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| − | '''Results-based aid''' is a form of [[Payment by Results]] and generally refers to the linking of [http://en.wikipedia.org/wiki/Official_development_assistance official development assistance] (from bilateral or multilateral development agencies to developing country governments) to verifiable results in the form of outcomes at the national level. For example, a results-based aid agreement might have payments linked to performance against one or more outcome indicators, or the successful implementation of a government program. Possible outcomes might include the number of people with a defined improvement in access to energy.
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| − | ==Definition== | + | = Overview<br/> = |
| − | Results-based aid can be characecterized by the following principles:
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| | + | '''Results-based aid''' is a form of [http://en.wikipedia.org/wiki/Payment_by_Results Payment by Results] and generally refers to the linking of [http://en.wikipedia.org/wiki/Official_development_assistance official development assistance] (from bilateral or multilateral development agencies to developing country governments) to verifiable results in the form of outcomes at the national level. For example, a results-based aid agreement might have payments linked to performance against one or more outcome indicators, or the successful implementation of a government program. Possible outcomes might include the number of people with a defined improvement in access to energy. |
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| | + | Results-based aid is distinct from [[Results-Based_Financing|Results-based financing]] which applies at a level below and will be concerned with outputs (such as electricity connections) rather than outcomes (such as number of households using electricity). |
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| | + | = Definition<br/> = |
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| | + | <u>Results-based aid can be characecterized by the following principles:</u> |
| | #Disbursement of funds is contingent on the delivery of pre-determined results in the form of national-level outcomes. | | #Disbursement of funds is contingent on the delivery of pre-determined results in the form of national-level outcomes. |
| | #There is recipient discretion over how results are achieved. | | #There is recipient discretion over how results are achieved. |
| | #Independent verification acts as the trigger for disbursement. | | #Independent verification acts as the trigger for disbursement. |
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| − | ==Examples==
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| − | Results-based aid is a very new concept in the energy sector, with even less implementation experience than with [[results-based financing]], which applies at a level below. Nevertheless, there is strong and growing interest in results-based aid instruments in two areas: i) bilateral development assistance; ii) under the area of [http://en.wikipedia.org/wiki/Climate_Finance climate finance].
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| − | Examples of results-based aid instruments include: | + | <br/> |
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| | + | = Examples<br/> = |
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| | + | Results-based aid is a very new concept in the energy sector, with even less implementation experience than with [[Results-Based_Financing|Results-based financing]], which applies at a level below. Nevertheless, there is strong and growing interest in results-based aid instruments in two areas: i) bilateral development assistance; ii) under the area of [http://en.wikipedia.org/wiki/Climate_Finance climate finance]. |
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| | + | <u>Examples of results-based aid instruments include:</u> |
| | *Cash-on-Delivery Aid (COD Aid), a modality proposed by the Center for Global Development<ref>Nancy Birdsall and William D. Savedoff. 2010. Cash on Delivery: A New Approach to Foreign Aid. Center for Global Development, Washington DC</ref> whereby donors would pay for development outcomes against (ideally) a single indicator, with minimal involvement in how the target is met; | | *Cash-on-Delivery Aid (COD Aid), a modality proposed by the Center for Global Development<ref>Nancy Birdsall and William D. Savedoff. 2010. Cash on Delivery: A New Approach to Foreign Aid. Center for Global Development, Washington DC</ref> whereby donors would pay for development outcomes against (ideally) a single indicator, with minimal involvement in how the target is met; |
| − | *Certain forms of climate finance, such as payments under the UN program for [http://www.un-redd.org/ Reducing Emissions from Deforestation and Forest Degradation] (REDD+), and those being proposed under [http://www.osloenergyforall2011.no/pop.cfm?FuseAction=Doc&pAction=View&pDocumentId=31145 Energy+]. | + | *[http://www.regjeringen.no/en/dep/ud/campaigns/energy_plus.html?id=672635 Energy+ partnership], which is proposing a coordinated adoption of results-based funding at both the outcome and output level in the delivery of partner programs; |
| | + | *[http://go.worldbank.org/5XN35BS9C0 Program-for-Results] (P4R), a lending instrument launched by the World Bank in 2012, which opens up new possibilities for results-based disbursements to programs in the energy sector; |
| | + | *Certain forms of climate finance, such as payments under the UN program for [http://www.un-redd.org/ Reducing Emissions from Deforestation and Forest Degradation] (REDD+). |
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| | There is some development experience with results-based aid, such as variable or performance-related tranche payments under [http://digitalmedia.worldbank.org/projectsandops/lendingtools.htm#devt Development Policy Loans] or the [http://www.gavialliance.org/support/iss/ Immunization Services Support] program of the GAVI Alliance<ref>Mark Pearson, Martin Johnson, and Robin Ellison. 2010. Review of major Results Based Aid (RBA) and Results Based Financing (RBF) schemes. DFID Human Development Resource Centre, London</ref>, but energy sector experience is very limited. | | There is some development experience with results-based aid, such as variable or performance-related tranche payments under [http://digitalmedia.worldbank.org/projectsandops/lendingtools.htm#devt Development Policy Loans] or the [http://www.gavialliance.org/support/iss/ Immunization Services Support] program of the GAVI Alliance<ref>Mark Pearson, Martin Johnson, and Robin Ellison. 2010. Review of major Results Based Aid (RBA) and Results Based Financing (RBF) schemes. DFID Human Development Resource Centre, London</ref>, but energy sector experience is very limited. |
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| − | ==Limitations==
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| − | Criticisms of results-based aid include the onus on the recipient country government to pre-finance the delivery of outcomes, the lack of donor control over the use of disbursed funds (particularly under the COD Aid approach), the risk of incentivizing the delivery of a single outcome at the expense of others (and the associated risk of perverse outcomes), and the potentially high costs of monitoring and verification. | + | |
| | + | = Limitations<br/> = |
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| | + | Criticisms of results-based aid include the onus on the recipient country government to pre-finance the delivery of outcomes, the lack of donor control over the use of disbursed funds (particularly under the COD Aid approach), the risk of incentivizing the delivery of a single outcome at the expense of others (and the associated risk of perverse outcomes), and a lack of data in some sectors<ref>Stephan Klingebiel. 2012. Results Based Aid – A New Aid Label or Potential for More Impact. Accessible at the [http://www.norrag.org/issues/article/1506/en/results-based-aid--a-new-aid-label-or-potential-for-more-impact.html Network for Policy Research, Review and Advice on Education and Training (NORRAG)], Geneva. </ref>. |
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| | + | = References<br/> = |
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| − | ==References==
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| | <references /> | | <references /> |
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| − | [[Category:Financing,_promotion_schemes_and_subsidies]] | + | [[Category:Financing_and_Funding]] |
Results-based aid is a very new concept in the energy sector, with even less implementation experience than with Results-based financing, which applies at a level below. Nevertheless, there is strong and growing interest in results-based aid instruments in two areas: i) bilateral development assistance; ii) under the area of climate finance.
There is some development experience with results-based aid, such as variable or performance-related tranche payments under Development Policy Loans or the Immunization Services Support program of the GAVI Alliance[2], but energy sector experience is very limited.
Criticisms of results-based aid include the onus on the recipient country government to pre-finance the delivery of outcomes, the lack of donor control over the use of disbursed funds (particularly under the COD Aid approach), the risk of incentivizing the delivery of a single outcome at the expense of others (and the associated risk of perverse outcomes), and a lack of data in some sectors[3].
