Comparing South Korea and Germany’s official development assistance projects in climate protection in Cambodia, Lao PDR, Myanmar and Vietnam

Climate change and its consequences are probably among the most urgent problems the international community has to face in the twenty-first century. While industrialized countries are responsible for most of the greenhouse gas (GHG) emissions that cause global warming, many low-income countries and least-developed countries (LDCs) are or will be affected disproportionately by the consequences of global warming (IPCC, 2014; Millner and Dietz, 2015). Climate change can further aggravate the “existing vulnerabilities of developing countries and threaten the achievement of the Millennium Development Goals (MDGs)” (Ayers and Huq, 2009). Therefore, projects on climate change, including both adaptation and mitigation, are an important part of official development assistance (ODA), with possibly growing future importance.

Since the late 1980s, climate policy has become a topic on the political agenda, and the UN Conference on Environment and Development in Rio de Janeiro 1992 discussed both environmental and development policy while emphasizing the importance of international climate policy. The conference also marked the start of donor countries’ use of development funds for climate policy projects (OECD/DAC, 2002), which was further encouraged by the 1997 Kyoto Protocol’s Clean Development Mechanism. This mechanism allows industrialized countries to acquire certified emission reductions by carrying out projects aimed at reducing GHG emissions in developing countries, providing incentives for donor countries to redirect aid resources into climate protection (Michaelowa and Michaelowa, 2007). Responding to these incentives, donors have started to finance climate-related ODA projects, including both adaptation and mitigation projects.

This article aims to carry out a comparative policy analysis for Germany’s and South Korea’s climate-related ODA projects from the Organization for Economic Cooperation and Development (OECD)’s DAC External Development Finance Statistics project database for the year 2013, the only year for which comparable project data are readily available, in Cambodia, Laos, Myanmar and Vietnam, four highly vulnerable Southeast Asian countries. A comparison between a “traditional” Western and an “emerging” Asian donor’s behavior in climate change-related ODA might provide interesting insights and has, to the best of our knowledge, never been carried out in the previous literature in the field. While Korea is a relatively new actor in the field of ODA and has been providing aid since 1991, Germany has been active since 1961, when the German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, BMZ) was founded. Similarly, Germany has provided aid in the field of climate protection since 1993, while Korea only started to do so after 2000.

The article’s first objective is to determine whether Germany and Korea provide aid based on the recipients’ need and merit or on their own self-interest, following and adapting the corresponding development economic literature on overall ODA allocation (Alesina and Dollar, 2000; White and McGillivray, 1995; Berthelemy, 2006; Dollar and Levin, 2006; Sawada et al., 2008; Hoeffler and Outram, 2011). This literature on ODA allocation has only analyzed overall ODA of donor countries. However, we focus exclusively on climate-related aid and provide an exploratory analysis of its determinants, specifically, whether climate-related ODA in those four countries is allocated according to need, merit or donors’ self-interest. To measure need, we propose to use Kreft et al.’s (2015) Global Climate Risk Index; to measure merit, we use Notre Dame University’s “Global Adaptation Index” readiness sub-index’; and to measure donors’ self-interest, we use bilateral trade volumes in environmental goods. To the best of our knowledge, this analysis is the first for donors’ motivations to provide climate-related ODA. The article’s second objective is to compare and analyze the climate-related policies and projects of both donor countries in the four countries under consideration. Our findings using the adapted need–merit–self-interest framework suggest that both donors consider vulnerability and adaptation readiness of the four countries, but also their economic self-interest. Need and merit seem to be more important for Korean ODA allocation. In addition, Korean ODA is more fragmented than German aid: Korea provides ODA in a larger number of sectors, and the average size of Korean projects is smaller (Table I and II).

Our approach and results have limitations. First of all, by basing our analysis in the need–merit–self-interest framework, we deliberately ignore a number of other factors that might matter for climate-related ODA allocation, such as the human rights situation in or absorptive capacity of receiving countries, or donors’ long-term geostrategic interests. Second, we do not aim to carry out an analysis of the complex relationships between climate science and climate policy (Keohane and Victor, 2011; Hoppe et al., 2013). Third, we do not aim to analyze the effectiveness of climate change policies by government projects of donor countries, or carry out an evaluation of the projects analyzed (Pindyck, 2013; The Economist, 2014; Ellis and Ockenden, 2013). Those important questions are beyond the scope of this analysis.

