How do developing countries estimate their climate finance needs under the Paris Agreement?
Year: 2025
Type: article
Abstract: • Developing countries estimate their climate finance needs in NDCs using top-down, bottom-up, or hybrid methods. • Influencing factors include political institutions, stakeholder engagement, technical capacity, etc. • Climate finance quantification is technical and political, serving both negotiation and signaling roles. • A typology highlighting NDC archetypes is proposed: inclusive, strategic, consultant-facilitated, and minimalist. • Proposed policy reforms include stronger institutions, better consultancy practices, and more standardized methods. Nationally Determined Contributions (NDCs) are central to the Paris Agreement, serving as both pledges of climate ambition and platforms for articulating climate finance needs. However, how developing countries quantify these needs and the influencing factors remain poorly understood. Using an inductive research design based on expert interviews, we identify domestic and international factors influencing how countries estimate finance needs in their NDCs. Political institutions and the strategic perceptions of policymakers regarding NDCs – either as negotiation tools or investment plans – influence the specificity of climate finance needs estimates. Limited technical capacity and stakeholder engagement are important constraints in several countries. Meanwhile, international factors such as negotiating groups and consultants contribute to more detailed costing of climate finance when enabled by supportive policy environments. We propose a typology describing the spectrum of NDC archetypes, reflecting the interaction between domestic and international factors, as well as bottom-up and top-down estimation approaches. Our findings underscore that climate finance quantification is both technical and political, with implications for transparency and resource mobilization potential of future NDCs. Policymakers should remove barriers to obtaining granular sectoral and climate data, demonstrate political commitment, and strengthen collaborations with subnational levels. Capacity-building initiatives should strengthen the institutional and stakeholder foundations of detailed NDCs. Climate finance consultants should prioritize knowledge transfer and sustained collaboration with domestic institutions.
Source: Global Environmental Change
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $6,440
OpenAlex ID: W4416814175