More than half of the world’s children who face the dual challenges of high climate risk and poverty live in lower-income countries.
Without urgent action and adequate funding to mitigate the impacts of the climate crisis, these children are at risk of being pushed further into poverty. The World Bank’s International Development Association (IDA) – the biggest source of concessional funding for low-income countries - has a role in addressing the climate funding gap for child-critical social services. To effectively play its part in building children’s climate resilience, IDA21 needs to be bigger and better.
Children’s climate finance needs are huge and growing
The climate crisis is eroding children’s rights, disrupting their daily lives and education and making them more vulnerable to malnutrition and disease outbreaks, with impacts worse for children most affected by inequality and discrimination. Incidents of child labour and child marriage are also on the rise, exposing children to risks of abuse, exploitation and gender-based violence. These distinct vulnerabilities of children necessitate special consideration in climate funding.
Building the resilience of services essential for children’s wellbeing and development is a key strategy for reducing climate risks to children, but it requires adequate and affordable funding. For example, adaptation of the health sector in lower-income countries is estimated to cost a staggering $11 million annually. Already stretched funding for the education sector, which faces a funding gap of $97 billion annually, is being further strained as climate shocks destroy and damage schools and surrounding infrastructure. IDA cannot single-handedly address these finance gaps but there’s room for it to do more.
Focus on health, nutrition and education declining in IDA’s climate finance
IDA delivered nearly two-thirds of the World Bank’s climate funding for health, nutrition and education between 2019 to 2023. However, these services represent a declining share of its climate funding. As shown in the figure below, climate funding to these services peaked in 2020 and has since been declining, despite a steady rise in IDA’s overall climate finance envelope (except in 2023).[1]
Graph showing climate funding through IDA for health, nutrition and education services in $ million.
Whilst it is good that IDA responds to shocks such as the Covid-19 pandemic with increased funding for sectors in need, arresting the decline in climate funding for children’s essential services is imperative. The World Bank’s commitment to raise the target of its annual financing for climate to climate to 45%, including from IDA, provides an opportunity to strengthen this focus. However, meeting multiple targets with limited resources is a huge challenge.
A bigger IDA21 can do more for children’s climate resilience
African Heads of State have called for a $120 billion package for IDA21. From a children’s climate resilience perspective, this level of ambition is key for at least two reasons:
- Additionality: Major shareholders of the World Bank are urging the institution to boost climate action support using existing grants. Countries like the UK now count their contributions to IDA as part of their climate finance. There is a pressing need for increased IDA funding through an expanded resource envelope, which should be additional to broader Official Development Assistance (ODA), rather than reallocating existing funds.
- Adaptation: A bigger IDA21 can contribute to closing the widening adaptation funding gap. According to reporting by the World Bank, IDA has consistently allocated a larger share of its climate funding for adaptation, averaging 57% over these five years. This focus is crucial, given the role of adaptation in reducing children’s vulnerabilities to the climate crisis and the historical underfunding of adaptation efforts.
A bigger IDA21 is thus essential but cannot be achieved without major shareholders stepping up with ambitious grant contributions during the pledging moment in December 2024.
A better IDA21 can maximise the impacts for children
IDA’s potential to protect and promote children’s wellbeing in the face of the devastating climate impacts can be further enhanced in a number of areas:
- Strengthening the policy framework: The focus on improving the resilience of education, health and social delivery systems is an encouraging sign in IDA21’s policy package but needs further bolstering. Better integration of the ‘people’ and ‘climate’ themes is crucial to support the development of project pipelines that explicitly link climate and children’s developmental needs. Initiatives such as Building the Climate Resilience of Children and Communities through the Education Sector (BRACE) provide example of how sectors like education can be harnessed to build climate resilience.
A fit-for-purpose IDA should also explicitly recognise the interlinkages of climate change and inequality in its policy framework, prioritising investments that maximise synergies between emissions and poverty reduction and adopting targets on inequality reduction in IDA countries, most of which are highly vulnerable to the climate crisis.
- Maximising effectiveness: IDA21 should explore its added value in the broader climate funding landscape to complement, rather than compete with, other climate funds. This can be achieved by strengthening partnerships and co-financing agreements that maximise opportunities for effective development cooperation.
IDA’s successful delivery is also dependent on wider Bank processes that need improvement and reform.
- Improving Transparency: The Bank’s climate finance accounting has faced scrutiny due to concerns about transparency and the questionable tagging of numerous projects as 'climate' related, which may have little to do with climate change mitigation or adaptation in low-income countries. Reforms are needed to improve the reporting on climate outcomes. This also includes providing clearer and more transparent reporting on disbursements and disseminating best practices for addressing the unique and significant climate risks faced by children.
- Leaving no one behind: World Bank’s development policy financing which involves borrowing countries undertaking specific conditions in exchange for budget support loans, grants, or guarantees, constitutes an important source of flexible funding for IDA countries. However, it must address risks, such as driving private sector-led energy transitions in low-income countries at the expense of consumers, as reported earlier in 2024, ensuring that its financing leaves no one behind.
A bigger and better IDA is essential, and possible
A robust IDA has an important role in providing the necessary financial support to reduce children’s vulnerability to the climate crisis. By scaling up climate investments for children, strengthening partnerships to enhance complementarity with other climate funds, ensuring transparency and effectiveness in climate finance, and prioritising the reduction of inequality, IDA can drive sustainable development that safeguards children's rights and futures.
Therefore, a well-funded and strategically guided IDA is not just a financial imperative but a moral one. Achieving this is eminently possible if both shareholders and the World Bank leadership step up rather than step back.
[1] Analysis based on the World Bank’s climate finance flyers from 2019 to 2023. The estimation of IDA’s climate contribution to the projects tagged as climate was done using the formula: Adaptation finance from IDA = Project Adaptation funding commitment x (IDA commitment/IDA commitment + IBRD commitment)