Finally, we limited our analysis to four countries in Southeast Asia for the following reasons. Southeast Asia is considered one of the most vulnerable regions to climate change in the world. It is a region where the “impacts of climate change are expected to be the greatest but where the adaptive capacity is the lowest” (Francisco, 2008). As this capacity primarily depends on a country’s level of socioeconomic development, developing countries have weaker adaptive capacity. Among the Southeast Asian nations, Cambodia, Lao PDR and Myanmar (all LDCs) are threatened because their economies heavily depend on agriculture and fishing. Meanwhile, Ho Chi Minh City and Hai Phong in Vietnam and Yangon in Myanmar are among the top 10 cities at risk of coastal flooding in 2070 (Fuchs, 2010), and the Mekong Delta is given an “extreme status” in terms of vulnerability hotspots with regard to population that can be potentially displaced. It “will be increasingly inundated with saline water” and “by 2030, rising sea levels in the Delta-where four million people live in poverty-would expose 45 per cent of the land to extreme salinization and crop damage” (UN-Vietnam 2012).

Due to the combination of climate change sensitivity, vulnerability and weak adaptive capacity of these countries, climate-related aid should be focused here. In fact, the 2006 Declaration on Integrating Climate Change into Development Co-operation as agreed upon by the OECD Development Co-operation Ministers and Heads of Agencies and OECD Environment states that regions which are the “most at risk to the impacts of climate change need special attention”, and that countries such as the “Least Developed Countries, Small Island Developing States and African states […] are particularly vulnerable and need special attention” (OECD, 2006, 2009). With Cambodia, Lao PDR and Myanmar as LDCs in Southeast Asia and Vietnam’s high vulnerability because of its location, these four countries are a natural choice for a region where the OECD’s commitment can be examined.

The remainder of this paper is organized as follows: Section 2 provides a brief literature review. Section 3 provides an overview of institutions and actors in Korean and German ODA and describes both countries’ activities and policies on climate-related ODA. Section 4 consists of a comparison of recent projects and an analysis using the abovementioned adapted need–merit–self-interest framework. Finally, Section 5 concludes.

This literature review first gives a brief overview of the literature on the determinants of overall ODA allocation before it turns to an analysis of Korea and Germany.

Since the 1970s, a considerable literature in development economic research has analyzed the determinants of donors’ overall aid allocation. Need, merit and self-interest of donors have been named as three possible motives behind aid allocation (Hoeffler and Outram, 2011). Newer results show that not only altruistic motives (i.e. need and merit) but also geostrategic and commercial interests of donor countries (i.e. self-interest) matter. Alesina and Dollar (2000) were the first to analyze the relationship between voting behavior in the United Nations (UN) general assembly as a measure of geostrategic self-interest and allocation of aid and found that countries who vote in line with donors receive more aid. White and McGillivray (1995), Berthelemy (2006) and Dollar and Levin (2006) provide surveys of the earlier literature and also concluded that donors’ self-interest plays a more important role than altruistic motives. Sawada et al. (2008) found that merit does not affect aid allocation. However, Hoeffler and Outram (2011) found that the five most important donor countries (France, Germany, Japan, the UK and the USA) consider recipient need as more important than donors’ self-interest for their allocation of aid.

In the next paragraph, we briefly summarize the existing literature analyzing Korea’s overall ODA allocation. A once recipient-turned-donor country, Korea started allocating its aid later than others in 1991. It is considered an “emerging” and “minor donor” whose aid is characterized as “fragmented” due to its small volume and many recipient countries (Oh, 2014). The pattern of its aid allocation is considered to have a close resemblance with Japan’s in the late 1980s. Both share a similarity in a high proportion of bilateral loans, focus on the Asian region, more aid to middle-income countries (MICs) and an emphasis on economic infrastructure (Kang et al., 2011). Interestingly, aid of both countries is considered autobiographical, reflecting their rags-to-riches experiences and portraying a “near-universal applicability” particularly to developing countries (Tonami and Muller, 2014). This is a unique feature that sets them apart from Western donors. Furthermore, Korea’s aid is observed to have a dual character: providing aid based on self-interest with MICs and based on the needs of LDCs (Kim and Oh, 2012). In Southeast Asia, for example, Korea provided most aid to Vietnam, which is its ninth largest trading partner, but provided the least aid to Cambodia, Lao PDR and Myanmar, all LDCs, in 2011 (Park, 2012). As a new member of the donor countries, however, it hopes to learn from the old ones. Among the EU members, collaboration with Germany is considered to be “the oldest (since 2006) and the most advanced, and covers a wide range of areas, including […] regional development and environment” (Park, 2014). It aims to increase its ODA volume further and aspires to become a major figure in “green” development by acting as a bridge between developed and developing countries.

