References

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  • Swiss Re Institute and Global Infrastructure Facility. 2021. Closing the Infrastructure Gap: Mobilising Institutional Investment into Sustainable, Quality Infrastructure in Emerging Markets and Developing Economies.

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  • World Bank. 2019. Lifelines: The Resilient Infrastructure Opportunity. World Bank. Washington D.C.

1

The views expressed in this paper are those of IMF staff and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

2

Environmentally sustainable investment is defined as an investment that is aligned with long-term climate resilient and greener growth. This includes investing in, among other things, climate-smart and/or low-carbon options, greener and resilient infrastructure, natural disaster preparedness and response, and measures that have positive impacts on the local environment (such as water and air quality) and natural resources (such as forests, ecosystem, and biodiversity). In this Note, we refer to “environmentally sustainable” and “greener” infrastructure interchangeably. The Note recognizes that the principle of common but differentiated responsibilities due to different national circumstances applies in the context of the Paris Agreement.

3

Mitigation refers to a human intervention to reduce the sources or enhance the sinks of greenhouse gases (IPCC 2014).

4

However, even these estimates are likely to understate benefits from mitigating climate change as they imperfectly take account of—or do not incorporate—some of the damages related to temperature increases such as a higher frequency and severity of natural disasters, a rise in sea levels, and the risk of more catastrophic climate change.

5

G20. 2019. G20 Principles for Quality Infrastructure Investment. July 2019.

6

IMF. 2020. World Economic Outlook: A Long and Difficult Ascent. Washington, DC, October.

7

IMF. 2020. Fiscal Monitor: Policies for the Recovery. Washington D.C., October.

8

Global Infrastructure Hub and Oxford Economics. 2017. Global Infrastructure Outlook. July 2017.

9

Forthcoming IMF 2021 estimates.

10

IMF. 2020. Fiscal Monitor: Policies for the Recovery. Washington D.C., October.

11

IMF. 2020. Fiscal Monitor. IDEAS to Respond to Weaker Growth. Washington D.C., April; IMF. 2019. Fiscal Monitor: How to Mitigate Climate Change. Washington D.C., October.

12

World Bank. 2019. Lifelines: The Resilient Infrastructure Opportunity. World Bank. Washington D.C.

13

Global Commission on Adaptation. 2019. Adapt Now: A Global Call for Leadership on Climate Resilience.

14

IMF. 2020. Fiscal Monitor: Policies for the Recovery. Washington D.C., October.

15

World Bank. 2019. Lifelines: The Resilient Infrastructure Opportunity. World Bank. Washington D.C.

16

A potential funding source that could help bridge infrastructure gap also includes long-term institutional investors with an estimated total asset under management of over US$80 trillion globally (Swiss Re Institute and Global Infrastructure Facility 2021).

17

Blended finance has emerged as a promising solution to fund climate resilient and low carbon infrastructure investments, through strategic use of public/concessional finance to mitigate investment risks, lower the cost of capital, and catalyze additional private finance that would otherwise not be available on commercial terms. Furthermore, countries need to also build readiness to improve access to international climate finance and markets, while simultaneously making use of financial instruments such as green bonds and insurance mechanisms to support environmentally sustainable investment.

18

Maintenance can be deployed quickly and has great benefits—it preserves substantial economic gains from investing in infrastructure. Prioritizing and restarting active projects would contribute to the timely delivery of a stimulus package. In addition, governments should take into account new development priorities that will lead to economic and social transformations beyond the recovery phase.

G20 Note On Environmentally Sustainable Investment For The Recovery
Author: International Monetary Fund. Fiscal Affairs Dept.