate Change Programme 2009-11 (£990,000) provides support to the Government's climate change programme working with Norway, UNDP, the World Bank and other partners. The project will develop medium to long term strategic responses to climate change and harmonize the goals and objectives of climate change responses with policies for achieving the MDGs. The project will respond to the challenges that climate change poses for sustainable economic development and national food security in Malawi and will also pilot projects to address the problems that communities are currently facing due to the impact of climate change.

As noted in Response to Question 23 , t he Defra managed Darwin initiative funds a range of collaborative projects which partner with UK institutions.

Question 5 - To what extent are environmental protection and climate change mitigation /adaptation included as aims of aid programmes?

Response 5 – The DFID Secretary of State in a recent speech emphasised that in order to tackle climate change while also addressing development we need to adopt a different sort of development, one that marries good development outcomes with low-carbon, climate-resilient growth. ( [13] ) This is the approach that DFID is following as we seek to mainstream climate and environment across all our programmes. See response to Question 8.

At the start of 2011 DFID introduced a new Business Case process for approval of all new investments – bilateral or multilateral. A climate and environment assessment is integral to the Business Case, replacing the earlier environment screening note. This will ensure that not only risks but also opportunities are given early consideration in project planning. The new approach will enable better integration of climate and environment within DFID’s portfolio of projects and programmes. See response to Q 13.

An increasing number of aid programmes include specific climate change objectives. Given it’s cross cutting nature, environment is more usually an integral component rather than an objective of programmes. That said DFID (and Defra’s) increasing investment in forestry are likely to have multiple climate change, environment and livelihood objectives.

The UK has committed £2.9 billion over the Spending Review period for international climate finance. All programmes funded from this will have climate change adaptation/mitigation objectives as does all UK Fast Start spending. [Fast Start is a commitment made by developed countries at the Copenhagen climate conference to provide new and additional resources approaching $30 billion to help meet the adaptation and mitigation needs of developing countries. UK Fast Start finance is already flowing. We have approved £568 million for 2010–11. Examples include:

· Support to the NGO CARE to help 40 rural communities in Mozambique, Ghana, Kenya and Niger adapt to the impacts of climate change and have a bigger say in local and national decision-making on adaptation policies. Communities are able to express their needs and priorities, such as introducing new varieties of drought-resilient crops and setting up systems for storing food and protecting livestock during extreme weather events. By sharing information and ideas across a network of communities, the programme will support communities to adapt to climate change impacts and address poverty. The projects will make an immediate difference to people’s lives as well as investing in longer term approaches for a more secure future. It is hoped that the approaches piloted through these projects can be scaled up and replicated in other African countries.

· £385m for the Clean Technology Fund of which £155m is UK fast start which is helping to catalyse clean energy production on a large scale in the developing world. For example in North Africa, the Fund proposes to fund the construction of ten new concentrated solar power plants, which could double current global capacity of concentrated solar power and could create 4,500 new jobs. This investment will help ensure businesses have power to grow, and homes have sufficient access to electricity. Deploying concentrated solar technology on this scale will also help the technology to be refined and so reduce its cost in the long term. It could then be more affordable for use around the world. The Clean Technology Fund proposes to invest $750 million in this solar power expansion, which is expected to mobilise an additional $4.8 billion of investment from other sources including the private sector.

· The UK is investing £35 million during the Fast Start period in the Congo Basin Forest Fund (in partnership with Norway and the African Development Bank) to help tackle deforestation across 10 countries in Africa’s Congo Basin. The Congo Basin Forest Fund is working to support transformative and innovative proposals to develop the capacity of the people and institutions of the Congo Basin to enable them to manage their forests; help local communities find livelihoods that are consistent with the conservation of forests; and reduce the rate of deforestation.

A further example of a programme with a direct climate change objective, is the Chars Livelihoods Programme in Bangladesh, which works with poor people living on river islands who are highly vulnerable to flooding. Raising homesteads on plinths above the high flood line, and providing sanitation and water points that are resilient to flooding is a major component of the programme. With floods likely to become more severe or more frequent due to climate change, this is an important contribution to ensuring people’s livelihoods are climate resilient.

Sustainable Agricultural Livelihoods in Eastern Hazarajat (SALEH 2003-2010) was jointly funded with New Zealand Aid (NZAid) and implemented in partnership with the Food and Agriculture Organisation (FAO). This is an environmentally fragile area with a population largely dependent on irrigated agriculture and livestock grazing. Project results included; improved food security for farmers through increases in productivity; increases in income from $100 to $365 for target households; 2,500 families gained access to improved grazing land, with coverage increased by more than 30% due to regeneration, seeding and conservation. For more than 12,000 families in four districts livelihood opportunities were identified, tested and successfully expanded. Objectives of environmental sustainability were incorporated into the project design (for example, community action plans for sustainable management of common property resources (including water and rangeland), and natural resource management plans for districts and provinces).

We have made good progress in helping improve forest governance in recent years through DFID’s Forest Governance and Trade Programme (£24 million from 2006 to 2011). An initial assessment of the global response to illegal logging suggests that the impacts have been very large and include , f or example, i mproving forest governance and tackling illegal logging is a cost effective way of cutting greenhouse gases and , at a cost of about £2 or less per tonne of carbon, is one of the cheapest methods. It will also achieve significant biodiversity impacts. This programme has been instrumental in helping shape the EU Forest Law Enforcement Governance and Trade (FLEGT) Action Plan.

The success and significance of DFID’s contribution so far is widely recognised. Its strengths have been its ability to draw on in-house expertise and external networks in the forest sector; to work effectively across UK government; to address the nexus between trade, consumer and development issues; to operate effectively at global, EU and country level; and to respond quickly and flexibly to a rapidly evolving situation.

Further examples of DFID programmes where environmental protection and climate change mitigation /adaptation have been included as specific aims of the programmes are given in the Fast Start brochures in Annex B.

The £40m Bangladesh Rural Electrification Development Project (2005-2010) aimed to provide increased access to affordable and reliable electricity services in poor rural and peri-urban areas. By June 2010, over 700,000 new connections had been made including over 23,000 commercial and irrigation connections. Facilities for over 300,000 new connections in the 9 poorest areas and facilities for over half a million new connections across the rest of the country have been established.

The overall objective of DFID’s work on global water management issues is to support the achievement of international water security ( [14] ). This means harnessing the potential of the overall water resource to support national development objectives, and ensuring that every person has access to enough safe, affordable water to lead a clean, healthy and productive life, while, at the same time, protecting the natural environment. This will enable developing countries to meet their basic needs, improve livelihood opportunities and maximise their economic growth. It will also support countries to cope with existing variability of water and build resilience to greater uncertainty caused by climate change in the future. Building on our track record of support to strategic water resources initiatives, we support activities at country, regional and global levels.

The livelihoods of the rural poor in India, particularly women and socially excluded groups, are becoming increasingly insecure because of unreliable access to water. To address this we have provided £150 million in four States resulting in improved rural livelihoods and more efficient watershed management for 15 million people. This is also helping to build climate resilience amongst poor communities and supporting the sequestration of carbon through improved agriculture.

At the regional level DFID will support programmes to improve cooperation on transboundary waters in key basins and regions. Activities include:

· Cooperation between the states that share the waters of the Nile is critical in supporting growth, conflict reduction and climate resilience in a highly vulnerable and unstable region. DFID has provided £14 million to the Nile Basin Initiative (NBI) to promote cooperation and economic growth. The NBI has developed an investment portfolio of $1 billion with $10 billion under design. This includes the first jointly planned investment on water infrastructure on the Blue Nile by Egypt, Ethiopia and Sudan.

· There has been limited cooperation over use of the rivers that drain from the greater Himalaya resulting in constrained economic growth and devastating floods and droughts. We provided £3.2 million via the World Bank for the South Asia Water Initiative. This supports dialogue among the Governments on sharing water and its benefits, improving the evidence for impacts from climate change and developing joint programmes of research. This will yield benefits to the 1.3 billion people that rely on water draining from the Himalaya.

