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Find Me the Money: Financing Climate and Other Global Public Goods - Working Paper 248

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  • Nancy Birdsall and Benjamin Leo
Abstract
The global economy faces a number of critical challenges ranging from climate change to cross-border 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 not 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.

Suggested Citation

  • Nancy Birdsall and Benjamin Leo, 2011. "Find Me the Money: Financing Climate and Other Global Public Goods - Working Paper 248," Working Papers 248, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:248
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    File URL: http://www.cgdev.org/content/publications/detail/1424979/
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    Cited by:

    1. David Wheeler, Dan Hammer, Robin Kraft, 2011. "From REDD to Green: A Global Incentive System to Stop Tropical Forest Clearing- Working Paper 282," Working Papers 282, Center for Global Development.
    2. Undp, 2011. "HDR 2011 - Sustainability and Equity: A Better Future for All," Human Development Report (1990 to present), Human Development Report Office (HDRO), United Nations Development Programme (UNDP), number hdr2011, September.
    3. Amanda Glassman, Denizhan Duran, Andy Sumner, 2011. "Global Health and the New Bottom Billion: What Do Shifts in Global Poverty and the Global Disease Burden Mean for GAVI and the Global Fund? - Working Paper 270," Working Papers 270, Center for Global Development.

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