{ "title": "Asia’s Climate Emergency", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla", "canonical": "https://www.imf.org/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla", "overlayPath": "/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla/index.md", "summary": "Fiscal policy can help address climate change in Asia, the region hit hardest by global warming.", "sections": [ { "heading": "The problem and regional exposure", "content": "- Temperatures are rising two times faster in Asia than the global average.\n- By mid-century, rising waters will impact nearly a billion people in the Asia-Pacific region.\n- Cities at risk include Mumbai, Dhaka, Bangkok, Ho Chi Minh City, Jakarta, and Shanghai; Indonesia is planning to move its capital, Jakarta, to the island of Borneo.\n- For small Pacific island countries such as Kiribati, the Marshall Islands, and Tuvalu, rising sea levels pose an existential threat.\n- The region produces about half of the world’s carbon dioxide (CO2) emissions and contains five of the largest greenhouse-gas-emitting countries.\n- Coal-based power generation and carbon-intensive manufacturing (steel and cement, motor vehicles, agriculture, domestic cooking and heating) have resulted in dangerously high levels of particulate matter; Delhi, Dhaka, Ulaanbaatar, Kathmandu, Beijing, and Jakarta are among today’s 10 most polluted cities.\n- In 2019, India experienced a severe heat wave leading to water scarcity; torrential rains in South Asia caused large-scale displacement; the Mekong Delta experienced unprecedented low water levels; Australia faced historic bushfires; and more than 25 tropical cyclones damaged Pacific and Indian Ocean coasts." }, { "heading": "Mitigation tools and fiscal policy measures", "content": "- Carbon tax:\n - A carbon tax can be an effective tool to reduce CO2 emissions.\n - Example: Gradually introducing a carbon tax of $25 a ton over the next decade in Vietnam would help meet its Paris mitigation targets.\n - Carbon revenues of about 1 percent of GDP could finance adaptation and mitigation plans or other social development needs.\n- Coal tax:\n - In China, India, and Mongolia, about 68–80 percent of emissions come from coal.\n - A specific tax on coal produced or consumed at an equivalent carbon tax rate could be considered.\n - India’s coal tax, introduced in 2010 and doubled in 2020, could be further strengthened.\n - Implementing a coal tax equivalent to $25 a ton could save about three million lives by 2030 in China alone.\n- Emissions trading systems and complementary measures:\n - Emissions trading currently covers power generators and large industries and typically covers only about half of national emissions in most countries in the region (China and Korea, for example).\n - Extending coverage to small-scale users would help.\n - Complementary measures include feebates (sliding scale of fees or rebates by emission rates) and stricter regulations on air quality, fuel quality, and vehicle emission standards.\n- Supporting green investment:\n - Investments in clean public transportation, smart electricity grids to incorporate renewables, and retrofitting buildings to improve energy efficiency will complement mitigation efforts.\n - Market-based incentives to promote access to green finance can ease financial constraints for firms." }, { "heading": "Managing transition and distributional impacts", "content": "- Side-effects to manage: rising energy costs for households and firms, labor displacement, unequal regional impacts.\n- Distributional outcomes of a carbon tax vary by country:\n - Moderately regressive in China and Mongolia.\n - Moderately progressive in India.\n- Compensation and support measures:\n - Use carbon revenue to finance transfers: In India, using revenue to finance a universal lump sum transfer (possibly using Aadhaar unique identification numbers) would leave 80 percent of households better-off and reduce inequality.\n - In China, both a universal lump-sum transfer per person and a subsidy to rural households would reduce inequality.\n - Support for displaced workers: extended unemployment benefits, training, and reemployment services.