· High rainfall variability and poor management of water resources in southern Africa leads to massive problems of drought and flooding. Only 2% of the land in Sub Saharan Africa is irrigated and 3-14 million people suffer each year from hunger. Most rivers are shared between countries. We provided £5 million via a delegated cooperation agreement with Germany to support improved management and development of river basin organisations on seven rivers.

· In recognition of the importance of transboundary waters in Africa, we are providing £10 million over 5 years to a new programme – Cooperation on International Waters in Africa – with the World Bank to transfer the lessons learnt from the Nile Basin to other river basins in Africa in order to improve transboundary water management, reducing the risk of conflict and enhancing water availability for the millions of people who depend on transboundary water sources. DFID also provides £15 million to the African Water Facility set up by the African Development Bank to improve regional and national water management in Africa.

And linked to health in the State of Bihar, India, DFID’s Nutrition and Health Sector Support (2008-2016; £146,500,000) seeks to address child, infant and neonatal mortality through an Integrated Maternal, Neonatal, and Childhood Illness Strategy that recognises the critical importance of improving water, sanitation, nutrition and anti-malaria efforts. With an overall goal to improve the nutrition and health status of people in Bihar, particularly the poorest and excluded, the programme seeks to increase the use of quality, essential nutrition, health services and water and sanitation facilities.

In Ethiopia, DFID supports the National Health Extension Programme (HEP) through its contribution to the Government’s district level ‘block grant’ which pays for the delivery of services. At the centre of the HEP are female health workers operating within local communities to promote a range of behaviours to safeguard health, with a strong focus upon the importance of maintaining a healthy environment – through safe excreta, solid and liquid waste disposal, water supply and safety measures, food hygiene and safety measures, healthy home environment and control of insects and rodents).

Our recent Policy Frameworks for Action in the areas of Reproductive, Maternal and Neonatal Health, and Malaria, both recognise the importance of water and sanitation to programming – the availability of water being critical to maternal and infant infections through hygienic deliveries, and environmental factors such as urban drainage and agricultural practices influencing the distribution of the mosquito vectors responsible for malaria transmission.

Question 6 - To what extent do UK aid programmes specifically seek to address the environmental causes of poverty?

Response 6 – Current patterns of economic growth and development are depleting natural resources and degrading ecosystems at an extremely fast rate. Many developing countries are now facing resource scarcities which potentially threaten to undermine development and achievement of the MDGs. Developing countries are especially dependent upon natural assets. 75% of the worlds poorest are dependant upon natural resources for their livelihoods. Their depletion reduces wealth and undermines prospects for future sustainable growth. With good governance, these resources offer pathways out of poverty for some of the poorest countries.

At a global level, sustainably managed natural resources offer significant public goods benefits and can play an important role in limiting the severity and reducing the impact of climate change. And at local level, they provide the poorest people with the basic goods and services needed for livelihoods (e.g. water, food, soil fertility and clean water).

The coalition government aspires to being ‘the greenest government ever’ and is developing far reaching plans to protect the natural environment, tackle climate change and promote sustainability. Given that we now better understand the importance of natural assets and ecosystems to the poor, DFID is focusing more on wealth and sustainable growth in its policy development to reduce poverty more effectively and more sustainably. DFID is in a strong position to contribute to this agenda and to leverage action amongst our country and multilateral partners. (see Response to Q3).

A number of DFID programmes have specific objectives that address the environmental causes of poverty:

DFID India Rural livelihood programmes have specifically addressed the environmental causes of poverty which are mainly around access and management of natural resources. At least 1.5 million poor people (300,000 households) have been brought out of poverty over the decade 2000 to 2010. Thus was achieved as a direct result of DFID’s rural livelihoods programme in the region. It is attributed largely to, better returns from agriculture, land and water management, enhanced knowledge and access to information, and diversified small-scale enterprise opportunities with micro-finance. All of which contributed to increased livelihood and employment opportunities.

Fish is the main source of animal protein for around one billion people around the world and provides a fifth of total animal protein nutrition within low income food deficient countries. DFID’s Africa Regional Department is supporting the Partnership for African Fisheries (PAF) to strengthen Africa’s ability to implement effective fisheries policy reforms. The goal is wealth creation, while also addressing conservation and welfare objectives. Creating incentives for fishers to invest in and conserve fisheries assets rather than racing to catch them is the key to effective fisheries. Effective use rights (or catch share) systems combined with supportive institutions will create the right incentives. In Ghana, PAF is helping reform the small scale canoe sector where productivity has fallen by 40% over the last decade. This programme will help lift 250,000 coastal people out of poverty, and ensure the sustainability of this food staple.

Environmental vulnerability is a huge driver of poverty (and the 'churning' of poverty) for Bangladesh which is highly prone to cyclones, floods and other natural and man made hazards. Addressing these environmental factors, is not always possible – much of the challenge is related to Bangladesh’s fundamental geography. It is a densely populated, deltaic country, with the majority of its land less than 10m above sea level, situated at the top of the Bay of Bengal in a cyclone prone area. However, there are numerous measures that can be taken to reduce people’s vulnerability (early warning, cyclone and flood shelters etc) – some of which involve environmental protection measures. For example, under the Comprehensive Disaster Management Programme II (part of DFID’s climate change programme in Bangladesh) communities are being supported to protect mangroves which act as a natural buffer against tidal surges. Communities are also planting trees on coastal embankments to strengthen the embankments and to protect them from erosion.

DFID’s Forest Governance and Trade Programme previously referenced is also making a specific contribution to addressing the underlying causes of poverty. Over a billion poor people depend on forests for their livelihoods- wood, fuel, fodder and food.

Illegal logging is often the first and critical step towards forest clearance for agriculture and plantations (and in some cases mining). International trade in agricultural commodities is growing very rapidly with demand in food expected to rise by 70% by 2050. Demand for bio-fuels is projected to double in the next 10 years. Global consumption of soybeans for human food and animal feed has increased by 60% since 2000/01, and that of palm oil by 85%. Much of forest clearance to meet these demands is legal and contributes to economic development. However, a substantial proportion, at least a third, contravenes national regulations and laws. Illegal forest clearance occurs regardless of the conservation or livelihood values of forests involved.

In these countries forest resources are relatively easy to capture, and dispersed (compared, for example, to "point source" resources such as oil and minerals). There are, therefore, multiple stakeholders with competing interests in their use. Competition is increasing with the growing value of forest products (driven by export markets and domestic demand, and potentially by climate finance), and increasing scarcity. The result is often violent conflict, and widespread corruption. In some parts of the world illegal logging also funds militias.

Poor communities are the first to suffer from the loss and degradation of local forests caused by illegal activities, and from the conflict and corruption associated with them. This provides a main rationale for DFID involvement. Evidence for the efficacy of acting on both demand and supply of illegally logged timber – an approach championed by UK over the past 10 years - is contained in a major independent assessment of progress by Chatham House.

The Nepal Livelihood and Forestry bilateral programme (LFP) supports 527,000 households organised into 4,600 community Forest User Groups, which comprise 11% of Nepal ’s population and 30% of its community forest user groups, managing 370,000 hectares of forest. The programme works with over 70 government and non-government partner organisations in 15 districts. The programme generated 1.5 million person-days of paid work in 2007/8. Incomes increased by 61% over the same period ( dalits by 93%, brahmins and chhetris by 59%) with community forestry contributing 25% of the income increase (remittances contributed 54%.

DFID funds substantial research on improving agricultural productivity, principally through CGIAR. CGIAR is a strategic research partnership, founded in 1971, which supports 15 international agricultural research centres worldwide. Over 65 donor members contribute $560m (2009) annually. Research is focussed on addressing the most pressing challenges facing agriculture and rural development of the 21st century.

CGIAR’s mission is to reduce poverty and hunger, improve human health and nutrition, and enhance ecosystem resilience through high quality international agricultural research, partnership and leadership. CGIAR research covers all aspects of relevance to sustainable agriculture and food security in developing regions including all major staple crops, livestock, forestry, fisheries, policy and environment. It develops new technologies and knowledge and works with partners to ensure that they are applied to make real changes to the lives of poor people.

