Determining Incremental Costs in GEF Projects

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Determining Incremental Costs in GEF Projects

• Sub-Regional Workshop for GEF Focal Points
• in the Pacific SIDS
• Auckland, New Zealand, 18-19 September 2008

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Presentation outline

• The GEF Instrument
• Results from evaluation of GEF Office of
  Evaluation
• Council Request
• Proposed Operational Guidelines

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GEF Instrument Incremental Cost

• The GEF Instrument states that the GEF shall
  operate for the purpose of providing new and
  additional grant and concessional funding to meet
  the agreed incremental costs of measures to
  achieve agreed global environmental benefits in
  the GEF focal areas.

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GEF Project Structure
Type of Costs
Source of Funding
Outcomes directly creating GEB
GEF and non-GEF
Incremental costs
Increment related to GEB
Outcomes creating both, GEB and national
benefits
Negotiation
Business-as -Usual related to National Benefits
Outcomes directly creating National Benefits
Costs associated with the Business-as-Usual
Non-GEF
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GEF Evaluation Office
GEF/ME/C.30/2, Evaluation of Incremental Cost
Assessment (December 2006) - Results

• The principle of incremental funding is alive and
  well in GEF projects
• There remains weak understanding and much
  confusion about incremental cost concepts and
  procedures
• Most project documents register low quality and
  compliance when measured against GEF requirements
  for incremental cost assessment and reporting
• As currently applied, incremental cost assessment
  and reporting do not add value to project design,
  documentation and implementation

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Council Request

• Council requested to address these issues, moving
  towards a more pragmatic, simplified, strategic
  and cost-effective approach to determine the
  incremental costs of GEF projects.

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Proposed Approach

• Consists of five steps
• Simplifies the process of negotiating incremental
  costs
• Clarifies definitions
• Links incremental cost analysis to results-based
  management
• GEF project cycle

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Proposed Operational Guidelines

• STEP 1 Determination of the environmental
  problem, threat, or barrier, and the
  business-as-usual scenario (or What would
  happen without the GEF?)
• STEP 2 Identification of the global
  environmental benefits and fit with GEF focal
  area strategic objectives and programs
• STEP 3 Provision of the incremental reasoning
  and GEFs role,
• STEP 4 Development of the result framework of
  the intervention
• STEP 5 Negotiation of the role of co-financing

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