A game simulating the management of a portfolio for climate finance

The Dutch ministry of Foreign Affairs of the Netherlands is playing an active role in the international debate on climate finance. For this assignment, the ministry requested the development of a climate finance game, so that policy makers and investors all over the world could more easily get acquainted with some of the issues that may occur when managing a portfolio for climate finance. The game was developed in collaboration with Tetra Tech.

The game simulates the impact of the various financial instruments on private leverage, as well as the development impact of investments in the chosen climate projects. The outputs are based on the choice of financial instrument (guarantee, loan, equity or grant), the type of receiving country (level of development), as well as the type of project (mitigation or adaptation). The aim of the game is to maximize the leveraged private investments as well as the development impact, asking for a smart composition of the team’s climate finance portfolio, using a limited amount of public budget to manage. During the game, the government will also intervene a few times, demanding for example that more adaptation projects are required, or by changing the loan payback times as a result of the financial crisis.

Results from playing the game:

The game was played twice already:

  • With the specialist staff of the Dutch Ministry of Foreign Affairs; and
  • On an international conference on climate finance for the Nordic countries.

The most important result of the game is that it supports the discussion on the impact of choices in financial instruments on the public/private leverage and trade-offs between leverage and development impact.