Social Equality Enhancement from International Climate Finance

• In Event: Climate Affects Sentiment; Sentiment Affects Outcomes: Culture, Attitudes, and Environmental Policy

Abstract

Climate finance has great potential to mitigate the socioeconomic impacts of climate change, particularly in vulnerable regions, by promoting social equity and sustainable development. This study examines the distributional effects of climate finance on social indicators in low- and middle-income countries from 2000 to 2020. Using data from Demographic and Health Surveys (DHS) covering 37 countries, the research focuses on the impact of climate finance on access to electricity, clean cooking fuels, child health, and gender-related outcomes. Generalized Estimating Equations (GEE) with interaction terms across 20 wealth quantiles are employed to analyze variations within and between countries.

The findings show that climate finance helps reduce inequalities in health and gender dimensions, though its impact on energy access is more varied. Middle-level wealth quantiles benefit most from improvements in electricity access, while upper-middle quantiles face reduced access to clean cooking fuels, likely due to investments in clean energy systems and rising fuel prices. Child health and gender-related indicators show positive effects across all wealth groups, with significant gains in reproductive health and women’s rights, especially among the poorest.

Between countries, lower-middle-income countries (LMICs) show strong responsiveness to climate finance, particularly in electricity access, whereas low-income countries (LICs) and upper-middle-income countries (UMICs) display more modest trends due to infrastructure challenges and mature electricity access, respectively. The analysis of cooking fuel indicators reveals negative marginal effects on clean cooking fuel access, though targeted finance improves outcomes in LMICs and UMICs.

Simulations projecting climate finance trends up to 2035 suggest substantial increases in social outcomes across all wealth quantiles, particularly under ambitious scenarios targeting 1.3 trillion USD in annual climate finance. With the COP29 outcome on the floor, a bold and equitable commitment to international climate finance is essential to address the challenges of climate change in the Global South. Given the developing countries’ need for at least $1.3 trillion annually by 2035, the focus must be on scaling up funding and improving the quality of its delivery. Our simulations of projected climate finance by 2035 show the significant impact on demographic and health outcomes in increasing the overall volume of climate finance and redistributing more funds to the least developed and vulnerable countries. These findings are closely related to the NCQG and COP discussions on climate finance commitment, underscoring the need for an inclusive framework to maximize social benefits.

Author

• Ji Qi, Fudan University
  Presenting Author