Cash and Knowledge Flows in Cities: The Influence of Federal Funding Schemes for Local Government in Climate Mitigation

The important role of local government in combating climate change is increasingly being recognized and acknowledged by practitioners and researchers. In order to support the local level in their climate activities – which often do not have the necessary resources or funds - national governments as well as the European Union have initiated a variety of support programmes. These range from a variety of funding schemes, over competitions for local initiatives to platforms and networks for knowledge exchange. The objective of this paper is to analyse and systematise the influence of various national programs in supporting local governments in climate mitigation. The underlying premise of this approach is that national governments can help to foster climate action in communities by co-funding climate-friendly local infrastructure, by initiating learning and transfer practices among cities and lastly by providing the legal and economic framework conditions. The focus of this paper is on the first two aspects: the various forms of funding schemes relating to climate mitigation and energy efficiency as well as the `softer` forms of transfer and diffusion practices which is implied to be instigated by national governments. These two aspects are also closely connected: an integral part of many of such funding schemes is the transfer of learning aspects among communities. By using the German climate regime for local governments as an example we analyse and systematize the various support programmes in terms of their thematic direction, outreach, funding volumes, horizontal transfer aspects, outputs and potential outcomes regarding GHG emission reduction. Despite the high practical relevance of the topic for municipalities and urban research, municipal funding and transfer practice is still under-researched (Gilardi, 2014, Marsh et al 2009, Shipan / Volden 2012). Although there are a number of evaluations with regard to the German funding landscape (eg BMVBS 2012, ifeu 2012, Öko-Institut et al 2017, Schneider 2018), there is no independent overview or meta-study on previous funding practice and policy. In terms of transfer practices, previous studies (e.g. Fricke 2018, Krause 2011, Marsden 2011, Nagorny 2018, Rave 2016, Timms 2011) come to the conclusion that the preferred source of information for administrative employees is direct exchange in her peer group (peer net-works). Compared to written information, the personal contacts and dialogues offer the advantage that bundled information is passed on and that more open is spoken about inhibiting factors. However, research on policy diffusion and policy learning (Dolowitz / Marsh 1996, 2000, Shipan / Volden 2008) usually leaves out the role of support programs (with the exception of Nagorny 2018). While other disciplines such as macroeconomics, are investigating the role of funding programs, they have traditionally dominated the study of development aid programs (e.g. Doucouliagos and Paldam 2009). This paper is starting to bridge the gap between the cash and the knowledge aspects and attempts to provide answers on how federal support programmes should enable local governments to take climate action effectively.