Incremental cost is the fundamental operational principle of the GEF. The GEF funds the increment, or additional costs associated with transforming a project with national/local benefits into one with global environmental benefits. The principle of incremental cost was originally envisaged to ensure that GEF funds do not substitute for existing development finance but provide new and additional funding to produce agreed global environmental benefits. Its application has been recognized as complex and not transparent by the GEF Council, the Secretariat, and the IAs, as well as by project proponents, governments, and nongovernmental organizations (NGOs). Furthermore, it has been identified in several evaluations conducted by the GEF Evaluation Office as an issue that needs further clarification.
Evaluation Report: