Table of Contents

Introduction Multimedia
Key concepts Tools
Topics Results
Key messages Activity
Takeaways Further reading



This chapter explains approaches for budgeting and financing for the mainstreaming of poverty and environment into policies, plans and programmes. It includes engaging in the budgeting process at various levels and improving the contribution of environment and natural resources to public finance. It looks in detail at how to influence a State’s budget process and describe how budgets actually work.


Key concepts

  • Budgets provide multiple entry points for pro-poor environmental and climate mainstreaming.

  • The budget process’s three primary steps – budget planning and formulation, budget execution and implementation, and budget monitoring and oversight – contain multiple openings for mainstreaming poverty, environment and climate objectives.

  • Budget screening creates opportunities to guide investments and expenditures

  • Climate fiscal frameworks incentivize investments in low-emission and climate-resilient economies.


Topics covered in this chapter

  • Budget call circulars

  • Procurement

  • Budget, reporting and monitoring

  • Revenue

  • Fund allocations

  • Expenditures

  • Climate change investment

  • Fiscal policy

  • Environmental fiscal reform

  • Pricing, taxation and subsidies


Key messages

  • Fiscal policy can be used to combine environmental and pro-poor outcomes that are central to a green economy.

  • By removing harmful subsidies and imposing environmental taxes or charges, governments can raise revenues that enable investment in other types of expenditures that benefit the poor.



Did you know?

  • Bangladesh’s Ministry of Finance found the country’s expenditure on climate change cost US$1 billion per year.

  • Global fossil fuel subsidies equaled US$409 million in 2010.

  • Subsidies often do not reach the poor. Only 8% of fossil fuel subsidies in 2010 benefited the poorest 20% of the population.






  • Public environmental expenditure review

  • Climate public environmental expenditure review

  • Climate fiscal framework

  • Sector plans and budgets

  • Budget guidelines

  • Capital investment project screening

  • Climate-related performance indicators



How Malawi Included Poverty and the Environment in Its Budget Guidelines. Box 5.1.

Including Poverty-Environment Objectives in Sector Plans and Budgets in Mozambique. Box 5.2.

Economic Analysis of Natural Resources and PEER Gives Mozambique’s Ministry of Finance Scope for Action. Box 5.3.

Indonesia Issues Ministerial Decree on Budget Tagging for Climate Change. Box 5.4.

Environmental Fiscal Reform Results and Benefits in China and Brazil. Box 5.5.

Safeguarding the Poor While Removing Fossil Fuel Subsidies. Box 5.6.

Developing a Climate Fiscal Framework in Bangladesh. Box 5.7.


Activity: Mainstreaming into Budget Processes

Discuss in a small group:

  1. Has your government integrated poverty-environment objectives into the three primary steps of the budget process?

  • Budget planning and formulation

  • Budget execution and implementation

  • Budget monitoring and oversight

  1. Is environmental and/or climate sustainability included as a priority for public expenditure in the Ministry of Finance’s budget call to line ministries?

  2. Identify at least one project in your country that has undergone some form of screening to assess their costs and benefits.

  3. Identify at least one line agency that has prioritized and costed programmes on the environment and climate change in submitting their expenditure plans to the ministry of finance.

  4. Do sectors have the capacity to deliver on work in areas outside their traditional scope, such as environmental sustainability, climate change and gender?

  5. Is the government tracking its expenditures on environment and climate through PEERs and CPEIRs?

  6. Is the government tracking the quality of expenditures in terms of impacts, in addition to tracking the quantity?

  7. Identify environmental fiscal reforms introduced by the government to raise revenues and protect the environment through the following:

  • Removal of negative subsidies

  • Imposition of taxes or charges

  • Introduction of positive subsides

  1. Can the government be supported to develop a climate fiscal framework which takes a holistic approach to expenditure and revenue policy and its interface with climate change?


Further reading

Climate Financing Frameworks (CCFFs) and Climate Public Expenditures and Institutional Reviews (CPEIRs) (various). Governance of Climate Change Finance Team, UNDP, Bangkok Regional Hub.

Empowering Women for Sustainable Energy Solutions to Address Climate Change (2015). UN Women and UNDP-UNEP Poverty-Environment Initiative.

Guidance Note on Integrating Environment linked Poverty Concerns into Planning, Budgeting, and Monitoring Processes (2015). UNDP-UNEP Poverty-Environment Initiative.

Indicators to Assess the Effectiveness of Climate Change Projects (2012). Impact-Evaluation Guidelines Technical Notes No. IDB-TN-398. Office of Strategic Planning and Development Effectiveness, Inter-American Development Bank.

Mainstreaming Climate Change Adaptation into Development Planning: A Guide for Practitioners (2011). UNDP-UNEP Poverty-Environment Initiative.

Mainstreaming climate change in monitoring systems (2011). Global Climate Change Alliance Support Facility.

Public Environmental Expenditure Review (PEER) (n.d.). Profiles of Tools and Tactics for Environmental Mainstreaming. International Institute for Environment and Development (IIED).

Public environmental expenditure reviews (PEERS): experience and emerging practice (2003). International Bank for Reconstruction and Development / The World Bank.
Public Expenditure Review for Environment and Climate Change for Rwanda, 2008-2012 (2013). Final report. Rwanda Environment Management Authority (REMA) and UNDP-UNEP Poverty-Environment Initiative.

Realizing Human Rights through Government Budgets (2017). United Nations Human Rights Office of the High Commissioner.

Training/Reference Manual for Conducting Public Expenditure Review s in Environment and Disaster Risk Management Sectors (2014). Ministry of Finance, Government of Malawi and UNDP.   


Published Date: 
Wednesday, November 1, 2017