Finally, we also briefly summarize the existing literature analyzing Germany’s overall ODA allocation. Despite being one of the most important donors, few studies focus on the country’s behavior in aid allocation. Faust and Ziaja (2011) discuss motivations for Germany’s aid allocation. In addition to the “development-oriented” (as opposed to need-oriented) focus of Germany’s development cooperation, the concept of Germany as a civilian power and a resulting preference for “poor but relatively democratic countries”, they also discuss economic and geostrategic interests, i.e. selfish motives behind German aid. For economic interests, i.e. trade promotion, they note that “German aid in prior periods went disproportionately to middle-income countries” (Faust and Ziaja, 2011). They also use the fact that the German Government published official lists of partner countries in development cooperation in 2000, 2008 and 2011 to analyze determinants of partner country selection and the amount of aid between 1992 and 2007, and find that poverty (need) and level of democracy (merit) have a strong impact on both the probability of being selected and the amount of aid received, but that a country’s level of poverty only matters for relatively high-income countries.

Dreher et al. (2015) analyzed the allocation of German aid between 1973 and 2010. Somewhat in contrast to the findings of Faust and Ziaja (2011), they found that geostrategic motives, measured as UN security council membership, and commercial motives, measured as the volume of German exports, matter for the allocation of German aid.

Nunnenkamp and Öhler (2011) analyzed the allocation of German aid between 2005 and 2007, focusing on differences between ODA provided by different ministries and aid provided by nongovernmental organizations (NGOs). They found that there is considerable heterogeneity in the determinants of aid allocation: ODA by the BMZ shows a high level of need orientation compared to other ministries, and a similar pattern emerges for merit. For financial cooperation (grants), they found evidence for self-interest. To summarize the literature on the determinants of German aid allocation, one could conclude that the country is a “moderately egoistic” donor, in line with Berthelemy’s (2006) finding, who also rated Germany as moderately egoistic.

The framework used in previous studies needs to be adapted for our analysis. Need, merit and self-interest should be operationalized differently. We propose that need be measured in terms of a country’s vulnerability to climate change, instead of GDP per capita; merit in terms of a country’s level of climate readiness; and self-interest as the volume of trade in environmental goods. We describe this approach in more detail in Section 4.4.

This section briefly describes both Korea’s and Germany’s policies and activities on climate change in general.

Climate protection is a global public good (Klingenbiel, 2013. In theory, all nations have the responsibility to protect the planet. In practice, however, not all have a strong capacity or political will to do so. Nations have differing mitigation and adaptation capacities. The OECD countries which have the socioeconomic and technological resources took the initiative to act on it. One outcome is their Declaration on Integrating Climate Change into Development Co-operation (OECD, 2006) as adopted by the Development and Environment Ministers of OECD Member Countries and the Integrating Climate Change Adaptation into Development Co-operation Policy Guideline (OECD, 2009) as agreed between the OECD’s Environmental Policy Committee (EPOC) and the Development Assistance Committee (DAC). Both documents prioritize LDCs and small island developing countries (SIDCs), the most vulnerable to the adverse effects of climate change. OECD members aim to “[…] integrate climate change adaptation in development planning and assistance, both within their own governments and in activities undertaken with partner countries” (OECD, 2006). As a result, climate change-related aid soared a year after. Total bilateral climate change-related aid reached US$21.2bn per year in 2010-2011 and represented 16 per cent of total ODA. Of these, US$12.3bn (58 per cent) was allocated for mitigation purposes, US$5.1bn (24 per cent) for adaptation purposes and US$3.8bn (18 per cent) for both (OECD/DAC, 2013).

Just as other donors’ aid, Korea’s ODA is composed of bilateral and multilateral assistance. Bilateral aid consists of grants and loans. The Korea International Cooperation Agency (KOICA) manages grant aid and technical cooperation under the Ministry of Foreign Affairs and Trade (MOFAT). Loans are handled by the Economic Development Cooperation Fund through the Export-Import Bank of Korea (Korea EXIM Bank). Multilateral aid in terms of contributions to international organizations is provided by various government agencies under the supervision of MOFAT. The Ministry of Health and Welfare; the Ministry of Science and Technology; the Ministry of Food, Agriculture, Forestry and Fisheries; and the Ministry of Environment are agencies involved in such aid. Multilateral aid in terms of subscriptions to international institutions is administered by the Ministry of Strategy and Finance (KOICA, 2011).

An active commitment to providing climate change-related aid for Korea started as a by-product of the government’s decision to join the “greening of ODA” trend among donor countries. Korea has provided aid for the environment since the first half of the 2000s. It contributed US$780,000 in 2003. However, it was during President Myung-bak Lee’s administration that it became aggressively committed to environment and climate change issues, such that in 2010, Korea provided a total sum of US$130 million.

