IMF Working Papers

Africa is vulnerable to the impacts of climate change despite its minimal contribution to global greenhouse gas emissions. The continent’s burden manifests in shifting weather patterns which threatens food security and economic stability, compounded by a growing population. This paper is a novel attempt at understanding whether trade in “green goods" and engaging in “green practices" can reduce negative environmental outcomes in the region. Using local projections methods, we find that increasing trade in “green goods" decreases the harmful effect on the environment in the medium-term. In the medium-term, there are cumulative improvements in ecological footprint by about 4%, decreases in net CO2 emissions embedded in trade by about 60-100% of total domestic production, and decreases in PM2.5 air pollution by about 1%. We also construct a novel Green Practices Index for Sub-Saharan Africa to benchmark individual country performance and facilitate regional cooperation on green practices. We find that engaging in green practices decreases harmful environmental outcomes by about 0.3-1.5% in the medium-term.