Beatrice Weder di Mauro (Centre for Economic Policy Research) presented the findings of the 25th Geneva Report on the World Economy at an online launch event organized by the Peterson Institute for International Economics (PIIE), the Centre for Economic Policy Research (CEPR), and the International Center for Monetary and Banking Studies on October 14, 2022. PIIE president Adam S. Posen moderated a discussion with the audience following her presentation.
Tackling climate change is a matter of survival and economic rationality. Investing in climate mitigation and adaptation, while expensive, will reduce the long-term human and economic costs of climate change. Debt is needed to fund these large-scale investments and distribute the financial burden of climate action across generations, generating complicated questions around how to balance debt sustainability with climate sustainability and how to design debt instruments to best support global climate action.
The 25th Geneva Report on the World Economy discusses how, and by whom, climate mitigation and adaptation should be paid, considering debt instruments such as sovereign bonds, carbon credits, conditional official grants, and debt relief from both public and private sources. The authors provide six policy proposals to jointly address climate change and debt sustainability by focusing on financial instruments as a means of incentivizing governments to do the right thing and providing fiscal space for climate investment in countries that could not otherwise afford it. Progress can only be made through the utilization of policies which best suit individual country circumstances, bearing in mind their limitations and the potential trade-offs.
Patrick Bolton, Lee Buchheit, Mitu Gulati, Ugo Panizza, Beatrice Weder di Mauro, and Jeromin Zettelmeyer
Beatrice Weder di Mauro
President, Centre for Economic Policy Research (CEPR); Professor of International Economics, Graduate Institute of International and Development Studies, Geneva; Distinguished Fellow, Institut Européen d'Administration des Affaires, Singapore