World Bank, IMF Leaders Make Economic Case for Climate Action
October 9, 2013
In their first joint public appearance to discuss climate change, World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde said Tuesday their institutions will offer the financial support and technical knowledge needed to put emerging economies on a green growth path.
“Don’t assume that tackling climate costs will make all your costs go up and that there are no good options,” Kim said at a panel discussion that marked the opening of the World Bank Group’s week of Annual Meetings in Washington. “The innovations that are happening in other parts of the world are not always apparent to ministers of finance. We would be very happy to play the role of bringing those options to the table and letting them see that they can create a better world for their grandchildren, but that it makes economic sense as well.”
IMF: Fuel subsidies and “right pricing” go a long way
Lagarde pointed to a just-released study by the IMF showing that national subsidies for gasoline and other fossil fuel subsidies now top $485 billion annually. By removing such subsidies, financially pressed countries would generate a significant new revenue stream needed for services such as health and education, while at the same time addressing climate change, the report found.
The IMF can also help country finance ministers get the pricing right as they look to carbon taxes and other fiscal instruments to reduce greenhouse gas emissions, Lagarde said.
Thinking locally was an idea that resonated with panelists from India, Philippines, Peru and Zambia—all of whom stressed that no one size fits all when it comes to tackling climate change. Countries need to tailor climate solutions to their own circumstances and some are already doing so, spurred on by increasingly violent weather episodes that threaten lives and prospects for economic growth.
Don’t assume that tackling climate costs will make all your costs go up and that there are no good options. The innovations that are happening in other parts of the world are not always apparent to ministers of finance. We would be very happy to play the role of bringing those options to the table and letting them see that they can create a better world for their grandchildren, but that it makes economic sense as well.
Countries Are Taking Action
Zambia has made funding for climate adaptation and mitigation programs part of the country’s budget process, and committed 25 percent of the budget toward climate-change activities, reported Keith Akekelwa Mukata, the African nation’s deputy minister of finance. It also removed fuel subsidies that only benefitted people in cities who didn’t need them, he said.
Rich Nations Have Job to Do
Rachel Kyte, the World Bank’s vice president of sustainable development, agreed that each country needs its own approach. But whereas local adaptation programs were the focus of World Bank lending in recent years, the institution has been shifting over the past 18 months to also look closely at mitigation of greenhouse gas emissions, Kyte said.
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