Mozambique opens up a new budget classification on climate change

In Mozambique 17% of the GDP is the yearly economic loss due to environmental degradation and the inefficient use of natural resources. This is specifically affecting vulnerable groups that are directly dependent on natural resources (crops, fish, forest, etc.) for their livelihood, and the achievement of the millennium development goals.

Nine percent of the GDP is the estimated cost to remediate these damages and yet only 1.4% of GDP was the average environmental expenditure for the period 2007-2010. This was demonstrated when the Ministry of Environment (MICOA) with support from PEI carried out a Public Environment Expenditure Review (PEER) in 2012. With the help of key studies such as the PEER, the Ministry of Finance kick-started their engagement in enhancing poverty-environment mainstreaming in Mozambique to demonstrate the economic potential of sustainable natural resource management and the costs of environmental degradation.

Not only has the Ministry appointed two environmental focal points who are situated within the Ministry, but it is also actively following up on one of the key recommendations from the PEER; to enhance the system and use of environment and climate codes in budget processes. For the 2014 budget processes, the Ministry of Finance has opened up a new budget classification code related to climate change. This is based on a proposal developed by MICOA, with support from PEI Mozambique, following the PEER recommendation. Furthermore, MICOA has decided to test the feasibility to use a wider range of the available codes, including codes related to land management and physical and environment planning in order to facilitate measuring the progress towards achievement of development goals. To further this work PEI will, in 2014, support the Ministry of Finance to analyze the structure and effectiveness of the expenditure and coding on environment, natural resources and climate in other sectors and its relation to economic development. The analysis will come to inform the 2015 budget guidelines.  

Generating information to effectively track environment and climate expenditure is instrumental not only for accurate accounting and identifying investment gaps for sustainable environment and natural resource management, but also for the potential of accessing global climate funds to bridge these gaps. The PEI Africa theory of change is that increased investments in environment and sustainable natural resource management by the government and other development partners ultimately will lead to improved livelihood opportunities for those vulnerable groups that depend on these resources for their livelihood.  

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