In 2010 DFID provided £37m to CGIAR in total, mainly as unrestricted funding to the 15 research centres. We also provided funds to two new CGIAR research programmes. The first on Climate Change, Agriculture and Food Security, which aims to close critical gaps in knowledge of how to enhance food security, livelihood and environmental goals in the face of a changing climate. The second on rice system productivity aims to boost supplies sufficiently to reduce anticipated increases in rice prices by an average of at least 6.5% by 2020; and 13% by 2035.

Three examples of the results being produced by this programme are given below:

· The Rice-Wheat Consortium (RWC) for the Indo-Gangetic Plains and CIMMYT (a CGIAR Centre) – This is a partnership involving the national research programmes of Bangladesh, India, Nepal, and Pakistan, supported by CIMMYT. It has helped enable the adoption of zero-tillage practices to sow wheat after rice on nearly 2 million hectares across the Indo-Gangetic Plains, increasing farmers' incomes, fostering more sustainable use of soil and water, and providing a platform for cropping diversification and the introduction of other resource-conserving practices. Studies in India suggest that adopting farmers can boost their income by US$97 per hectare of land, and increase annual income by US$180-$340.

· DFID support to the World Vegetable Center and partner organisations in India and Bangladesh has been used to research and develop an integrated pest management (IPM) strategy to help poor small-scale vegetable reduce costly and intense use of hazardous pesticides and improve the productivity of their farming practices. For example, the development of borer-resistant eggplant cultivars, biological pest control using natural enemies, and better cultivation practices has resulted in pesticide use dropping by up to 75 per cent, production costs reducing by 30% and incomes increased by between 50-60%.

· Developing flood-tolerant rice - Over 20% of rice land in Bangladesh is prone to floods which occur every year. Paddy loss due to flooding in Bangladesh and India alone amounts to an estimated 4 million tons of rice per year - enough to feed 30 million people. In 2006, more than 50 provinces in the Philippines were affected by devastating typhoons and floods which cost the rice industry more than 3 billion pesos (US$65 million). Through collaborative research led by the International Rice Research Institute (IRRI – a CGIAR institute), a flood-tolerant local rice variety was investigated to isolate the gene responsible for flood resistance. Yields of up to three tons per ha have been achieved under flash flood conditions where farmers could not harvest other varieties. Through distributing the seed and other drought and salt tolerant rice varieties, the programme aims to raise yields by 50% over ten years benefiting an estimated 18 million households.

Question 7 - How do DFID’s programmes take account of (i) Defra’s policies on biodiversity and the recent report of the Economics of Ecosystems & Biodiversity, (ii) Defra’s policies of climate change adaptation, and (iii) DECC’s policies on climate change mitigation? What arrangements are there for inter-departmental co-ordination?

Response 7 – DFID, DECC and Defra work closely together on all aspects of the aid agenda relating to climate change and the environment. A series of interdepartmental (Defra, DFID & DECC) meetings, at Secretary of State and Director levels, took place in the latter half of 2010 in the run up to key high level meetings in the autumn. The purpose was to facilitate inter-governmental working and policy development on biodiversity, climate change and development. The result was a joint narrative and a set of common objectives for climate change, natural resources and development. These led to coherence in the UK’s position at the Millennium Review Summit, COP10 of the Convention on Biodiversity (CBD) in Nagoya and COP13 of the UNFCCC in Cancun. These meetings will be maintained in 2011.

The arrangements for management of the ICF as set out in response to Question 23 are one example of the coordinated close working that exists between Departments.

The National Security Council (NSC) was established by the coalition government in 2010. Ministerial decisions on international climate issues are taken in the context of the international climate change strategy agreed by NSC and other related NSC decisions. Policy is further guided by the cross Whitehall International Climate Change Programme Board. The International Climate Change Board brings together DFID, DECC, Defra, HMT, FCO, CO, DFT and BIS on international climate change policy. The Departments have also addressed the links between climate adaptation, sustainable agriculture and global food security, including through work in the UNFCCC .

There has been joint departmental decision making on finance delivered multilaterally through the Environmental Transformation Fund Board. This cross-Whitehall Board advises the DFID and DECC Secretaries of State on ETF spending. This allowed for maximizing the synergies between supporting development and tackling climate change. Lessons learnt on maximising cross-departmental working are being incorporated into the newly created International Climate Fund Board that will supersede the ETF Board and support ministerial decision-making on the ICF (see also answer to Q 23 below)

At country level, the departments with a role in responding to climate change (DFID, DECC, Defra and FCO) work closely together, often in joint teams. For example, in India, there is a joint cross-Whitehall Climate Change unit that leads dialogue with the Indian government and manages UK climate finance in India.

DFID will also be working closely with Defra on monitoring resilience to climate change, especially assessing institutional or private sector actions to adapt to a changing climate. Furthermore, DFID sit on Defra’s advisory group for studying the international impacts of climate change and their consequences for the UK’s interests and objectives. DFID and Defra adaptation staff are in regular contact to ensure that lessons from the domestic programme continue to be shared, where appropriate, with international partners. In addition, the departments have co-operated in supporting ecosystem-based approaches to adaptation, in UNFCCC and other international negotiations, informed by work on biodiversity and climate change chaired by Defra’s Chief Scientific Adviser under the auspices of the CBD.

Question 8 - To what extent, and how, have environmental protection and climate change mitigation/adaptation been mainstreamed in DFID’s decision-making and programme management?

Response 8 - The results offered through the Bilateral Aid Review are structured according to four thematic pillars drawn from the Business Plan. These include a specific "Climate Change" pillar, ensuring climate results are integral to the overall result offers from country offices. Similarly, the cross-cutting effectiveness criteria for the Multilateral Aid Review include climate change and environmental sustainability as a key assessment factor.

Planning to ensure that climate and environment is taken into account in country plans is an important mainstreaming activity. DFID has strengthened its strategic planning by introducing Strategic Programme Reviews (SPR) for all country programmes. These are designed to allow DFID country offices to develop an understanding of the potential impact of climate change on national growth and development and help identify an appropriate response by DFID (and its development partners) in current and future programmes and investments.

The SPR process supports local analysis including the assessment of science and climate impacts but also an appraisal of the socio economic and political context. Six pilot SPRs are underway in India, Nepal, Ethiopia, Tanzania, Caribbean and Rwanda and will be completed in 2011. By December 2013 all our country offices will have gone through an SPR. This will allow them to develop an assessment of the climate impacts of present programmes and will inform planning choices for future investment. SPRs will also consider how DFID can raise the general level of staff engagement and skills in climate change issues across DFID, and how DFID overseas estates can reduce their carbon footprint

DFID has expanded its professionally trained cadre of climate and environment advisers with at least MSc level or equivalent (Q.11). In addition many of DFID agriculture, forestry advisers contribute to the wider climate and environment agenda. Skilled Human resources are one of the main instruments for mainstreaming skills, values and knowledge in our country programmes and with stakeholders.

To ensure DFID is furthering learning and deepening the knowledge of our climate change advisers we have established a DFID Learning Hub to connect professionals across the globe through electronic learning forum and action learning groups. This is a resource that enables DFID staff to access the latest research and information on climate change and development issues. DFID is opening participation in this network to other Whitehall Departments.

DFID recognises the importance of effective leadership at a senior level to help establish strategy and vision to address the challenges of climate change and resource scarcity issues. A Senior SCS Climate Change Champions network is in place across all our areas of business with local networks of Climate Change Champions in country offices. The Climate Change Champions network is directed and led by the Director General for (DG) Policy and Global Issues. Senior champions are in leadership roles to challenge and help shape DFID’s response to climate change.  In country programmes our aim is to have champions in every office. The south Asia champion’s network is particularly active and has raised awareness of issues and cross sectoral links, and greening DFID estates.  Work is in hand to establish a strong network across Africa. Champions also exist in DFID professional cadres to ensure that links are made between climate change and professional areas such as health , conflict and humanitarian work.

DFID has held a number of series of learning events across the organisation to help build skills. These have focused on a range of issues including the science of climate change, socio and economic impacts of a changing climate change and the impact of climate change on reaching the MDGs. Most of these events were filmed and made available via the DFID Intranet, which has proved very popular for those not able to attend. The Climate Change and Environment Cadre has focused on three levels of climate change awareness - covering Basic, Intermediate, and Advanced issues made available across the global network. Building on this work DFID is now in the process of formulating a "Climate Smart" programme for DFID; this is a programme of organisational change which will ensure DFID has the capability to respond to wider Climate and environmental challenges.  Whilst this programme is still being designed, it is likely to be a long term strategic initiative focusing on greening DFID, building skills knowledge and evidence, climate-proofing our current programmes and considering future investments in a changing climate. It will be led at DG level in DFID.