In 2008, at the G8 Summit Leaders’ Meeting of Major Economies on Energy Security and Climate Change in Tokyo, then President Lee launched the East Asia Climate Partnership (EACP), an international cooperation initiative which aimed to support developing countries of Asia and the Pacific deal with climate change. Shortly afterwards, he announced the “Low Carbon, Green Growth” policy that aims to substitute unsustainable “brown” growth (Ikenberry and Mo, 2013). In early 2009, the government launched the “Green New Deal” to promote economic growth while tackling the climate change issue. In the same year, it established the Presidential Commission on Green Growth and announced the National Green Growth Strategy and the five-year plan for Green Growth (2009-2013). Within this framework, Korea aimed to be the seventh largest green economic power by 2020 and the fifth by 2050. The Five-Year Plan aimed to further expand Korea’s ODA from 11 to 30 per cent in 2020 with 50 billion won for Green ODA. In December 2009, the National Assembly passed the “Framework Act on Low Carbon Green Growth”, and it took effect in April 2010. It has been considered the flagship national climate change legislation of the country (OECD, 2012).

The government’s green growth vision includes three strategies with ten policy directions. They include:

1. mitigating climate change and promoting energy independence;

2. creating new engines of economic growth; and

3. improving the quality of life and enhancing Korea’s international standing.

In the third policy, Korea aims to “provide ODA to developing countries for green growth and climate change adaptation” as one of its policy directions. The EACP is one mechanism whereby Korea was able to increase its “green ODA”, particularly in Asia.

A US$200m fund was allocated to EACP for a five-year period, from 2008 until 2012. In 2008, EACP was managed by the Korea Energy Management Corporation, which utilized US$20m on 17 projects. The following year, the responsibility was given to KOICA.

Unlike its Green ODA, which focuses on all developing countries in reforestation and wastewater management sectors, the EACP targeted Asian countries and focused specifically on water management and renewable energy. Moreover, it wanted to support those countries in sustainable development by promoting its green growth paradigm. It believed that Asia needs to be focused on primarily due to its climate change vulnerability. Most developing Asian countries lack infrastructure, the capacity and the system/policies to reduce their GHG emissions, as their economies are growing rapidly due to industrialization. At the same time, they also lack forecasting capability to adapt to climate change. As such, the EACP assisted them by promoting renewable/alternative energy projects, strengthening their pollution/disaster forecasting capability and expanding their water resources. After 2012, the EACP aimed to establish a follow-up plan for the sustainability of climate change-related ODA.

Among the four countries, only Cambodia and Vietnam were provided with bilateral projects under EACP. A hybrid power system (2009-2012) was established in Cambodia for supplying electricity to rural areas using solar energy. Meanwhile, projects in Vietnam include the construction of water supply systems (2009-2012) to provide freshwater to local residents, a feasibility study for a bus rapid transit system (2009-2012) to build an advanced public transportation system and an electronic manifest system for the integrated management of hazardous waste (2009-2013) to improve environmental quality. The EACP planned to create measures to follow-up these projects and to ensure the sustainability of its future projects.

In total, from 2004 to 2013, Korea provided about US$79m to Cambodia, about US$60m to Vietnam, about US$3m to Lao PDR and about US$1m to Myanmar.

The BMZ was founded in 1961, giving the field of development cooperation a relatively strong position in German politics, although this strength depends on a number of other factors, such as interests of other ministries or advocacy groups (Klingenbiel, 2013)[¹].

Germany is one of the leading international donors: in 2011, the country provided US$14.5bn in development aid. This amount corresponds to 0.40 per cent of German GDP, above the average of 0.31 per cent among DAC members, but below the EU average of 0.45 per cent (OECD/DAC, 2012). However, the provision of German development cooperation was relatively fragmented until 2011 and provided by a number of different institutions, leading to a high amount of resources being spent on coordination of activities (OECD/DAC, 2010a). A major reform in 2011 led to the creation of the Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society for International Cooperation, GIZ) after a merger of Deutsche Gesellschaft für Technische Zusammenarbeit (German Technical Cooperation, GTZ), Internationale Weiterbildung und Entwicklung (Capacity Building International, InWEnt) and Deutscher Entwicklungsdienst (German Development Service, DED). The DIZ is now the only public organization providing technical cooperation with developing countries. In addition, the Kreditanstalt für Wiederaufbau (Reconstruction Credit Institute, KfW) provides financial cooperation on behalf of the Federal Ministry[²].

