OECD Observer
Environmental aid

Although the environment is high on the international policy agenda, development aid for the environment has declined in relation to total aid since 1996. This trend comes despite an increase in overall aid funding: from 2004 to 2005, total official development assistance (ODA) rose 32% to a record high of US$107.1 billion, though eased back somewhat in 2006 (see development setback news brief).

By 2005, environmentally-related aid was about $12 billion, up on its level of $10 billion in 1997. However, its share of total ODA nearly halved over the same period, from 19.6% to 10.2%. It remained stable at about 10% in 2002-2005.

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Changes in the overall structure of aid explain some of the declining share. For instance, funds are often channelled through general budget support, making it harder to ensure aid goes towards the environment. Also, “core” environmental aid, covering the likes of conservation, waste management and renewable energy, fell partly because bilateral donors–which provided over 80% of this aid–shifted towards water-related assistance. Aid for projects other than the environment have seen reductions too, as more ODA has been allocated for debt relief, emergencies and other similar non-sector-specific aid.

For water the picture is mixed. Aid for the water sector will likely remain above 40% of total environmental aid, using broad definitions that take account of issues such as access in the Millennium Development Goals and resource management. But a narrower definition shows sector-allocable ODA to water supply and sanitation declining from about 11% of total sector-allocable ODA in 1997 to about 8% in 2006.

See more OECD development statistics on the Creditor Reporting System (CRS) database: www.oecd.org/dac/stats/idsonline.

©OECD Observer No 266 March 2008