International trade and the distribution of economy-wide benefits from the disbursement of climate finance

In the framework of recent international climate negotiations, industrialized countries have committed to transfer at least USD 100 billion per year to developing countries from 2020. Climate finance has become the subject of an already extensive literature. However, the economic impact of the disbursement of climate finance and the role of international trade in its distribution globally have not been studied yet. This paper specifically estimates the geographical distribution of economic benefits for 17 mitigation and 9 adaptation options. We use a Global Multi-Regional Input-Output framework to track both domestic as well as spill-over effects of climate finance disbursements. The relevance of spill-overs is confirmed: on average, 29% of the economic benefits of climate actions flow to countries different from the recipient country (i.e. to the donors and third countries). But this percentage varies widely, between 11 and 61% depending on the type of climate action implemented as well as the recipient country. The findings are expected to be of interest for both recipient and donor countries as they provide guidance on how to maximize the economic co-benefits of climate finance. (c) 2018, (c) 2018 Informa UK Limited, trading as Taylor and Francis Group.Maria Victoria Roman was funded by Norges Forskningsrd (CICEP (Strategic Challenges in International Climate and Energy Policy)). Authors also thank financial support from the Ministerio de Economía y Competitividad (ECO2015-68023) and the Eusko Jaurlaritza (IT-799-13)

Why do some economies benefit more from climate finance than others? A case study on North-to-South financial flows

The Copenhagen and Paris Agreements, in which developed countries committed to mobilise USD 100 billion a year by 2020, indicate that climate finance will continue to grow. Even though economic development is not the aim of climate finance, climate-related disbursements will generate an economic impact on recipient countries economies. This impact will also reach other countries (including climate finance donors) through induced international trade. In this paper, we apply a structural decomposition analysis to study why the economic impact of climate finance varies between countries. We focus on specific climate actions and quantify the contribution of four drivers: value-added intensity, domestic multiplier, foreign multiplier and trade structure. The paper helps identifying the factors with the greatest potential to enhance the economic gains of climate finance in each country. This information can be useful for policy-makers trying to design national strategies that exploit the synergies between climate action and economic development. © 2017 The International Input Output Association.This work was supported by Norges Forskningsråd (Research Council of Norway – CICEP project)