Similarly to other donors, Germany has also aimed to increase efficiency by focusing on fewer partner countries (50 at the moment) and sectors of priority (18 at the moment) (BMZ, 2013). In addition to these 50 partner countries, it cooperates with a further 29 countries in thematic and regional projects, such as climate change or the prevention of deforestation. German development policy uses the following criteria for decision-making about aid allocation: level of poverty; possibility to protect public goods, such as climate or health; existence of development-friendly policies of the government; value added that Germany could provide compared to other donors; and the existence of historical and/or political ties (BMZ, 2013).

Germany is one of the worldwide leaders on renewable energy and climate change policies and has well-developed capacities in the field (Weidner and Mez, 2008). Since 1993, the Federal Ministry’s “Program on Climate Protection for Developing Countries” (run by GIZ) aims at supporting developing countries to contribute in international climate agreements. The GIZ supports selected partner countries in strategy development, action plans and climate-related monitoring systems. Environmental and climate protection is one of the two core areas of Germany’s regional development cooperation in Asia. As many challenges in the area of climate protection are transnational, this is a well-suited regional cooperation focus (BMZ, 2011).

In climate adaptation, capacity building is one focus of Germany’s development aid, and there are cooperation projects of the BMZ in national adaptation plans and low-emission development strategies. The country has pledged about 2 billion euro for climate finance in 2013, making it one of the biggest donors in this area. In multilateral cooperation, Germany is one of the biggest investors in both climate investment funds and global environmental facility and has pledged 750 million euro for the Green Climate Fund (GCF) (BMZ, 2014). The Climate Finance Readiness Program of the BMZ is a capacity-building project to enable developing countries to receive international funds for climate projects, especially from the GCF. It supports countries in the fields of institutional support, strategic advice, national GCF investment plans and related projects, in-country tracking systems for climate monitoring and global exchange on climate finance and GCF readiness. In climate adaptation, the country is the biggest donor in two multilateral funds, the Least Developed Countries Fund, where it provided US$220m out of a total of US$765m, and the Special Climate Change Fund, where it provided US$160m out of a total of US$368m (BMU and BMZ, 2013).

This section gives an overview of general trends in climate-related ODA from the OECD’s DAC statistics before it analyzes Korea’s and Germany’s projects in the four countries under consideration.

From 2010-2012, total mitigation aid was US$16.1bn, while bilateral adaptation aid was US$9.3bn per year. A major part of the mitigation aid went to MICs, and 58 per cent of it consisted of concessional loans, while adaptation aid mostly went to LDCs and SIDCs, where 69 per cent consisted of grants (OECD, 2014a).

In 2013, total climate-related finance aid amounted to US$37.5bn, where 61 per cent (23.0 billion) was for mitigation purposes, 26 per cent (9.6 billion) for adaptation purposes and 13 per cent (4.8 billion) was for both. The total bilateral commitment was US$23.2bn, where 51 per cent (11.9 billion) was for mitigation, 30 per cent (6.9 billion) for adaptation and 19 per cent (4.4 billion) was for both purposes. MICs received 55 per cent for adaptation and 80 per cent for mitigation, while LDCs received 45 per cent for adaptation and 20 per cent for mitigation. In terms of sectors, transport and storage, energy generation and supply, agriculture, forestry, fishing and rural development, general environmental protection and water and sanitation were given priorities. Among the four Southeast Asian countries examined in this study, Vietnam received the most aid (US$1,266,826bn), followed by Myanmar (US$466,694m), Cambodia (US$180,201m) and Lao PDR (US$88,595m) (OECD/DAC, 2014).

It is interesting that most climate change mitigation and adaptation aid went to MICs, such as Vietnam. From 2010 to 2013, it was one of the top 10 recipients of adaptation-related aid (OECD/DAC, 2014). Among the four Southeast Asian countries discussed here, Germany provided most climate change aid to Vietnam (US$209,594m) and Korea the most to Cambodia (US$47,377m) and Vietnam (US$24,463m) (OECD/DAC, 2014). This reflects the general climate change ODA trend which targets MICs not just for mitigation but also adaptation objectives, but it remains to be seen if this trend continues in the future. Meanwhile, the DAC stresses that mitigation is needed in the growing economies of Asian countries, where their GHG emissions must be particularly given weight. Also, with the concessional loans provided, it believes that the private sector can be encouraged to help deal with such problems (OECD/DAC, 2014). Moreover, MICs have the capacity to absorb ODA because of their government structures (Michaelowa and Michaelowa, 2007). However, it is also argued that the reason behind focusing on mitigation is that “it ensures quick disbursements and relatively simple measures of success” and that:

