Planetary Health and the Global Financial System

26 Pages Posted: 12 Mar 2020

See all articles by Hugues Chenet

Hugues Chenet

University College London - UCL Institute for Sustainable Resources; Chair Energy and Prosperity

Date Written: September 1, 2019

Abstract

• The financial system is not structurally well equipped to address long-term global public goods issues like planetary health. Relying on the financial system to solve planetary health is therefore challenging.

• Planetary health finance should shift current global investment flows towards economic activities compatible with planetary health; it is also important to cease financing those activities that create environmental and health problems.

• Public finance has a strong role to play in planetary health to support innovation and crowd-in private actors.

• The volume of available financial capital appears to be large enough to be substantially mobilised for planetary health.

• Nature conservation finance is a promising approach to target concrete impact on the ground, but it may be difficult to scale to global level.

• There is a need to channel capital towards planetary health and manage the related risks to the financial system, but the traditional mechanics of risk pricing cannot work in this case because markets cannot manage the fundamental uncertainty and long time horizons at stake.

• A precautionary approach to the financial risks associated with planetary health is needed, as is the application of a new approach to supervision and regulation of the financial system.

• Mobilizing finance for planetary health is likely to require deeper regulation of the financial system, although measures taken will strongly depend on each country’s current approach to financial regulation.

Keywords: planetary health, financial system, climate change, biodiversity, sustainability

JEL Classification: Q54, E44, E58, G28, G18, G14

Suggested Citation

Chenet, Hugues, Planetary Health and the Global Financial System (September 1, 2019). Available at SSRN: https://ssrn.com/abstract=3537673 or http://dx.doi.org/10.2139/ssrn.3537673

Hugues Chenet (Contact Author)

University College London - UCL Institute for Sustainable Resources ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Chair Energy and Prosperity

France

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