Transforming Climate Perils into Economic Advantages for Emerging Nations

In the realm of climate finance, the Jharia Master Plan in India offers a compelling case study, highlighting the complexities and potential solutions for integrating governance-led actions into international climate finance frameworks.

The prevailing discourse often frames developing countries in terms of what they lack, such as capital, technology, and regulatory capacity. However, the Jharia Master Plan illustrates the systems that developing countries are building in response to their own priorities. This plan aims to rehabilitate individuals affected by underground coal fires and land subsidence, with the goal of safe relocation to places like Belgaria.

A major challenge observed is residents’ reluctance to move due to inadequate facilities at relocation sites. This reflects a governance challenge in intertwining climate-related hazard mitigation with social and economic development needs to ensure sustainable outcomes.

Financially, the Indian central government has allocated Rs 5,940 crore under the revised Jharia Master Plan-2 for safe rehabilitation. However, effective use of these resources requires well-coordinated governance mechanisms that monitor implementation, improve infrastructure, and support skill development leading to economic independence of relocated families.

The Jharia Master Plan exemplifies typical challenges in climate finance frameworks integrating governance-led actions. Effective solutions require holistic governance approaches that coordinate multi-sectoral actors, emphasise socio-economic reintegration, and apply flexible, outcome-oriented climate finance structures.

Potential solutions include integrated planning and multi-stakeholder governance, community-centric approaches, targeted climate finance mechanisms, and monitoring and adaptive management.

Elsewhere, countries such as South Africa, Colombia, and Mexico have introduced carbon pricing and environmental fiscal reforms that are now embedded within national revenue systems. In Rwanda, a green bond issued by Prime Energy Plc in 2023 raised £5.5m on the Rwanda Stock Exchange, demonstrating that even relatively shallow capital markets can mobilize long-term finance for climate-aligned infrastructure.

In Kenya, over 326,000 farmers supported through public initiatives have adopted improved agricultural practices, leading to an average 41% increase in yields across key value chains, according to the World Bank's Climate-Smart Agriculture Project. These examples underscore the potential for domestic policy and public investment strategies to generate resilience outcomes in low- and middle-income countries.

However, disbursement of climate finance is often constrained by fragmented donor governance and rigid project templates that fail to accommodate cross-sector strategies. To address this, climate finance models that are flexible and multi-sectoral, emphasising accountability, community engagement, and long-term sustainability, are needed.

Recognising and scaling such approaches will require a shift in how climate finance is designed and evaluated. Across many low- and middle-income countries, resilience outcomes are being generated through domestic policy and public investment strategies that originate within development planning rather than environmental programming.

Without recognised carbon accounting, the Jharia intervention cannot access carbon markets or outcome-based finance. Forms of institutional innovation remain largely unrecognised within mainstream climate finance frameworks.

In conclusion, the Jharia Master Plan serves as a testament to the potential of public administration, land governance, and institutional reform in achieving emissions reduction and resilience. As we navigate the complexities of climate finance, it is crucial to embrace holistic, flexible, and community-centric approaches to ensure sustainable and equitable outcomes.

In the context of climate change, effectively utilizing resources for rehabilitation requires well-coordinated governance mechanisms that monitor implementation, improve infrastructure, and support skill development.
The Jharia Master Plan demonstrates that developing countries can build systems in response to their own priorities, such as addressing underground coal fires and land subsidence.
To address the challenges in climate finance frameworks, holistic governance approaches that integrate multi-sectoral actors, socio-economic reintegration, and flexible, outcome-oriented structures are essential.
Innovative climate finance mechanisms like integrated planning, multi-stakeholder governance, and community-centric approaches are vital for addressing the complexities in climate finance.
Climate finance models that prioritize accountability, community engagement, and long-term sustainability are needed to overcome the constraints posed by fragmented donor governance and rigid project templates.
Actions originating within development planning, rather than environmental programming, can generate resilience outcomes in low- and middle-income countries as observed in Kenya with the support of public initiatives and agricultural practices.
Incorporating carbon pricing, environmental fiscal reforms, and green bonds into national revenue systems can help mobilize long-term finance for climate-aligned infrastructure, as seen in countries like South Africa, Colombia, Mexico, and Rwanda.
Addressing climate-related risks in areas like finance, business, and the environment requires insights from research in climate-change, environmental science, and AI.
Sustainable investments in areas like climate finance can contribute to emission reduction and resilience, as demonstrated by the Jharia Master Plan.
The successful implementation of the Jharia Master Plan shows the potential of public administration, land governance, and institutional reform in achieving sustainable and equitable outcomes in the face of environmental challenges.