Find Me the Money: Financing Climate and Other Global Public Goods

52 Pages Posted: 16 Feb 2012

See all articles by Nancy Birdsall

Nancy Birdsall

Center for Global Development

Benjamin Leo

Center for Global Development; Georgetown University

Date Written: April 6, 2011

Abstract

The global community faces a number of critical challenges ranging from climate change to crossborder health risks to natural-resource scarcities. Many of these so-called global commons problems carry grave risks to economic growth in the developing world and to the livelihoods and welfare of their people. Climate change is the classic example. Despite the risks involved, donor governments have funded programs addressing global challenges such as climate change at far lower levels than traditional programs of country-based development assistance. The prospects for dealing with such global challenges will depend at least in part on new collective financing mechanisms. In this paper, we examine four categories of existing resource-mobilization options, including (1) transportation levies; (2) currency and financial transaction taxes; (3) capitalization of IMF Special Drawing Rights (SDRs); and (4) the sale, mobilization, or capitalization of IMF gold. In the end, we recommend that willing governments utilize a modest portion of their existing SDR allocations to capitalize a third-party financing entity. This entity would offer bonds on international capital markets backed by its SDR reserves. The proceeds would back private investment in climate-mitigation projects in developing countries that might otherwise lack adequate financing. This approach could mobilize up to $75 billion at little or no budgetary cost for contributing governments. Any limited budgetary costs could be offset by using excess proceeds from recent IMF gold sales. In our view, capitalizing a small portion of existing global assets — SDRs with a small back-up reserve of the income from gold already sold — to finance programs that deal with global public goods and bads makes eminent sense.

Keywords: global public goods, financing, climate change

Suggested Citation

Birdsall, Nancy and Leo, Benjamin, Find Me the Money: Financing Climate and Other Global Public Goods (April 6, 2011). Center for Global Development Working Paper No. 248. Available at SSRN: https://ssrn.com/abstract=1824648 or http://dx.doi.org/10.2139/ssrn.1824648

Nancy Birdsall (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
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202-416-0700 (Phone)

Benjamin Leo

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

Georgetown University

Washington, DC 20057
United States

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