Thailand moves closer to climate change fiscal framework

03 Jun 2012

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BANGKOK - Thailand moved one step close to having a comprehensive policy to address climate change financing.

At a June 1 workshop in Bangkok led by the Ministry of Finance’s Fiscal Policy Office, agencies examined the “Climate Public Expenditures and Institutional Review” or CPEIR.  The review is the first building block toward a comprehensive fiscal policies and budgetary process.

“This workshop will lead to understanding on climate change costs as well as fruitful exchanges among key agencies to improve on the CPEIR recommendations, which will be crucial for Thailand to implement measures to respond to climate change,” said Ms. Pailin Srisupavinij, Director of the Fiscal Policy Office.

The review marks the very first attempt to classify climate expenditures in Thailand. Using a three-year period of the budget data (2009-2011), it indicated that Thailand’s climate budget is roughly 0.5% of GDP and 2.8% of the total government budget.

The findings also highlight the role of the private sector, in a middle-income country (MIC). It was suggested a commission should study carbon base-line taxable activities before introducing a carbon tax or subsidy in support of the private sector’s activities for climate change mitigation. With clear incentives and comprehensive policy frameworks, the private sector would become more agreeable in pursuing climate change mitigation actions.

“[The FPO is] currently drafting a bill on Environmental Fiscal Measures in collaboration with other agencies on setting up the Thailand Carbon Fund to be a mechanism to encourage the private sector’s role in combating climate change,” said Srisupavinij, in during her remarks at the workshop.

Financing adaptation actions are more challenging.  As an MIC, Thailand has limited opportunities to benefit from international climate finance. The review proposed that Thailand look into the possibility of setting up an extra-budgetary channel  in the form of ‘National Adaptation Facility’ to support adaptation actions, especially at the local level, where climate impacts will be have the most impact.

The recommendations proposed by this CPEIR exercise will forward by the Working Committee on Climate Fiscal Framework in Thailand, chaired by the Fiscal Policy Office along with the NESDB, the Bureau of Budget, and the Office of Natural Resources and Environmental Policy and Planning.

These recommendations will be instrumental to the implementation of the forthcoming Climate Change Master Plan, expected to be endorsed by the Cabinet in August 2012.The review is conducted by three international experts from the Overseas Development Institute, and three national experts from national universities and research institutes. It is a part of the Climate Fiscal Framework Initiative, facilitated by UNDP in partnership with government counterparts, which began in July 2011.

Thailand is one among the 5 trail-blazing countries in conducting the CPEIR exercise, with the support of UNDP’s Capacity Development for Development Effectiveness Facility for Asia Pacific.