OPENING NEW FINANCE OPPORTUNITIES FOR CITIES
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In low-income communities in western Jakarta, an arrangement developed through the Global Partnership on Output Based Aid (GPOBA), the city government, and the local water utility, PALYJA, subsidizes the cost of water-supply connections for almost 12,000 households in poor areas, including 2,200 in informal settlements where PALYJA had previously not been authorized to provide services (Menzies and Setiono 2010). Concessionaires are given grants for the cost of installing connections to the networks, provisional on two measureable outputs—the provision of a working household connection, and the delivery of acceptable service for three months. While the project has faced some difficult challenges in implementation related to water availability, and problems dealing with existing informal water suppliers, these eventually were resolved, with the help of the NGO Mercy Corps, paving the way for further expansion to other communities.
Bringing It All Together Sustainable financing for climate change, disaster risk, and the urban poor in cities will need to draw on all available resources, as well as maximize synergies and complementarities. An efficient combination of resources from the instruments described above can leverage public and private sources while ensuring significant co-benefits. Combinations of financial instruments will be needed, with approaches customized to address specific needs, risks, or barriers, while also reducing transaction costs. Since most international funds for addressing adaptation and mitigation are channeled through national implementing entities, cities have extensive scope to access such funds through national processes (see annex 1), but modalities for more direct access need to be considered. One approach to facilitating access would be allowing cities to access such financing through a more unified “window,” which would reduce overhead and administrative complexity. Such an approach could bring together many of the existing resources that are available and draw on some innovative instruments, such as green bonds for cities and results-based financing for basic services. With regard to climate support alone, the World Bank offers more than 30 potential programs, including for capacity building and technical assistance, as well as funding initiatives. To encourage cities to achieve specified targets, such a program could consider a more standardized approach to benchmarking and monitoring through metrics commonly agreed upon by the international community, such as a citylevel GHG index, urban risk assessments, or Local Resilience Action Plans. By meeting specified targets, cities would then be eligible for accessing such financing through the designated window.