This paper was written as background for a seminar with the IMF and climate experts that CGD co-sponsored with the European Climate Foundation (ECF).  Seminar participants put forward many of the ideas for action described in the last section of the paper.  Throughout the process, the paper has benefited from comments from our ECF colleagues, Laurence Tubiana, Emmanuel Guerin, Brice Roinsard, and Astrid Manroth. Luisa Mendoza provided excellent research assistance. We gratefully acknowledge the financial support of the ECF.

The challenge for the IMF

The deleterious impacts of global climate change are upon us. What were episodic and isolated climatic, meteorological, and biological crises have now become regular and widespread. Confronting climate change requires an international cooperative effort on a scale never seen. Economic issues are at the heart of the problem: policymakers must make politically difficult decisions about using (or not using) resources, building new infrastructure, managing public budgets and financial portfolios, and regulating financial flows. While the cost of taking serious action is high, the cost of inaction will be higher. Close cooperation among economists and environmental experts will be critical to accelerate change, reduce uncertainties, and contain costs of the needed fundamental shifts in the productive structure of the global economy. While the COVID-19 crisis has rightly occupied the world stage in the past weeks, the climate challenges will endure and in due course, policy makers will have to confront them.

Paper by the Centre for Global Development