Estimating Public Climate Finance Using Objective– Based Cost Component Approach

Abstract

In this paper, we estimate the climate budget of the City of Skopje, the capital of the Republic of North Macedonia, by applying the objective-based cost component approach of the Climate Budget Tagging (CBT) methodology. CBT is a budget tool for monitoring and tracking climate-related public expenditures in the national/subnational budget system. In this approach, relevance level of the climate budget is calculated as the percentage of total expenditure for each climate intervention minus the share of the expenditure that would take place under a business-as-usual (BAU) scenario. Using the budget data for the representative year 2018, we estimated that the total budget of the climate-relevant programmes is 585 mil. MK denars, of which 311 mil. MK denars is allocated for mitigation while 41 mil. MK denars is allocated for adaptation purpose. Accordingly, about 48.6 percent of the budget is allocated for highly relevant programmes, 28.6 percent for medium relevant programmes, and 22.7 percent for low relevant programmes. This method also acknowledges that some programmes already have climate functions built-in, and when these programmes are implemented to contribute to climate functions, the additional benefits they would provide also need to be considered.