Drivers of Bilateral Climate Finance Aid: The Roles of Paris Agreement Commitments and Public Governance

Abstract

Using granular data from the OECD from 2010 to 2018 that differentiate between adaptation and mitigation measures to address climate change, we employed a double-hurdle model to examine whether countries’ Paris Agreement commitments and governance capacity help attract international climate-change-related financial aid. We found that (i) countries received a short-term aid boost in the year when they submitted the nationally determined contribution, and countries that committed only to action targets rather than emission goals were more likely to receive funds; (ii) both the quality of the budget and financial management and the quality of public management significantly enhanced the likelihood of receiving aid, but only the quality of public management contributed to attracting funding for adaptations; and (iii) multilateral institutions played catalytic roles in fostering bilateral international climate-change aid, particularly by increasing the likelihood of funding.JEL: O13; O19; Q54; H83.