Nicoletta Batini, Mario di Serio, Matteo Fragetta, and Mr. Giovanni Melina
This paper estimates multipliers for spending in clean energy and biodiversity conservation to help inform stimulus measures for a post-COVID-19 sustainable recovery. Using a new international dataset, part of which was especially assembled for this analysis, we find that every dollar spent on key carbon-neutral or carbon-sink activities—from zero-emission power plants to the protection of wildlife and ecosystems—can generate more than a dollar’s worth of economic activity. The estimated multipliers associated with green spending are about 2 to 7 times larger than those associated with non-eco-friendly expenditure, depending on sectors, technologies and horizons. These findings survive several robustness checks and suggest that ‘building back better’ could be a win-win for economies and the planet.
The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.
Mr. Nicolas Arregui, Ms. Ruo Chen, Mr. Christian H Ebeke, Jan-Martin Frie, Mr. Daniel Garcia-Macia, Ms. Dora M Iakova, Andreas Jobst, Louise Rabier, Mr. James Roaf, Ms. Anna Shabunina, and Mr. Sebastian Weber
This paper discusses sectoral policies needed to achieve the ambitious greenhouse gas (GHG) emissions reduction targets announced in the European Union’s Green Deal, complementing the companion paper “EU Climate Mitigation Policy”, which focuses on broader EU-level policies.
With total emissions nearly a quarter below their 1990 level, the EU has made important progress, but the new goals will require much stronger policy action. Moreover, progress has varied across sectors. Emissions from power and industry have fallen by about a third, buildings by a quarter and agriculture by a fifth – while transport emissions have risen. This paper argues that this divergence reflects differences in effective carbon prices, but also cost differences among the available abatement channels, market imperfections, and policy gaps. It discusses specific sectoral policies needed to address these factors and achieve the new emissions reduction goals.
This paper reviews the significant macro-fiscal challenges posed by climate change in
Djibouti and the costs of mitigation and adaptation policies. The paper concludes that
Djibouti is susceptible to climate change and related costs are potentially large. Investing
now in adaptation and mitigation has large benefits in terms of reducing the related costs in
the future. Reforms to generate the fiscal space are therefore needed and investment for
mitigation and adaptation to climate change should be built into the long-term fiscal
projections. Finally, concerted international efforts and stepping up regional cooperation
could help moderate climate-related macro-fiscal risks.
This paper takes stock of Seychelles’ plans to manage climate change, from the perspective of its macroeconomic implications. It suggests macro-relevant reforms that could strengthen the plans’ likelihood of success. It highlights high public awareness and a body of existing sustainable development planning, which puts Seychelles several steps ahead toward preparedness. Next steps would be to ensure that climate change planning is integrated with the forthcoming National Development Plan. Disaster preparedness is a relatively strong point, but there is much still to be done—from improving warning systems to resilience building to contingency financing.
This Economic Development Document highlights the Moldova 2020 National Development Strategy focus on producing a social and economic impact on various development priorities. Poverty reduction has progressed significantly during the past eight years: the national poverty rate decreased from 26.4 percent in 2008 to 9.6 percent in 2015. Remittances by emigrants and higher agricultural income, salaries, and social benefits were the major drivers of poverty reduction. The means-tested social assistance program had a significant impact. This social aid has proved to be the most efficient social protection against poverty; however, social support programs that are not means tested are ineffective.
This paper studies the economic costs of hurricanes in the Caribbean by constructing a
novel dataset that combines a detailed record of tropical cyclones’ characteristics with
reported damages. I estimate the relation between hurricane wind speeds and damages in
the Caribbean; finding that the elasticity of damages to GDP ratio with respect to
maximum wind speeds is three in the case of landfalls. The data show that hurricane
damages are considerably underreported, particularly in the 1950s and 1960s, with
average damages potentially being three times as large as the reported average of 1.6
percent of GDP per year. I document and show that hurricanes that do not make landfall
also have considerable negative impacts on the Caribbean economies. Finally, I estimate
that the average annual hurricane damages in the Caribbean will increase between 22 and
77 percent by the year 2100, in a global warming scenario of high CO2 concentrations and
high global temperatures.
International Monetary Fund. Western Hemisphere Dept.
This paper discusses three important sectors of Belize economy: financial, sugar market, and energy. Belize’s banking system has continued to strengthen since the 2014 Article IV Consultation in June 2014. Despite recent improvements, some banks’ balance sheets are still weak and exposed to adverse macroeconomic developments. The sugar sector makes a very important contribution to Belize’s economy. The sector is estimated to account for about 4-5 percent of GDP, 9-10 percent of total exports, 8 percent of employment, and 5-6 percent of foreign exchange earnings. But the reform of EU sugar regime, scheduled to take full effect in 2017, will most likely cause a significant drop in the EU sugar price.
Jordan’s initiatives to reduce its energy dependency could have substantial macroeconomic
implications, but will crucially depend on the level of international oil prices in the next
decade. Significant uncertainties remain regarding the feasibility of the initiatives and their
potential fiscal costs, including from contingent liabilities, could be very large. Given the
lead time required for such major investments, work should start now on: (i) conducting
comprehensive cost-benefits analysis of these projects; (ii) addressing the challenges arising
from the taxation of natural resources; and (iii) designing a fiscal framework to anchor fiscal
policies if revenue from these energy projects materializes.