After Paris : Fiscal, Macroeconomic and Financial Implications of Global Climate Change

Author/Editor:

Mai Farid ; Michael Keen ; Michael G Papaioannou ; Ian W.H. Parry ; Catherine A Pattillo ; Anna Ter-Martirosyan

Publication Date:

January 11, 2016

Electronic Access:

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Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary:

This paper discusses the implications of climate change for fiscal, financial, and macroeconomic policies. Most pressing is the use of carbon taxes (or equivalent trading systems) to implement the emissions mitigation pledges submitted by 186 countries for the December 2015 Paris Agreement while providing revenue for lowering other taxes or debt. Carbon pricing in developing countries would effectively mobilize climate finance, and carbon price floor arrangements are a promising way to coordinate policies internationally. Targeted fiscal measures that are tailored to national circumstances and robust across climate scenarios are needed to counter private sector under-investment in climate adaptation. And increased disclosure of carbon footprints, stress testing of asset values, and greater proliferation of hedging instruments, will facilitate low-emission investments and climate risk diversification through financial markets.

Series:

Staff Discussion Notes No. 16/01

Subject:

English

Publication Date:

January 11, 2016

ISBN/ISSN:

9781513506562/

Stock No:

SDNEA2016001

Format:

Paper

Pages:

46

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