Fiscal Implications of Climate Change

54 Pages Posted: 20 Apr 2016

See all articles by Benjamin Jones

Benjamin Jones

University of Oxford

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS)

Jon Strand

World Bank

Date Written: January 1, 2012

Abstract

This paper provides a primer on the fiscal implications of climate change, in particular the policies for responding to it. Many of the complicated challenges that arise in limiting climate change (through greenhouse gas emissions mitigation), and in dealing with the effects that remain (through adaptation to climate change impacts), are of a fiscal nature. While mitigation has the potential to raise substantial public revenue (through charges on greenhouse gas emissions), adaptation largely leads to fiscal outlays. Policies may unduly favor public spending (on technological solutions to limit emissions, and on adaptation), over policies that lead to more public revenue being raised (emissions charges). The pervasive uncertainties that surround climate change make the design of proper policy responses even more complex. This applies especially to policies for mitigation of emissions, since agreement on and international enforcement of cooperative abatement policies are exceedingly difficult to achieve, and there is as yet no common view on how to compare nearer-term costs of mitigation to longer-term benefits.

Keywords: Climate Change Mitigation and Green House Gases, Climate Change Economics, Carbon Policy and Trading, Energy Production and Transportation, Environment and Energy Efficiency

Suggested Citation

Jones, Benjamin and Keen, Michael and Strand, Jon, Fiscal Implications of Climate Change (January 1, 2012). World Bank Policy Research Working Paper No. 5956. Available at SSRN: https://ssrn.com/abstract=1988741

Benjamin Jones

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Jon Strand

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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