Determinants and effects of climate finance in the transport sector

Abstract

We examine the determinants of climate-related development finance flows to the transportation sector and their relationship with CO2 emission levels. The mitigation fund allocation is particularly correlated with the demographic characteristics of recipient countries; however, the correlation with per capita income and emissions seems to be weak. In contrast, equity considerations appear to be the main determinants of adaptation fund allocation. Finally, we find some evidence of a significant negative relationship between mitigation investments and emissions per capita and while the overall effect is modest, it tends to be most marked in countries with the highest per capita emissions. Thus, the fact that countries with the highest emissions per capita are not receiving relatively more investments may be hampering the effectiveness of climate finance.