Question 9 - What dialogue does DFID have with other departments/agencies when seeking to influence the environmental protection and climate change consequences of the activities of the Export Credit Guarantee Department, CDC Group Plc and UK Financial Investments (in managing the Government holding in some banks)?

Response 9 – DFID has played an active role in improving the approaches and procedures to environmental protection that are followed by these agencies.

The DFID Secretary of State announced in a statement to the House of Commons on 13th October and a speech on 12 th October, his intention to create a revitalised CDC with a great deal more clarity and ambition over what it does and where it works. In his recent evidence to the International Development Committee Inquiry into "the Future of CDC", the Secretary of State re-affirmed his aim to make CDC the best DFI in the world and said that the provision of patient capital  was the unique niche that CDC should be bringing to the development architecture .  Whilst the sectors that CDC should be in going forwards were a matter for consultation, the Secretary of State identified agriculture, clean energy and infrastructure as areas that were highly relevant for CDC.

CDC has an Investment Code (agreed by DFID in 2008) which sets out the principles, objectives, policies and management systems for sustainable and responsible investment with respect to Environment Social Matters and Governance (ESG) matters and which the Fund managers which CDC uses are asked to implement in their operations. DFID are reviewing the Investment Policy and Investment Code as part of their consultation into the future direction for CDC.

The Coalition Government in the document "Our Programme for Government" stated that they would "ensure that UK Trade and Investment and the Export Credit Guarantee Department (ECGD) become champions for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production." The DFID Secretary of State emphasised this commitment in his speech on climate change on 18th November 2010.

ECGD has a Sustainable Development Action Plan for the period 2009-2011. This Action Plan details the commitments that ECGD aims to deliver during the financial years 2009-11. The key sustainable development outcomes that ECGD expects to achieve are:

· T o continue to support sustainable development through the influence ECGD can exert on exporters and buyers by means of the standards applied to the business which ECGD supports;

· T o maintain and, where necessary, seek to strengthen on a multilateral basis, international standards in relation to e nvironmental screening and assessment;

· T o improve reporting on the environmental impacts of the business ECGD supports, e.g. on the Greenhouse Gas (GHG) emissions for high and medium impact projects;

· T o continue to reduce the environmental impact of ECGD’s domestic operations, striving to achieve the targets set by the Sustainable Development in Government ( SDiG ) framework .

In order to agree a cross Whitehall position on a set of principles by which the UK will evaluate future coal related projects that come through the MDBs, DFID is consulting widely with other UK government departments.  This includes discussions with the Department of Energy and Climate Change and ECGD with a view to ensuring a UK position in the MDBs consistent with UK support for its exporters, UK domestic policy, and the UK’s position in international climate negotiations. The Principles are still being drafted but are likely to include a requirement for the MDBs to demonstrate: That a poverty reduction and/or growth case has been made; Consistency with environment and climate objectives; Consideration of low carbon alternatives; and Use of best available technology.

We are not aware of any direct DFID engagement in managing the Government holding in some banks.

Question 10 - In what circumstances does DFID impose conditions on recipient countries about their environmental/climate change policies and actions?

Response 10 - We do not use conditions to impose specific policy choices on countries. We do, however, bring a strong results focus to our programming and insist on clear and measurable results from our partners. Where we judge that policy choices are incompatible with agreed sustainable development objectives and the achievement of results, we may withhold or terminate funding.

Question 11 - What skills/expertise on environmental protection or climate change mitigation/adaptation does DFID have at HQ and in-country teams? How is the division of staff with those skills between HQ and in-country teams determined?

Response 11 - DFID’s climate and environment capacity and capability has increased substantially since the 2006 EAC report at which time there were only 14 Environment Advisers. There are now 70 accredited and affiliated Climate and Environment advisers. 20 of these are working on the UK in policy roles. The remaining 50 are working in programme delivery roles and of these 8 are based in the UK and the remaining 42 are based in different locations overseas. The requirement for deployment of climate and environment advisers to country offices is determined by country heads of office and regional directors.

DFID’s drive to ensure that research and evidence are at the heart of policy making was strengthened in 2009 by the creation of a Research and Evidence Division (RED) led by a Director and co-located with Policy Division. The Director of Research is also the Chief Scientific Advisor for DFID, helping to coordinate DFID’s science and research efforts with other Whitehall departments. In 2009 fourteen eminent researchers were appointed by DFID as Senior Research Fellows, four of whom are climate change and environment experts, including the Deputy Director of RED.

The competency Framework for Climate and Environment advisers is attached at Annex C and sets out the range of skills and experience required. Those working on environment issues are required to specific environment related qualifications and experience. Climate Change advisers are drawn from a wider range of backgrounds recognising that DFID’s climate change response needs to draw on the full range of disciplines.

Question 12 - How does DFID monitor the environmental/climate change impacts of (i) its bilateral aid programmes, (ii) ‘budget support’ programmes, and (iii) multilateral programmes which are supported by the UK? What do the results of any such monitoring show about environmental/climate change impacts? To what extent are environmental/climate change impacts monitored when these are not the main purpose of the aid programmes?

Response 12 – The Secretary of State has set out the need to focus on value for money and independent evaluation. For DFID as a whole, within 2 years we aim to have:

· Credible evaluation arrangements in place for our major and most innovative programmes backed up by strong evaluation skills in operational teams.

· A wide range of new and high quality decentralised evaluations (with partners) being commissioned each year, including some impact evaluations.

· A culture in DFID where rigorous evaluation is a routine and accepted part of the policy and programme cycle and is fully owned at operational level.

· evaluations will be seriously considered for all new programmes above £5m, particularly in areas where the evidence is weak and which are innovative or particularly risky.

DFID has identified the need to invest in strengthening evaluability and increasing the rigour of climate change evaluations by:

· assessing climate change relevance of development investments;

· devising a monitoring and evaluation framework for climate relevant investments;

· working towards internationally agreed outcome and impact indicators;

· supporting decentralised evaluation work to incorporate climate change;

· commissioning joint and central evaluations focussing on climate change interventions;

· investing in research to inform climate change evaluation; and

· increasing evaluation capability and practice.

DFID has recently introduced a requirement for a Business Cases to be prepared for each new intervention. A Business Case sets out the rationale for choosing a project, programme or approach to funding. The Business case is based on HM Treasury’s "five case" model: A Strategic case; Appraisal Case; Commercial case; Financial case and Management case. The Appraisal case includes consideration of the Climate and Environment relevance of the Options. Each option must give explicit consideration to its likely impact on the environment and on climate change. Impact/opportunity is then categorised as either: high, medium/manageable or low/no risk. See response to Q.13.

Indicators drawn from standard indicator sets are then identified and monitored throughout the intervention.

The International Climate Finance Fund (ICF) will have a strong evaluation framework. Performance against this framework will be monitored by the ICF Board, described in the response to Question 23.

DFID currently has an internal Evaluation Department with responsibility for broader assessment of impact at the level of a country programme or a sector. From April 2011 onwards, the Independent Commission for Aid Impact (ICAI) will provide greater scrutiny of UK aid spending, to deliver the maximum value for money for British taxpayers. See response to Q16. DFID’s own structures will continue to support decentralised evaluation work.

DFID’s vision on evaluation is:

· To become world-class in using evidence to drive value for money and impact, and to influence other donors to be the same;

· That our programme design is driven by rigorous evaluation of what works, allowing us to test, innovate and scale up;

· Taking measured risks using high quality evidence of impact on poverty;

· Helping our partners to generate and use evidence and build capability.

With regard to funding to Multi-lateral organisations our approach depends on whether DFID is providing support for specific programmes and projects or core funding. For the former our programmes are reviewed in the same way as for bilateral initiatives. We also often participate in steering committees that enable additional scrutiny of progress. Core funding support depends more directly on the multi-lateral organisation’s own systems and processes – more details are given in the response to Question 15. Our membership of the Board of the MDBs also enables us to challenge and seek improvement in their approach to safeguard policies and their approach to climate change and environment issues. This enables us to influence not only the UK contribution, but the overall work of these institutions.

