Subnational urban development/planning, subnational ﬁnancing | Financing for Sustainable Development Office

The Addis Ababa Action Agenda acknowledges that in some countries expenditures and investments in sustainable development are being devolved to the subnational level, and that these institutions may lack the capacity to effectively implement the Addis Agenda and, by extension, the 2030 Agenda.

The Addis Agenda specifically:

Encourages the participation of local communities in decisions affecting their communities, such as in improving drinking water and sanitation management
Commits Governments to support cities and local authorities of developing countries, particularly in LDCs and SIDS, in implementing resilient and environmentally sound infrastructure and sustainable and resilient buildings using local materials
Commits to increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, and resilience to disasters by 2020
Commits Members to develop and implement holistic disaster risk management at all levels in line with the Sendai Framework
Commits States to support national and local capacity for prevention, adaptation and mitigation of external shocks and risk management
Commits States to scaling up international cooperation to strengthen capacities of municipalities and other local authorities
Commits to strive to support local governments in their efforts, as appropriate, to mobilize revenues, strengthen debt management, and strengthen municipal bond markets
Commits to promote lending from financial institutions and development banks, along with risk mitigation mechanisms, such as the MIGA, while managing currency risk
Commits to enhance inclusive and sustainable urbanization and strengthen economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning, within the context of national sustainable development strategies

Latest developments

Rising economic losses due to disasters and the subsequent cost of recovery and reconstruction can deplete public financing for SDG investment. To protect public investments and strengthen stability, disaster risk considerations should be systematically embedded into domestic public financing, including expenditure and strategic procurement planning. In most countries, expenditure for disaster risk reduction in public budgets is marginal and inconsistent. Domestic public finance, including dedicated budget lines for disaster risk reduction within sectoral budgets, along with disaster-risk-informed public procurement, can be an effective entry point for mainstreaming disaster risk reduction across public investment.

Several countries have developed hazard maps, risk assessments and risk profiles at national, subnational and local levels which can ensure a context-specific, disaster-risk-informed approach to public expenditure and procurement. With risk-sensitive budget reviews, countries can identify gaps in public budgetary allocation for disaster risk reduction across sectors. Some countries have established national funds for disaster risk reduction and prevention. These provide a mechanism for Governments to co-finance investments in risk reduction with the private sector at national and local levels. Others have applied disaster risk screening tools to integrate risk reduction in public investment planning, expenditure and procurement. However, no single instrument is optimal for all risk scenarios. Disaster risk reduction financing strategies require a risk-layered approach. In the extensive risk layer (high probability and low expected loss), investment for risk reduction and prevention is the most cost-efficient. In the intensive risk layer (low probability and high expected loss), risk reduction is often financially prohibitive, especially in LDCs and SIDS. Where risk must be retained, risk transfer schemes, such as insurance, and catastrophe bonds can be more cost-efficient. However, it is critical to integrate measures to incentivize risk reduction across these tools.