\n - Public spending on clean public infrastructure can create new jobs in low-carbon sectors." }, { "heading": "Adaptation needs, costs, and priorities", "content": "- Adaptation priorities: develop early warning systems, build resilient infrastructure, reduce exposure, ensure appropriate financing mechanisms, and decide what to protect versus relocate.\n- Gaps in adaptive capacity are large for Pacific island countries (Vanuatu and Tonga) and developing economies (Bangladesh, Indonesia, the Philippines).\n- Public investment needs for climate-proofing infrastructure are estimated to average 3.3 percent of GDP annually for the region.\n- Country-specific costs:\n - In Tonga, climate-related investment needs (of which adaptation investment accounts for a major part) are estimated at 14 percent of GDP annually for 10 years.\n - Public investment needs are sizeable in Indonesia, Laos, and the Philippines because of their large existing stock of exposed assets.\n- Investment returns and finance implications:\n - Investing in adaptive infrastructure can unlock private capital, reduce disaster recovery spending and debt distress, and enable quicker economic rebounds.\n - Financing adaptation will require revenue mobilization and spending prioritization and efficiency to ease growth-debt trade-offs.\n - For the most vulnerable low-income and Pacific island countries with limited fiscal space, meeting adaptation needs will require concessional financing." }, { "heading": "Exploiting synergies and leveraging recovery packages", "content": "- Fiscal packages to jump-start COVID-19 recovery should exploit synergies between infrastructure needs and opportunities for emissions reduction and adaptation.\n- Innovation in climate-smart infrastructure and technologies (for example, carbon capture and storage) can help reduce mitigation costs.\n- The region’s advantages: countries such as China and Japan are at the forefront of innovation—from electric vehicles to renewables—positioning the region to capitalize on scale and technology.\n- More active promotion of green finance will help ensure more funds flow into low-carbon, climate-resilient investments.\n- Examples of adaptation leadership: Japan, Singapore, and Thailand perform well in frameworks for identifying, assessing, and reducing natural disaster risks; measures include restoring mangroves, protecting coral reefs, and adopting national and local adaptation plans.\n- For developing economies with large infrastructure needs (Vietnam and Indonesia), ensuring new infrastructure is climate-resilient (for example, roads with drainage or built on higher ground) is a relatively inexpensive way to reduce future risks.\n\nAuthors: ERA DABLA-NORRIS; MASAHIRO NOZAKI; JAMES DANIEL — Asia’s Climate Emergency, F&D Magazine, September 2021.\n\n---\n\n Content in this bundle\n\n- 1tonea2020001\n - 1tonea2020001 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 1tonea2020001 (PDF){rel=\"external\" type=\"application/pdf\"}\n- الطوارئ المناخية في آسيا\n - الطوارئ المناخية في آسيا (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - الطوارئ المناخية في آسيا (PDF){rel=\"external\" type=\"application/pdf\"}\n- Asia’s Climate Emergency - IMF F&D\n - Asia’s Climate Emergency - IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Asia’s Climate Emergency - IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n- Emergencia climática en Asia● Finanzas y Desarrollo ● Septiembre de 2021\n - Emergencia climática en Asia● Finanzas y Desarrollo ● Septiembre de 2021 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Emergencia climática en Asia● Finanzas y Desarrollo ● Septiembre de 2021 (PDF){rel=\"external\" type=\"application/pdf\"}\n- L’urgence climatique en asie\n - L’urgence climatique en asie (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - L’urgence climatique en asie (PDF){rel=\"external\" type=\"application/pdf\"}\n- ЧРЕЗВЫЧАЙНАЯ климатическая ситуация в Азии\n - ЧРЕЗВЫЧАЙНАЯ климатическая ситуация в Азии (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - ЧРЕЗВЫЧАЙНАЯ климатическая ситуация в Азии (PDF){rel=\"external\" type=\"application/pdf\"}\n- 亚洲气候紧急状态 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期\n - 亚洲气候紧急状态 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 亚洲气候紧急状态 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2021/09/asia-climate-emergency-role-of-fiscal-policy-imf-dabla/bundle-manifest.json)", "Authors: ERA DABLA-NORRIS, MASAHIRO NOZAKI, JAMES DANIEL", "Published: September 