The recent review of the Environmental Screening Note process (Question 13) highlighted that these were often undertaken late in the programme cycle and did not impact sufficiently on the design of the programme, nor the indicators of performance. The new Climate and Assessment is now undertaken early in the new Business Case process. We are confident that this will result in better integration of these issues into programme design and also monitoring and evaluation processes.

Question 13 - Has the system of Environmental Screening Notes been reviewed since the previous Committee’s report in July 2006 (HC 1014, Session 2005-06), and if so what changes have been made or are contemplated?

Response 13 - Following the EAC Report in July, DFID commissioned an external review of the Environmental Screening Note (ESN) in 2006. The review presented a series of recommendations to strengthen and improve the effectiveness of the ESN. The recommendations were adopted and changes were made to the ESN system in 2006/7.

In 2009 a second review of the ESN system was undertaken to assess how well the changes were being implemented and whether they were sufficient in addressing the weaknesses in the system, identified in the 2006 report. The review also focused on determining how actions identified during an ESN could be better followed-up in implementation.

The review concluded that changes were still required to the system. These included:

· Integrating climate change

· Bringing the climate and environment assessment up-front in programme development

· Improving DFID’s ability to monitor, evaluate and audit impacts of climate and environment assessment through project life cycle

The OECD DAC highlighted the need to integrate climate change and improve the ability to monitor and evaluate impacts of the screening in their review report of DFID in July 2010

At the beginning of 2010 DFID commenced a process of revising the ESN system. This work was put on hold in May 2010 due to the launch of an internal process to introduce a new Business Case Model for DFID. The new Business Case Model Case Model replaces DFID’s programme management cycle procedures. It offered an opportunity for DFID to fundamentally re-shape the way in which climate change and environment issues are considered across all of DFID’s interventions.

A new Climate and Environment Assessment has been developed, which is integrated into the Business Case Model. This replaces the ESN and addresses the challenges of the ESN system identified by the 2009 and the OECD reviews. The new integrated approach is aligned with good practice on climate and environment assessment and is consistent with the practices of other bilateral donors who are developing progressive climate and environment assessment processes (e.g. Sweden)

Key features of the new Climate and Environment Assessment are that it:

· Integrates climate change (previous screening was for environment only)

· Identifies opportunities as well as risks with the aim of achieving co-benefits and maximum impact

· Categorises all interventions according to their potential relevance to climate change and environment (A High, B moderate, C little or no relevance)

· Ensures a Climate and Environment Advisor is engaged in all stages of programme development

· Is an opportunity for the logframe and monitoring and evaluation plans for programmes to include climate and environment indicators as appropriate

The new Climate and Environment Assessment was launched on 1 January 2011 within the Business Case Model.

Question 14 - Is the UK able to impose any restrictions on how its contribution to multilateral donors can be utilised?  If so, does the UK impose any such restrictions?

Response 14 - The UK is not able to impose restrictions unilaterally on how multilateral donors use core funding. But we do have considerable influence through their Boards and Governing Councils, on many of which we have a seat. We can also exercise influence by engaging both with other Board Members and with staff in the MDBs. We can also help support change by providing targeted support for the development of specific initiatives as a way of developing our collective understanding of new issues and identifying better ways of working. We can decide to abstain or to object to the funding of particular projects but final decisions remain with the Governing bodies of each institution. UK support for the CIFs is a good example of the UK working with partners to change the way the MDBs approach climate change, including renewable energy investment.

The Secretary of State for International Development instituted a Multilateral Aid Review (MAR) for all multilateral agencies receiving core funding from DFID in 2010. The aim of the MAR is to ensure that UK taxpayers’ money allocated to multilateral agencies is used as effectively and efficiently as possible and meets development objectives. It will seek to do this in two ways: by helping institutions which play an important role in international aid become more effective and by providing analysis to underpin funding decisions. The reform priorities identified by the MAR for each institution will also be tracked by DFID in the future so that performance against the criteria can be monitored and used to inform future replenishment decisions for each multilateral.

Other departments have been consulted and, in some cases, closely involved throughout the assessments of particular institutions (e.g. DECC and Defra in the assessment of UNEP, the CIFs and FAO).

More details of the MAR process are given in the response to Qs 15 & 17.

Question 15 - Are UK contributions to multilateral donors contingent on the acceptance of certain environmental standards? 

Response 15 - We expect all multilateral donors to meet high environmental standards. Multilateral donors have their own environmental policies and safeguards, many of them having been in place and developed over a considerable time period.

DFID’s Multilateral Aid Review (MAR), which is nearing completion, includes an assessment of the environmental standards, policies and safeguards of the multilateral organisations with whom DFID has worked. The outcomes of the MAR, including on climate and environment will guide the engagement of DFID with multilateral organisations in the future. We expect the MAR results to be published in February.

Through DFID’s new Climate and Environment Assessment procedures the environmental and climate safeguards of all multilateral organisations will be assessed prior to approval to fund. If a multilateral organisation does not meet DFID’s requirements, actions and standards to manage any climate change and environment concerns will be agreed before the funding to that multilateral organisation is approved.

The UK is legally required to make payments to many multilaterals, including the United Nations and the European Commission. Where our obligation to fund a multilateral organisation is a legal one, we use our Board position and/or other representational means to ensure environmental standards are met, as described in the response to Question 14.

Question 16 - What will be the resources, remit and timetable of the proposed Independent Commission for Aid Impact? What will its remit be specifically with regard to environmental protection and climate change adaptation/mitigation?

Response 16 - The Independent Commission for Aid Impact (ICAI) is being set up by the coalition government to evaluate and review, independently, the impact and value for money of UK aid programmes. ICAI will provide greater scrutiny of UK aid spending, to deliver the maximum value for money for British taxpayers. Its findings will support greater accountability to Parliament and to taxpayers, helping to develop confidence in the effectiveness of aid. The results of its independent scrutiny will include recommendations on how the impact and results of programmes might be improved. These recommendations will then be taken into account in determining future aid allocations and strategies, helping Ministers to target aid most effectively.

ICAI will be able to scrutinise any of the UK Government’s ODA spending, including ODA spend related to climate change adaptation and mitigation, and environment. It is expected to carry out up to 20 evaluations, reviews and investigations of aid spending per year. This will include a range of thematic, policy and country evaluation or reviews.

ICAI will consist of a board of four Commissioners led by Chief Commissioner, Graham Ward. The Commissioners will be supported by a contractor combining scrutiny and development expertise. ICAI will be completely separate from DFID in terms of its location, staff and decision-making. It will report directly to the International Development Committee in Parliament. Its reports will be published immediately on its website: accessible to the public and partners overseas. The ICAI will decide its work programme independently. 

The extent to which ICAI will address topics such as environmental protection and climate change adaptation/mitigation depends on the decisions of its Commissioners.  However, in drawing up its work programme, ICAI will consult the public and Ministers and will act on the recommendations of the International Development Committee. 

ICAI is expected to be permanent and fully operational by June 2011.

Question 17 - DFID’s Business Plan envisages reviews of the effectiveness of the bilateral and multilateral aid programmes by February 2011. What criteria will be used to assess the effectiveness of the aid programmes, and who will be undertaking the reviews? To what extent are other government departments involved in these reviews?

Response 17 - The Secretary of State for International Development commissioned a review of the DFID Bilateral Aid Programme to ensure that UK aid is targeted where it is needed most and will make the most significant impact. The Review is considering which countries should receive British aid, how much they should receive and which countries should stop receiving British aid.

The review was launched on Wednesday 16 June through a Written Ministerial Statement.  DFID country teams have developed "Results Offers" setting out the results they could deliver against DFID’s strategic priorities which include Climate Change alongside Wealth Creation, Delivering the MDGs, Governance and Security. The offers are underpinned with evidence, analysis of value for money and a focus on girls and women. DECC was represented on the review panel and participated in the scrutiny panel for a number of the country ‘results offers’. In November Ministers discussed the offers with individual country teams, and indicated which offers they would like to take up from each teams.  Resources are being allocated on this basis.

