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

Abstract

ABSTRACTIn 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.