IMF Staff Discussion Notes

IMF Staff Discussion Notes
Journal
Publisher:
International Monetary Fund
ISSN:
2221-030X
Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff members and are published to elicit comment and to encourage debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011
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After Paris : Fiscal, Macroeconomic and Financial Implications of Global Climate Change

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After Paris : Fiscal, Macroeconomic and Financial Implications of Global Climate Change
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Journal Issue
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Volume/Issue:
2016/1
Series:
Staff Discussion Notes
Author(s):
Mai Farid, Michael Keen, Michael Papaioannou, Ian Parry, Catherine Pattillo, and Anna Ter-Martirosyan
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
January 2016
DOI:
http://dx.doi.org/10.5089/9781513506562.006
ISBN:
9781513506562
ISSN:
2221-030X
Page:
46
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.
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