The review is running in parallel with the Multilateral Aid Review and the Humanitarian Emergency Response Review. A final report will be published in the spring. Other Government Departments have been involved throughout the conduct of the Review, both centrally and at posts.

As indicated above (response to Q. 14) the purpose of the Multilateral Aid Review (MAR) is to ensure that the UK gets maximum value for money from its contributions to multilateral organisations (MOs). The Multilateral Aid Review (MAR) is comprised of 10 criteria, each of which assesses a specific aspect of a multilateral institution’s relevance or effectiveness:

· The relevance criteria look at how critical institutions are to UK and international development and humanitarian objectives, as well assessing whether funding goes to countries where there is high need and where funds will be used well.

· The effectiveness criteria cover areas such as strength of delivery on the ground, the ability to control costs, good partnership behaviour, effective organisational systems, transparency and accountability, cross-cutting issues and the scope for continual improvement.

A total of 43 institutions are being assessed through the MAR with DFID staff who are institutional leads writing the assessments. A wide range of evidence sources have informed the assessments, including country reviews conducted by DFID staff. The assessments have also been subjected to extensive and multiple levels of scrutiny including external review by academics who are experts in development.

Climate change and environmental sustainability is one of three issues which constitute the cross-cutting effectiveness criteria (the other two are gender and fragility). The fact the MAR treats climate change and environmental sustainability as a cross-cutting issue and not one confined to institutions working in this field is important. It demonstrates DFID’s commitment to making this agenda an integral part of broader multilateral development and humanitarian practice.

The criteria used to assess performance against climate change and/or environmental sustainability are built around four questions:

1. Whether an institution has a climate change and or/ environmental strategy or framework for guiding policies and resource allocation?

2. Whether there is specific policy guidance on the issues at the country level and whether this is applied in all countries?

3. Whether the institution has adequate environmental and climate safeguards and whether these inform institutional practices?

4. Whether climate change and environmental impacts are measured and whether these are incorporated in the institution’s own performance/results systems?

The MAR is using evidence from a range of sources, including evidence submitted to the review by MOs, existing reports (e.g. audit reports, evaluations) by the MOs themselves and by others, evidence submitted by civil society, and evidence gathered in-country.

Key to the MAR is the performance of MOs on the ground and views of beneficiaries and other donors. The 10 MAR country reviews (Sierra Leone, Indonesia, Tajikistan, Bangladesh, Uganda, Nepal, Tanzania, Yemen, Mali and Sudan) have captured views from partner governments and civil society.

The MAR will make recommendations for how DFID should engage with the multilaterals in future to increase value for money. The assessment stage is drawing to a close. Results are being considered by Ministers in relation to future financing decisions. The final report is due to be published in February 2011.

We have consulted fully with those government departments with an interest in the multilaterals being assessed. These departments have provided evidence to be considered as part of the assessment process and we have also shared the emerging findings from the review with them. We will continue to engage fully with our Whitehall partners.

The review is being led by a team from the International Finance Division of DFID. Two external reviewers acted as peer reviewers during the course of the review.

Question 18 - What co-ordination is there with departments (DECC, Defra or others) with regards to assuring the quality of programmes which have a focus on environmental protection or climate change mitigation/adaptation?

Response 18 - Details of the joint management arrangements for the ICF are included in the Response to Question 23, and for the ETF in 7(iii) above

For DFID climate change programmes outside the ETF, we have maintained a close working relationship with relevant HMG colleagues, and provide them the opportunity to input into programmes at all stages of their development (i.e. from concept design phase through to implementation options) to ensure wider HMG objectives are reflected in the programme.

In addition to cross-Whitehall scrutiny, quality assurance has also been maintained through robust and up-to-date results and logical frameworks, which have been required for all DFID programmes over £1 million (and encouraged as best practice for those under £1m). Logframes ensure programmes have a clear, well-defined purpose and outputs, and appropriate indicators, baselines, milestones and targets, to allow us to accurately measure and report on what the project has delivered. They are used to report on progress annually and at the end of the programme.

DFID, as the lead department on international adaptation, has responsibility for the majority of programming on UK support for adaptation in developing countries. We co-ordinate with DECC on some jointly funded programmes (e.g. the UK’s £500m contribution to Climate Investment Funds).

DFID sits on the Darwin Advisory Committee and can feed in comments on project proposals in advance of and at Committee meetings.

Question 19 - Please can you highlight any notable case studies that have had a significantly positive/inadvertently negative environmental impact?

Response 19 - There are a number of examples of significantly positive environmental impact of DFID’s work.

DFID Rural Livelihood programmes in India have contributed to very positive environmental impacts. Over the period 1990 to 2010, DFID India has helped over 13 million of the poorest and most excluded people to increase their income, build productive assets, improve their food security and develop resilience to climate variability. Over this period it invested £250m in nine major rural development projects aimed at poverty reduction through a number of entry points including forestry, watershed development, rain-fed farming and rural decentralisation. The evidence of positive environmental impact is as follows:

· Managing, protecting and enhancing the natural resources base: Projects engaged extensively in soil and water conservation work, and in the order of 50% of project households (over 650,000) undertook conservation measures. Water harvesting raised the groundwater table by 2 to 4 metres. These activities have profound influence on the natural resource base.

· Increasing access to forests, and non-timber forest produce: Two forestry projects introduced Joint Forest Management to the Forest Department. Livelihoods projects successfully devoted resources to improving access for the poor (an estimated 120,000 households) to non wood forest products.

· Adaptation to climate change shocks: Increased water retention, raised water tables, livelihood diversification, higher income and strong self help groups all helped to ensure a better flow of information, and thus quicker and more appropriate reactions and responses.

· Low carbon activities: Projects have unlocked new opportunities offered by carbon markets and carbon finance. Low carbon activities (plantation, composting, improved cropping and water saving technologies such as surface treadle pumps) have resulted in savings of over 770,000 tonnes of CO2 in the Western Orissa Rural Livelihoods Programme (WORLP). Some 4,000 hectares of plantation benefitted over 73,000 farmers; over 900 vermi-composting units benefitted more than 8,000 farmers and avoidance of methane saved almost 6,400 tonnes of CO2 per year; smokeless stoves and solar lanterns were introduced; improved rice cropping and the introduction of approximately 1,600 low energy consuming pumping and water saving technologies also contributed.

In Ethiopia DFID is providing £203 million to support the Government’s Productive Safety Nets Programme (PSNP) over a 5 year period. PSNP is the largest climate change adaptation programme in Africa. The programme undertakes a broad range of public works projects to rehabilitate the environment and improve social services with investments in Soil and Water Conservation (SWC), water supply as well as health projects. To avoid or minimize negative environmental impacts, PSNP has employed an Environmental and Social Management Framework (ESMF) to determine appropriate projects for funding. Climate Change is being mainstreamed into PSNP on the basis of detailed studies that have been commissioned.

By promoting, financing and implementing sustainable land management measures, the PSNP has contributed to environmental transformation at scale in Ethiopia and the mitigation of the negative impacts of climate change. A recent Impact Evaluation (2008-9) concluded that soil and water conservation activities are dramatically reducing surface runoff, increasing infiltration, raising groundwater levels, enhancing spring yields, increasing stream base flows and wood and herbaceous vegetation cover. In several communities, springs now last longer into the dry season. Additionally, the number of domestic water supplies has doubled.

In Bangladesh, the Pilot Programme for Climate Resilience (PPCR), one of the Climate Investment Funds, is helping to provide storm and cyclone proof housing, emergency shelters, coastal defences and improved water and food security in 12 vulnerable coastal communities, potentially benefiting over a million people. The investment will help to construct disaster-resilient, single-family homes, with safe drinking water and sanitation systems, and detachable solar systems for electricity. Small grain storage areas can be converted to livestock refuges when a storm hits. Roads and bridges connecting the communities will also be improved.

The PPCR investments blend other sources of finance including small contributions from homebuyers, substantial government grants and private sector investment, enabling the programme to continue independently of funding from the PPCR. A total of $110 million of PPCR funding has been endorsed for climate resilience programmes in Bangladesh.

