This guidance note draws on World Bank experience to address the why, who, what and how to conduct poverty and social impact analysis (PSIA) in the context of climate change development policy and operations. PSIA provides an understanding of vulnerability, marginalisation, accountability and voice. This document supports the idea that integrating a strong social perspective into climate change policies and strategies contributes to effective, pro-poor actions. It covers key issues and challenges of conducting PSIA working on climate change operations.
PSIA is a systematic approach to analysing the distributional impact of policy reforms and programmes on the welfare of different stakeholder groups (rural, urban, gender etc.), with particular focus on the poor and vulnerable. It asks: Who are the most effected? How do they shape outcomes? What are the positive and negative impacts over time? It supports the analysis of drivers of climate- and non climate-related vulnerability, and identifies entry points for pro-poor policy that build resilience, maximising development dividends of low-carbon growth while minimising risks. Ultimately, it facilitate recommendations for more appropriate, pro-poor policy options.
PSIA assessments relies on 5 key transmission channels in which policies can effect households/vulnerabilities: employment, prices, access to goods and services, assets and transfers and taxes. The nature of PSIA tools and methods depends on context and logistical pragmatic considerations. However, political economy analysis is a valuable tool in PSIA for climate change as it deepens understanding of how different actors conceptualise, negotiate and use ideas, power and resources. Particular challenges in applying PSIA to climate change include: its resource intensiveness – involving a large range of stakeholders and its long-term implications; data limitations which call for the use of new tools and techniques to address varied availability, reliability and quality of climate change data across sectors and countries.
The paper highlights that PSIA implementation requires active participation and capacity building, not just consultation. Close cooperation within the team and government buy-in are also invaluable – donor is useful in developing a common social strategy, providing donors a platform for longer-term cooperation.