Korea provided US$47.378m to Cambodia, where almost 99 per cent was allocated to adaptation purposes; US$2.742m to Lao PDR, where 99 per cent was allocated to adaptation; and US$24.780m to Myanmar and US$24.463m to Vietnam, for both mitigation and adaptation purposes. There were 48 projects in total, where 14, 10, 9 and 15 went to Cambodia, Lao PDR, Myanmar and Vietnam, respectively. Korea focused on various sectors. Interestingly, however, more than on climate change, it concentrated on providing basic human needs like food (such as food crop production, agricultural development), water supply (such as basic drinking water supply and basic sanitation, water supply system), education (such as education facilities and training, higher education) and waste management/disposal. Among these, water management and wastewater disposal along with pollution management are Korea’s areas of expertise, and they have become important components of its ODA.

Germany provided a total of US$6.198m to Cambodia, US$11.020m to Lao PDR, US$2.734m to Myanmar and US$209.595m to Vietnam. There were 24 projects in total, where 5, 2, 7 and 10 went to Cambodia, Lao PDR, Myanmar and Vietnam, respectively. Sectors in order of importance include rural development, agricultural development, biodiversity, environmental policy and administration management, forestry development and power generation/renewable sources.

Cambodia, Lao PDR and Vietnam are all among Germany’s 50 partner countries in development cooperation, and Myanmar is among the countries with regional or thematic cooperation. The BMZ’s emphases for development cooperation in the four countries are as follows:

1. in Cambodia, they are rural development and the development of a health care system;

2. in Lao PDR, rural development and sustainable economic development;

3. in Myanmar, vocational education, banks and SMEs and the development of private business; and

4. in Vietnam, vocational education, environmental and resource protection and energy.

The fact that explicit climate protection is not among them should be kept in mind for the following analysis, which shows that a significant number of them (5) belong to the broader field of “energy” (including biomass, electrical transmission/distribution and power generation/renewable sources), where Germany has considerable expertise (Beveridge and Kern, 2013), also because of its decision to phase-out atomic energy. The link to climate protection here is quite clear: the development of renewable energies, such as biomass or wind parks, reduces GHG emissions. The same argument holds true for efficient energy use.

Even more projects, however, could be summarized under the broader field of “forestry, rural, and agricultural development”, with a total of 11 projects. This might be due to the fact that three out of the four countries analyzed in this paper are LDCs, with only Vietnam recently becoming a MIC, although still one with high poverty rates among ethnic minorities (Berliner et al., 2013) and almost half of its workforce employed in agriculture (McCaig and Pavcnik, 2013). Consequently, the focus in the LDCs is more on projects such as building rural infrastructure, while Vietnam’s growing energy need as the country develops also calls for cooperation in this field. Forestry development (and especially forest protection or reforestation), again, has a direct link to climate protection, as forests absorb carbon dioxide (Canadell and Raupach, 2008). However, for some of the projects in rural and agricultural development that are labeled as climate mitigation or adaptation projects, the link is actually less obvious. For example, the Rural Infrastructure Programme Phase III in Cambodia, carried out by the KfW, consists of building roads and markets in rural areas to improve the population’s access to markets and central places[³]. It is unclear how this can contribute to climate adaptation.

Finally, it should also be kept in mind that projects in the four countries under consideration here only constitute about 5 per cent of Germany’s overall climate-related ODA and are therefore not a complete picture of the country’s activities.

In terms of climate-related ODA spending in 2013 in the four countries, Korea spent a total of 99.363 Mio. USD, while Germany spent a total of 229.547 Mio. USD. Most Korean aid went to Cambodia (US$47.378m in 14 projects), followed by Myanmar (US$24.780m in 9 projects), Vietnam (US$24.463m in 15 projects) and Lao PDR (US$2.742m in 10 projects). For Germany, by far the biggest amount of aid went to Vietnam (US$209.595m in 10 projects), followed by Lao PDR (US$11.020m in 7 projects), Cambodia (US$6.198m in 5 projects) and Myanmar (US$2.734m in 2 projects). Korean climate-related ODA in the four countries seems to be more fragmented in the sense that there are both more projects and the amounts allocated to them are smaller. In addition, Korea’s projects are in 21 different sectors, while Germany’s are in 12 different sectors, which shows a higher degree of specialization for German aid.

As already mentioned, the framework of need, merit and self-interest needs to be adjusted to take into account the fact that this article only analyzes climate-related ODA projects (Table III).

A country’s need is measured as its vulnerability to climate change according to the “Global Climate Risk Index” rank by Kreft et al. (2015), merit is measured as its rank on Notre Dame University’s “Global Adaptation Index” and donor country’s self-interest is measured as bilateral trade volume in environmental technology goods for the years 2009-2014 for Germany and 2009-2013 for Korea, using data from the OECD’s International Trade by Commodity statistics. The volume of trade is given in US dollars.

