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

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

January 11, 2016

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Mai Farid, Michael Keen, Michael G. Papaioannou, Ian W.H. Parry, Catherine A Pattillo, and Anna Ter-Martirosyan. After Paris: Fiscal, Macroeconomic and Financial Implications of Global Climate Change, (USA: International Monetary Fund, 2016) accessed December 21, 2024

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.

Subject: Carbon tax, Climate change, Climate finance, Environment, Greenhouse gas emissions, Natural disasters, Taxes

Keywords: Access country, Adaptation, Asset-management firm, Bond market, Carbon pricing, Carbon tax, Climate change, Climate finance, Climate mitigation, Countries price carbon, Economic growth, Emissions price, Exchange rate, Financial markets, Fiscal policy, Global, Greenhouse gas emissions, Long-term debt, Natural disasters, Price level, Pricing carbon, Private sector, Public expenditure, SDN, South Asia

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2016/001
Stock No:

SDNEA2016001
ISBN:

9781513506562
ISSN:

2617-6750

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