How Fiscal Policy Can Help Battle Climate Change

Efforts to control atmospheric accumulations of greenhouse gases that threaten to heat up the planet are in their infancy. Although the International Monetary Fund is not an environmental organization, environmental issues matter for the organization's mission when they have major implications for macroeconomic performance and fiscal policy. Climate change clearly passes both these tests. 

A new book, Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers, provides practical guidelines for the design of fiscal policies (carbon taxes and emissions trading systems with allowance auctions) to reduce greenhouse gases.

Providing incentives

Not only are these instruments potentially the most effective at exploiting emission reduction opportunities in the near and longer term, but they can also generate for many countries a valuable new source of government revenue. The chapters, written by leading experts, explain the case for fiscal policies over other approaches; how these policies can be implemented; reasonable levels for emissions prices; policies for the forest sector; appropriate policy for developing countries; the most promising fiscal instruments for climate finance; and lessons to be drawn from prior policy experience.

This is essential reading for policymakers in finance and environment ministries in developed and developing countries alike, and others grappling with balancing environmental and development concerns.

Purchase your copy:

• IMF Bookstore: Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers
• Amazon: Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers 

Also available to IMF eLibrary subscribers: 

• Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers

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Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers by International Monetary Fund (IMF)
My rating: 5 of 5 stars

Clearly written book on how taxes and other instruments can help in the battle against climate change by reducing energy-related carbon dioxide emissions (which account for about 70% of projected greenhouse gas emissions). By some of the leading experts in the field.

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Getting a Grip on Public Spending

Two books from the IMF are putting the spotlight firmly on the big spending issues of our times in advanced economies and some emerging markets--health care and pensions.

Health care reform is likely to remain a key fiscal policy challenge in both advanced and emerging economies in coming years. In the advanced economies, the health sector has been one of the main drivers of government expenditure, accounting for about half of the rise in total spending over the past forty years. 

Aging populations

These spending pressures are expected to intensify over the next two decades, reflecting the aging of the population, income growth, and continued technological innovations in health care. 

Spending increases will come at a time when countries need to undertake fiscal consolidation to reduce public debt ratios in the wake of the global financial crisis.

In the emerging economies, health care reform is also a key issue, given substantial lags in health indicators and limited fiscal resources. For these economies, the challenge will be to expand public coverage without undermining fiscal sustainability. The Economics of Public Health Care Reform in Advanced and Emerging Economies provides new insights into these challenges and potential policy responses, with cross-country analysis and case studies.

Pension reform is also high on the policy agenda of many advanced and emerging market economies. In advanced economies the challenge is generally to contain future increases in public pension spending as the population ages. In emerging market economies, the challenges are often different. 

Where pension coverage is extensive, the issues are similar to those in advanced economies. Where pension coverage is low, the key challenge will be to expand coverage in a fiscally sustainable manner. The Challenge of Public Pension Reform in Advanced and Emerging Economies examines the outlook for public pension spending over the coming decades and the options for reform in 52 advanced and emerging market economies.