In research on the allocation of overall ODA, need has been measured most often by GDP per capita. For climate-related ODA, need could be measured by a country’s vulnerability to climate change as assessed by climate risk indices. An example of such an index would be the “Global Climate Risk Index” developed by Kreft et al. (2015)[⁴]. It takes into account both deaths due to extreme weather events as well as economic losses[⁵]. A strength of this index is the fact that it is based on a very reliable and readily comparable data set for almost all countries in the world. We therefore use the 1994-2013-based version to assess a country’s need, measured as its vulnerability to climate change, according to which Myanmar is ranked 2nd, Vietnam 7th, Cambodia 12th and Laos 67th. If need was the decisive factor behind aid allocation, Myanmar should receive most climate-related ODA, as it is considered to be the most vulnerable country according to the index by Kreft et al. (2015). However, among the four countries analyzed in our article, the country received least climate-related aid from Germany and almost tied for second-most aid from Korea with Vietnam. Hence, need measured as a country’s vulnerability to climate change seems to be more important for Korea than for Germany as a criterion for aid allocation.

Second, in research on the overall allocation of ODA, merit has been measured as the quality of a country’s governance, often proxied by democratization indices. For the case of climate-related ODA, merit could be measured as the existence of institutions, policies or efforts to reduce the speed of climate change. To measure “merit” for the case of climate-related aid, we use an existing index, Notre Dame University’s “Global Adaptation Index” readiness sub-index’ (accessed at: http://index.gain.org/ranking/readiness), to compare the quality (or merit) of the four countries’ adaptation efforts, in the GDP-adjusted version to take into account their different income levels. To the best of our knowledge, it is one of only two indices measuring climate change readiness, with the second one, KPMG’s Change Readiness Index, including climate change as only one potential challenge to societies, relying on expert opinions instead of objective data and covering fewer countries (KPMG, 2015). Therefore, we decided to use the GAIN index as a measure of a country’s merit. According to the index, Myanmar ranks 3rd, Vietnam 91st, Cambodia 100th and Laos 131st. If merit, measured as climate-change readiness according to the GAIN index, was the decisive factor behind aid allocation, Myanmar should, again, receive most climate-related ODA among the four countries analyzed in our article. However, it again received least climate-related aid from Germany and almost tied for second-most aid from Korea with Vietnam. Hence, merit measured as a country’s readiness for climate change according to the GAIN readiness index seems to be more important for Korea than for Germany as a criterion for climate-related aid allocation.

Third, donors’ self-interest could also be a factor behind their allocation of ODA. For overall ODA, self-interest has been measured as trade volume between countries (for economic self-interest) or as voting in line with the donor’s behavior in the UN’ general assembly (for geopolitical self-interest). This approach also needs to be adapted for our analysis of climate-related aid. For the field of geopolitical self-interest, it is difficult to think about international conventions or organizations where receiving countries’ voting behavior could be analyzed: the most important international environmental agreements in the field of climate protection are the UN Framework Convention on Climate Change (UNFCCC) from New York (1992), including the Kyoto Protocol (1997), and the Vienna Convention for the Protection of the Ozone Layer (1985), including the Montreal Protocol on Substances That Deplete the Ozone Layer (1987). Germany, Korea, Myanmar and Vietnam were signatories of the UNFCCC in 1992, and the two remaining countries are parties to it[⁶]. Similarly, Germany, Korea and Vietnam were signatories of the Kyoto Protocol in 1998, and the three remaining countries covered by our analysis here are parties to it[⁷]. While geopolitical self-interest might play a role in donors’ climate-related ODA allocation decisions, it is difficult to analyze using a similar approach to the analysis of overall ODA allocation decisions. We therefore restrict our analysis to economic self-interest and follow Wackerbauer’s (2004) approach in selecting trade codes for the analysis of trade in environmental technology, using bilateral trade data for 2009-2014 from the OECD’s International Trade by Commodity statistics database[⁸]. According to these trade data, Vietnam is the most important partner for trade in environmental technology for both countries, followed by Myanmar. For Germany, Laos is the third important trading partner, followed by Cambodia, and the order is the opposite for Korea. If self-interest, measured as the bilateral trade volume in environmental technology, was the decisive fact behind aid allocation, Vietnam and Myanmar should receive most aid by both Korea and Germany. Vietnam, in fact, receives most aid from Germany among the four countries under consideration here, but only third-most aid from Korea. Myanmar received second-most aid from Korea, but received least aid from Germany. Hence, economic self-interest measured as a country’s bilateral trade volume in environmental goods with a donor country seems to be somewhat important for both countries as a criterion for aid allocation in the four countries under consideration as well.

