Impact Of Climate Finance on Sustainable Development in West Africa

Abstract

This research examined the understanding of climate finance in West Africa and how countries can benefit to build resilience and cope with the consequences of climate change since this issue is projected to worsen their fragile economies and the livelihood of populations. The data were collected from 138 REDD+ beneficiaries, by interview and from secondary sources. The data analysis involved a two-step equations model (Logit and OLS), a Cost Benefit Analysis method, a Seemingly Unrelated Regression method and an instrumental variable regression methodology. From the results, countries with higher CO2 emission, lower per capita gross domestic product, good governance (good political stability, good regulatory quality, good control of corruption and effective governments), high human capital index and higher democracy rate tend to participate and receive more amount climate funds. The benefits (use and non-use like the gain in agricultural production, carbon emissions reduction and sequestration, the goods conservation and the environmental services provided by forests) of the REDD+ project are higher than the costs of implementation. The benefit cost ratio is higher than one (3.002 from the contingent valuation method). Evidence that climate finance did not have a positive impact on carbon emission reduction can be justified by the fact that the funds received were insufficient to fight climate change and were mainly led to adaptation. (105 adaptation and 65 mitigation projects). Climate finance has a positive and statistically significant impact on livelihoods through HDI and GDP per capita. Considering the importance of climate finance in the general economic wellbeing, it is recommended to imply local populations in forests management, conservation and restoration by sensitization and collaboration, to increase human capacity, and put in place good governance to develop and manage more bankable climate projects which will further impact positively on present and futures generations’s wellbeing and standard of living.