The Darwin Initiative has provided some case studies of note, including sustainable management of natural resources and building technical expertise in developing countries (one of the earliest projects was a University of Kent programme to train 18 individuals in conservation and biodiversity techniques). Currently work is ongoing in the Tian Shan mountains of Kyrgyzstan on sustainable forest management contributing to preservation of livelihoods amongst forest users, and in the Maldives where a sustainable management plan for coral reefs is looking to link economic sustainability to biodiversity and climate change issues.

In Sudan the overwhelming need to place people in Internally Displaced People (IDP) camps resulted in the concentration of large numbers of people in small areas, This led to significant negative impacts on the local environment including trees being cut for fuel and shelter and unsustainable drawdown of groundwater.

A subsequent project, the £20m Sudan Integrated Environment Programme (SIEP) is designed to contribute positively to improving environmental management and to offsetting any adverse impacts from other international development / humanitarian assistance. The SIEP programme also includes measures to help adapt to the variable climatic conditions being experienced in Darfur.  The project does this in three ways:

· Mainstreaming Environment throughout the UN / humanitarian system in Sudan;

· Strengthening Environmental Governance in Darfur;

· Construction of a series of micro-dams with infiltration ponds to recharge the groundwater (thereby offsetting the problem of over-extraction).

Unless such issues are addressed through a programme such as SIEP there is a real risk of competition over environmental resources re-triggering conflict and unrest.

Question 20 - For programmes specifically aimed at environmental/climate change action, to what extent are there differences in the impact of DFID’s bilateral work compared with UK-funded multilateral aid?

Response 20 - We use a balance of funding channels and instruments to maximise the impact of the UK Government’s ODA. Our bilateral engagement is focused principally where we have significant comparative advantage, established relationships and are able to deliver large and often innovative and influential programmes.

Our support through multilaterals enables a much broader reach to countries where we have less presence and comparative advantage to operate bilaterally. It also enables the use of our funds to leverage funding from others into areas that we consider to be important. The issue of reach as a key feature of the role of multilaterals, is vital in addressing public and global goods issues such as climate change and environmental degradation.

Multilateral funds are particularly useful when pooled finance from a number of sources is needed to support a large programme, or to act as trustee for a fund established to address a particular market failure. The strong fiduciary management provided by these institutions – particularly the World Bank – is an important consideration.

For example, The Clean Technology Fund (one of the Climate Investment Funds), is helping to catalyse clean energy production on a large scale in the Middle East and North Africa. Further support to the Climate Investment Funds include:

· £50 million to the Scaling-up Renewable Energy Programme – to ramp up the deployment of renewable energy and expand renewable markets in the world’s poorest countries – including Ethiopia, Honduras, Kenya, Maldives, Mali and Nepal – by financing solar, wind, bio-energy, geothermal and small hydro technologies.

· £385 million for the Clean Technology Fund which, when combined with other donor funding, is expected to leverage over $40 billion of investment in low carbon projects. These are expected to provide 18 million people with low carbon and affordable transport, and provide over 12 megawatts of clean electricity and thousands of jobs to local communities. This is enough energy to supply the equivalent of almost 16 million households. Countries participating so far include Colombia, Egypt, Indonesia, Kazakhstan, Mexico, Morocco, the Philippines, South Africa, Thailand, Turkey, Ukraine, Vietnam and a regional pilot covering the Middle East and North Africa region.

The Pilot Programme for Climate Resilience (PPCR) is delivering transformational outcomes in a small number of pilot countries – Bangladesh and Niger to date. It provides these countries with grant finance and the option of taking highly concessional loans on top of this. The loans have zero or near-zero per cent interest rates, low administration and service charges and long repayment periods. Loan money from the UK repaid to the PPCR will be able to be used to finance further lending so a greater number of countries can benefit from adaptation finance.

Question 21 - What is DFID’s assessment of the extent to which (i) UK bilateral aid and (ii) UK-supported multilateral aid avoids exacerbating environmental degradation or worsening climate change?

Response 21 – Environment and Climate considerations are integral to all of DFID’s activities. As described in response to Question 2 they are a key consideration within the overall DFID Business Plan and have been important in the BAR and MAR processes. DFID has recently strengthened the Business Case requirements for all new investments – bilateral and multilateral (Q 13). The new approach streamlines and removes the need for a separate environment screening note process through integration of a strengthened environment and climate assessment into the single appraisal process. In addition, our programme of climate and environment mainstreaming is ongoing, see response to Question 8. These approaches are designed to minimise the negative impacts of our work on the environment and climate and maximise the beneficial impacts wherever possible. This draws on best practice from other donors.

In the past, environmental screening notes have been required for all DFID programmes over £1m (and encouraged as best practice for those under £1m or where there were potentially large environmental impacts). Environmental screening is a risk management tool. It helps identify environmental risks which may reduce the effectiveness of the development intervention. It is also a tool for identifying opportunities to improve the effectiveness of the intervention. Screening ensures we are compliant with other UK policies, international environmental agreements and any environmental regulations established by our partner countries.

DFID is also working directly with multilateral partners to reduce their impact on the environment, particularly in respect to carbon emissions. For example, as part of the Gleneagles Plan of Action, The Clean Energy Investment Framework (CEIF) established a basis for the multilateral development banks (MDBs) to broaden and accelerate their climate-change related activities through the CEIF. This was supported by a $22.4 million trust fund established by UK to assist all the MDBs develop their strategies. DFID continues to challenge the MDBs to increase their clean energy lending We are also working with the World Bank to improve their methodologies for analysing different electricity generating technologies, taking account of long-term fossil fuel prices and the potential cost of carbon emissions.

An example of where we have worked with partners to avoid exacerbating environmental degradation or worsening climate change is the Pro-Routes project in DRC. Pro-Routes is a multi donor programme managed by the World Bank and implemented by the Ministry of Public Works and Infrastructure, their delegated advisory body (the Cellule Infrastructures) and the Office des Routes.

Re-opening roads in DRC is a key step in the country’s development plan and essential to enable fair and sustainable economic growth. However it involves improving access to a variety of highly sensitive ecosystems including high-biodiversity rainforests and highlands. Many of these areas were subject to significant human pressure over the last decades, such as slash-and-burn agriculture and poaching. Over the last 20 years, due to the status of the roads, these areas were relatively isolated and impacts of logging were limited. Reopening the roads attracts various groups looking for ways to sustain a living and/or make short-term profits. Legal and illegal logging, charcoal production, and commercial poaching are likely to increase, as well as encroachment on newly opened-up forested areas by agriculturalists, artisanal miners, and others, leading to accelerated deforestation and reduced biodiversity.

DFID’s Environmental Screening Note made a full Environmental Impact Assessment a requirement for funding. As a result of this, when designing the programme, Pro-Routes partners agreed that a 16% portion of the budget should be devoted to environmental and social impact mitigation and monitoring. This represents a step change from traditional road building programmes in Africa where 1-2% of the overall budget was the norm, mainly focussing on much less significant direct impacts of road building rather than the far reaching and more damaging indirect impacts highlighted above.

A scoping study was performed in early 2006 and this was followed up by a field-based refinement mission in late 2006/early 2007, which developed the ToR for a project to produce an Environmental and Social Management Framework (ESMF), in line with World Bank safeguards and funding requirements. This ESMF was undertaken under EU funding in mid-2007 and produced an analysis of the impacts and recommendations for a mitigation and monitoring programme for the roads in Orientale, Equateur, and Kasai Occidental. A reconnaissance-level Environmental and Social Impact Assessment (ESIA) study of the Uvira-Kasomeno road was also performed at this time.

World Bank procedures require a further, more detailed, study of roads prior to construction, to follow up the Management Framework with specific recommendations for individual road sections. The road section for the first year of construction, from Kisangani to Buta/Aketi, was the subject of a more detailed Environmental Assessment in late 2007.

The ESMF and EA studies identified the likely direct impacts from the road construction on the environment and human health (including STDs), and recommended mitigation measures. At the same time they noted indirect effects, which included positive economic and social benefits as well as negative impacts that would accrue from the infrastructure improvement.