Besides need, merit and self-interest of donors, other factors might also determine the allocation of climate-related aid. Those include not only geostrategic motives of donors, receiving countries’ institutional and absorptive capacity for aid and countries’ status as LDCs or non-LDCs, but also factors such as the human rights situation in receiving countries, which might play a role, especially in the case of Myanmar. In addition, only a relatively small percentage of total climate-related German and Korean ODA is allocated to the four countries, and results for an analysis of total climate-related ODA might differ.

The explorative nature and the limitations of this analysis should be kept in mind, as the lack of data for a longer period unfortunately prevents us from carrying out a more detailed analysis.

The present paper provided an analysis and comparison of climate-related ODA projects of Korea and Germany in four Southeast Asian countries expected to be affected severely by climate change, namely, Cambodia, Laos, Myanmar and Vietnam. It presented a general overview of both countries’ efforts on climate change adaptation and mitigation as well as an analysis of recent projects in the four countries.

Following the economic literature on the determinants of overall ODA allocation, this article also provided an exploratory analysis of need, merit and self-interest as possible drivers of donor countries’ decisions to allocate aid. Our results for the four countries suggest that Korean ODA allocation in the field of climate protection and the four countries under consideration is driven more by receiving countries’ need and merit than German ODA, and that self-interest seems to be somewhat important for both countries. Possible other drivers, such as geostrategic interests of donor countries or the human rights situation in receiving countries, could not be analyzed in this study. In general, it seems that both donors are not very focused on climate protection. Their respective aid is still geared toward poverty reduction, providing for basic needs, education and rural development, all of which are part of the MDGs. Many projects labeled as adaptation or mitigation projects do not have a clear link to these goals. Finally, Korean aid seems to be more fragmented: Korean aid projects are both smaller in size and spread out over a higher number of sectors.

There are several limitations to the present study. First of all, it could only analyze both countries’ projects in 2013 because there are no other project data available in the OECD Creditor Reporting System. Second, because of the simplifying assumptions of the need–merit–self-interest framework, possible other determinants of aid allocation were deliberately ignored. Finally, we restricted this explorative study to four vulnerable countries in Southeast Asia.

Drawing on our results, we have suggestions for climate change-related projects. First of all, more clearly defined criteria are needed for the classification of projects as “climate-related” because of two reasons. First, with the current system, there is no clear distinction between MDG-related and climate-related activities. Projects such as basic sanitation, water or waste management, but also rural development, are clearly helpful for achieving the MDGs of poverty reduction and access to water, but not related to climate protection. In addition, mislabeling projects that are not related to climate change inflates the volume of climate change-related ODA. Second, projects that are targeting poverty reduction, and not necessarily climate change, can have synergies with the goals of both adaptation and mitigation, and these synergies should be exploited more in the future to further increase the efficiency of ODA.

For the data on bilateral trade in environmental technology, we followed Wackerbauer (2004) and used the following trade codes to retrieve data from the OECD’s International Trade by Commodity database, SITC 3 revision

Solar thermal

775.81 Electric instantaneous or storage water-heaters and immersion heaters

741.82 Other instantaneous or storage water-heaters, non-electric

Photovoltaics

776.3 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices (including photovoltaic cells, whether or not assembled in modules or made up into panels); light-emitting diodes

Hydropower

718.1 Hydraulic turbines and water-wheels, and parts thereof

Air pollution control, water pollution control

743.6 Filtering or purifying machinery and apparatus, for liquids or gases

743.61 … for filtering or purifying water

743.9 Parts of the machines and apparatus of subgroups 743.5 and 743.6

743.91 … of centrifuges (including centrifugal driers)

743.95 … of filtering or purifying machinery and apparatus (nur das rein!)

598.64 Activated carbon

742.6 Centrifugal pumps, n.e.s.

Waste disposal

741.38 Other non-electric furnaces and ovens (including incinerators)

741.39 Parts for the furnaces and ovens of headings 741.36 through 741.38 (nur diese beiden rein!)

Monitoring equipment

874.3 Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (e.g. flowmeters, level gauges, manometers, heat meters), excluding instruments and apparatus of subgroups 873.1, 874.1 and 874.6; parts

874.31 Instruments and apparatus for measuring or checking the flow or level of liquids

874.35 Instruments and apparatus for measuring or checking the pressure of liquids or gases

874.37 Other instruments and apparatus

874.39 Parts and accessories

Table AI 

Table AII