2, 2021", "Temperatures are rising two times faster in Asia than the global average.", "By mid-century, rising waters will impact nearly a billion people in the Asia-Pacific region.", "Cities at risk include Mumbai, Dhaka, Bangkok, Ho Chi Minh City, Jakarta, and Shanghai; Indonesia is planning to move its capital, Jakarta, to the island of Borneo.", "For small Pacific island countries such as Kiribati, the Marshall Islands, and Tuvalu, rising sea levels pose an existential threat.", "The region produces about half of the world’s carbon dioxide (CO2) emissions and contains five of the largest greenhouse-gas-emitting countries.", "Coal-based power generation and carbon-intensive manufacturing (steel and cement, motor vehicles, agriculture, domestic cooking and heating) have resulted in dangerously high levels of particulate matter; Delhi, Dhaka, Ulaanbaatar, Kathmandu, Beijing, and Jakarta are among today’s 10 most polluted cities.", "In 2019, India experienced a severe heat wave leading to water scarcity; torrential rains in South Asia caused large-scale displacement; the Mekong Delta experienced unprecedented low water levels; Australia faced historic bushfires; and more than 25 tropical cyclones damaged Pacific and Indian Ocean coasts.", "Carbon tax:", "Coal tax:", "Emissions trading systems and complementary measures:", "Supporting green investment:", "Side-effects to manage: rising energy costs for households and firms, labor displacement, unequal regional impacts.", "Distributional outcomes of a carbon tax vary by country:", "Compensation and support measures:", "Adaptation priorities: develop early warning systems, build resilient infrastructure, reduce exposure, ensure appropriate financing mechanisms, and decide what to protect versus relocate.", "Gaps in adaptive capacity are large for Pacific island countries (Vanuatu and Tonga) and developing economies (Bangladesh, Indonesia, the Philippines).", "Public investment needs for climate-proofing infrastructure are estimated to average 3.3 percent of GDP annually for the region.", "Country-specific costs:", "Investment returns and finance implications:", "Fiscal packages to jump-start COVID-19 recovery should exploit synergies between infrastructure needs and opportunities for emissions reduction and adaptation.", "Innovation in climate-smart infrastructure and technologies (for example, carbon capture and storage) can help reduce mitigation costs.", "The region’s advantages: countries such as China and Japan are at the forefront of innovation—from electric vehicles to renewables—positioning the region to capitalize on scale and technology.", "More active promotion of green finance will help ensure more funds flow into low-carbon, climate-resilient investments.", "Examples of adaptation leadership: Japan, Singapore, and Thailand perform well in frameworks for identifying, assessing, and reducing natural disaster risks; measures include restoring mangroves, protecting coral reefs, and adopting national and local adaptation plans.", "For developing economies with large infrastructure needs (Vietnam and Indonesia), ensuring new infrastructure is climate-resilient (for example, roads with drainage or built on higher ground) is a relatively inexpensive way to reduce future risks.", "**1tonea2020001**", "**الطوارئ المناخية في آسيا**", "**Asia’s Climate Emergency - IMF F&D**", "**Emergencia climática en Asia● Finanzas y Desarrollo ● Septiembre de 2021**", "**L’urgence climatique en asie**", "**ЧРЕЗВЫЧАЙНАЯ климатическая ситуация в Азии**", "**亚洲气候紧急状态 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期**" ], "related": [ { "title": "1tonea2020001", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/cr/2020/english/1tonea2020001.pdf", "summary": { "path": "/-/media/files/publications/cr/2020/english/1tonea2020001.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/cr/2020/english/1tonea2020001.pdf", "mime": "application/pdf" } }, { "title": "الطوارئ المناخية في آسيا", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/september/ar/dabla-norris.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/september/ar/dabla-norris.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/september/ar/dabla-norris.pdf", "mime": "application/pdf" } }, { "title": "Asia’s Climate Emergency - 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