The environmental management component of Pro-Routes aims to mitigate these impacts in a proactive manner by promoting participatory land use planning and sustainable livelihood opportunities, thus minimizing spontaneous colonisation of newly accessible areas. It will support public institutions such as ICCN and MECNT in managing and protecting natural habitats, biodiversity, and forests and enforcing the pertaining laws. The component will also support sustainable community development through partnerships with civil society organizations and local communities.

Following the work done on Pro-Routes DFID DRC developed a specific policy approach to managing environmental and social impacts of road sector support in DRC. This document and the approaches therein were then developed further into national (DRC) guidelines for evaluating the environmental and social impacts of road projects in DRC with specific requirements for subsequent management plans along the lines of those developed for Pro-Routes. These were then adopted by the GoDRC as a requirement for all future road reopening and building projects in DRC, regardless of the source of funding.

Question 22 - How is DFID’s Spending Review settlement affecting its portfolio of aid programmes?

Response 22 - The Spending Review 2010 (SR10) settlement for the Department for International Development ensured a rising aid trajectory in order that the UK can meet its target of delivering 0.7 percent of Gross National Income as Official Development Assistance by 2013. There were two further requirements which were set out in the overall settlement which will have an impact on both the composition and the geographic allocation of resources. These were that:

· 30 percent of ODA will be used to support fragile and conflict affected states by 2014-15; and

· £2.9 billion over the Spending Review period should be for International Climate Finance.  

The decision to establish the ICF will have a major impact in increasing UK aid for climate finance. The detailed impact of the Settlement on the composition of the aid portfolio, will be determined through the ongoing review processes.

Question 23 - How are the UK’s contributions to the International Climate Finance Fund being managed, and what are the prospective plans for managing the UK’s biodiversity funding post-Nagoya? How will the contributions of individual departments to these financing arrangements be calculated?

Response 23 - International climate finance from 2011/12 will be provided from the ICF by DFID, DECC and Defra (the latter with respect to forestry finance). Given the cross-cutting nature of this challenge, we have established governance arrangements through the International Climate Finance (ICF) Board to ensure cross-Whitehall input into spending decisions, reflecting the fact that the funding involves more than one department. Decisions on the priorities and principal allocations of the ICF will be taken by the Secretaries of State for Energy and Climate Change and International Development, and the Chief Secretary to the Treasury, and the Secretary of State for Environment, Food and Rural Affairs, in consultation with the Foreign Secretary. 

The ICF will be used to support adaptation and low carbon development and to help tackle deforestation in developing countries, taking into account issues of biodiversity. An ICF Board has been established at Director-General level (chaired by DFID) which will meet regularly to advise Ministers. A priority issue for the ICF Board will be to ensure that money is spent where it will maximise results and ensure value for money. In the case of adaptation, funding will be prioritized for the poorest and most vulnerable developing countries as agreed in the Bali Action Plan and Copenhagen Accord. For low carbon development (including forestry) we will need to consider how we maximize the potential for the reduction or avoidance of current and projected emissions reductions in ways that reduce poverty; and for forestry we also need to consider how to deliver biodiversity co-benefits. By March 2011, we plan to have an agreed implementation plan in place.

The £2.9bn ICF will be provided by DFID, DECC and Defra. The funds have been allocated to the three Departments as follows: £1.8bn (DFID, £1bn (DECC) and £100m (Defra). Further details are provided in the text of this Memorandum.

The UN Convention on Bio-Diversity (UNCBD) COP10 took place in October 2010 in Nagoya, Japan. The Defra SofS led the UK delegation. The outcomes were positive and included:

· A Protocol on Access and Benefit Sharing – this will help to ensure that developing countries (and all counties) get a fair financial deal for the use of their biological diversity – including genetic diversity (important for medicines etc). It requires further work – but the basis of the Protocol is now operational.

· A resource mobilization strategy – to get the right levels of resources (financial, capacity, technical) to developing countries so that they can manage their natural resource in a way which supports rather than undermines growth and development. There are now 2 years to develop a framework to determine a) how much money currently goes into biodiversity b) how much is needed to prevent the further degradation of biodiversity and c) what the gap is.

· In view of the fact that the MDG7 target to halt the loss of biodiversity by 2010 was not achieved, Nagoya agreed a framework / strategic plan of 20 ambitious targets, under five strategic goals. These targets include, for example, integrating biodiversity values into national accounts; halving or where possible bringing close to zero the rate of loss of natural habitats, including forests; conserving at least 17% of terrestrial and 10% of marine ecosystems through protected-area systems; updating national biodiversity strategies; and increasing financial and other resources for biodiversity;

In addition, there was a decision to ask the UN general Assembly to designate 2011-2020 as the UN Decade of Biodiversity, which has subsequently been taken.

Regarding the UK’s funding for international biodiversity following Nagoya, an increase in funding for the Darwin Initiative has been announced from 2011-12 until the end of the current spending period in 2014-15; DFID will assume the costs for the ODA-compliant majority of current and future Darwin projects from April 2011. In addition, a proportion of the funding which will be allocated through GEF (the Global Environment Facility, a facility run through the World Bank funding environmental projects) will be dedicated to achievement of biodiversity objectives. While as noted above, the UK’s International Climate Fund, particularly for forestry, will be delivered such that it supports biodiversity co-benefits over the long-term in low carbon, climate resilient development plans.

Aside from direct funding, the UK will be devoting considerable time and effort to following up the key agreements secured at Nagoya.

On the Strategic Plan, this will involve the elaboration of a new England Biodiversity Strategy, the continuation of efforts to integrate valuation of biodiversity and ecosystem services into financial planning, and outreach to embed new sub-targets (such as on marine and terrestrial protected areas, reduction in biodiversity loss, including forests). Defra will lead on most of this work.

On the Resource Mobilization Strategy, the programme of work agreed at Nagoya will need to be implemented both domestically and in the European context.

Finally, on the Protocol on Access and Benefit Sharing (ABS) with respect to genetic resources, we shall be collaborating closely with the Commission and successive EU Presidencies to ensure that the commitments made at Nagoya are realised and the Protocol comes into effect as soon as practicable. This will also require considerable investment, and also eventually new domestic legislation.

Question 24 - Under the Coalition government, the Public Service Agreements have been terminated. What indicators and/or targets are there, beyond those listed in DFID’s Business Plan, which address the environmental/climate change effectiveness of UK’s ODA?

Response 24 – In 2009 DFID developed a set of climate and environment indicators to strengthen its ability to monitor impact. These are drawn from a wide range of sources including Think Tanks, NGOs, multilaterals and other bilateral organisations. The indicators cover Low Carbon Development, Adaptation, Forestry, Environment and Water Resources. They can be applied where appropriate, to address the environmental aspects of other DFID programme areas such as health, water and sanitation, education, gender, agriculture and infrastructure. And they cover outcomes, outputs or overarching impacts.

DFID's Structural Reform Plan (SRP), developed under the coalition government in 2010, includes a set of short to medium-term DFID actions and milestones on climate change. Progress against these actions can be followed online at http://www.dfid.gov.uk/About-DFID/Finance-and-performance/DFID-Business-plan-2011---2015/ . DFID’s Business Plan incorporates the SRP Actions and Milestones and also adds further Input and Impact indicators relating to climate change and the environment.

In the new Spending Review period from April 2011, DFID will internally measure its performance through Operational Plans. These Plans include draft indicators on climate/environment that will be used by DFID departments and country offices. These will help to ensure that the effectiveness of DFID's work can be measured in a standard way across the organisation. 

Policy Division is finalising its objectives and indicators for measuring success.

Climate and Environment Department’s indicators will include:

· Resilience of poor people to climate impacts increased as measured by a basket of indicators

· Reduction in deforestation and forest degradation

· The number of countries following low carbon development trajectories

The Growth and Agriculture Department has an objective to:

· Safeguard wealth by working with country offices to ensure economic growth is inclusive, sustainable and resilient; that natural resources are managed productively for sustainable growth; that growth is not undermined by corruption; and, that poor people enjoy food security. This will be measured by country level uptake of advice on growth.

The £2.9 billion cross-Government International Climate Fund (ICF) will be guided by an ICF strategy, which will also include targets/indicators by which to measure performance.

26 January 2011