Building Back Better: How Big Are Green Spending Multipliers?

By Nicoletta Batini, Mario di Serio, Matteo Fragetta, Giovanni Melina, Anthony Waldron

March 19, 2021

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Nicoletta Batini, Mario di Serio, Matteo Fragetta, Giovanni Melina, and Anthony Waldron. Building Back Better: How Big Are Green Spending Multipliers?, (USA: International Monetary Fund, 2021) accessed December 31, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper provides estimates of output multipliers for spending in clean energy and biodiversity conservation, as well as for spending on non-ecofriendly energy and land use activities. Using a new international dataset, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar’s worth of economic activity. Although not all green and non-ecofriendly expenditures in the dataset are strictly comparable due to data limitations, estimated multipliers associated with spending on renewable and fossil fuel energy investment are comparable, and the former (1.1-1.5) are larger than the latter (0.5-0.6) with over 90 percent probability. These findings survive several robustness checks and lend support to bottom-up analyses arguing that stabilizing climate and reversing biodiversity loss are not at odds with continuing economic advances.

Subject: Economic sectors, Environment, Environmental protection, Financial crises, Greenhouse gas emissions, Non-renewable resources, Renewable energy, Renewable resources

Keywords: Agricultural subsidies, B. data coverage, Biodiversity, Clean energy, Conservation spending, Cumulated multiplier, Data coverage, Eco-friendly expenditure, Eco-friendly spending, Environmental protection, Fossil fuels., Global, Green multiplier, Green stimulus, Greenhouse gas emissions, Investments multiplier, Land use multiplier, Nature-based solutions, Non-renewable resources, Nuclear energy, Policy implication, Renewable energy, Renewable resources, Robustness check, Spending data, Spending multiplier, Spending shock

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/087
Stock No:

WPIEA2021087
ISBN:

9781513574462
ISSN:

1018-5941

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