- Climate Consequences of Rebalancing Official Climate Finance: Analyzing Multilateral Development Banks’ Allocation Practices (with Bert Scholtens and Swarnodeep Homroy)
Abstract: The transition towards a low-carbon economy requires the fundamental reallocation of financial capital from current technology towards green innovation. The role of public financing of green technological innovation by Multilateral Development Banks (MDB) is a largely unexplored area. In this paper, we provide novel evidence on the climate financing practices of MDBs and their long-term climate consequences. The majority of MDB climate finance is for mitigation projects and is concentrated in a small number of relatively wealthy countries. We show that MDBs’ climate financing is positively correlated with countries' greenhouse gas emissions but not with their vulnerability to climate risks. Our numerical simulations show that moving towards more equal funding of innovative mitigation-adaptation projects can substantially lower global climate vulnerability. We also show that rebalancing MDB funding towards adaptation projects and technologies can reduce vulnerability significantly for an additional 2.5 billion people, without a significant change in the annualized growth rate of emissions.
Presentation: World Finance Conference 2021 (Norway/Virtual)
- Public Finance Intermediaries and Climate Change (with Bert Scholtens and Swarnodeep Homroy)
Abstract: Public financial intermediaries (PFIs) play crucial roles in climate transition concerning the externalities of climate change. However, how they evaluate and respond to climate change is underexplored. We investigate 788 PFIs from four OECD countries and quantitatively measure their climate change awareness after 2015 using textual analysis. PFIs in Germany have the highest climate change awareness while those in the U.S. have the lowest. PFI-banks are more climate change minded than PFI-pensions. The government’s climate performance partly explains the divergence of PFI’s climate change awareness. We find that PFIs in larger asset sizes and less constrained by funding issues are more aware of climate change on the institutional level.
|Last modified:||25 June 2022 3.11 p.m.|