Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries

This paper uses simple analytical models to study high-income donor countries' willingness to pay to supply mitigation finance to low-income countries; how this depends on modality for finance supply; and how it changes as the global greenhous...

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Main Author:	Strand, Jon
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	GREENHOUSE GAS EMISSIONS CLIMATE ACTION CLIMATE CHANGE CLIMATE CHANGE MITIGATION MITIGATION POLICY CARBON POLICY TRANSFORMATIONAL CLIMATE POLICY CLIMATE FINANCE CARBON TAXATION WILLINGNESS TO PAY
Online Access:	http://documents.worldbank.org/curated/en/541441589828863997/Transformational-Climate-Finance-Donors-Willingness-to-Support-Deep-and-Transformational-Greenhouse-Gas-Emissions-Reductions-in-Lower-Income-Countries http://hdl.handle.net/10986/33798

id	okr-10986-33798
recordtype	oai_dc
spelling	okr-10986-337982022-09-20T00:12:26Z Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries Strand, Jon GREENHOUSE GAS EMISSIONS CLIMATE ACTION CLIMATE CHANGE CLIMATE CHANGE MITIGATION MITIGATION POLICY CARBON POLICY TRANSFORMATIONAL CLIMATE POLICY CLIMATE FINANCE CARBON TAXATION WILLINGNESS TO PAY This paper uses simple analytical models to study high-income donor countries' willingness to pay to supply mitigation finance to low-income countries; how this depends on modality for finance supply; and how it changes as the global greenhouse gas mitigation agenda moves forward. The paper focuses on two modalities: transformational project-based mitigation finance (transitioning from fossil to non-fossil energy use at scale), and transformational policy-based mitigation finance support (implementing comprehensive carbon taxation). These modalities are compared with conventional finance for which donors have lower willingness to pay. High-income countries' willingness to pay is higher when mitigation is combined with carbon taxation; private-sector finance is also more highly incentivized. Reaching the transformational mitigation finance stage can be challenging, as it may require large provision of mitigation finance with negative net returns to high-income countries. Willingness to pay will be higher when high-income countries collaborate in the provision of mitigation finance. The findings show that more effective collaboration can be sustained when it is enforced by an international financial institution that collects and spends the provided mitigation finance to induce efficient mitigation activity in low-income countries and collaboration among donors is enforced by simple tit-for-tat reaction strategies. 2020-05-21T19:28:45Z 2020-05-21T19:28:45Z 2020-05 Working Paper http://documents.worldbank.org/curated/en/541441589828863997/Transformational-Climate-Finance-Donors-Willingness-to-Support-Deep-and-Transformational-Greenhouse-Gas-Emissions-Reductions-in-Lower-Income-Countries http://hdl.handle.net/10986/33798 English Policy Research Working Paper;No. 9251 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	GREENHOUSE GAS EMISSIONS CLIMATE ACTION CLIMATE CHANGE CLIMATE CHANGE MITIGATION MITIGATION POLICY CARBON POLICY TRANSFORMATIONAL CLIMATE POLICY CLIMATE FINANCE CARBON TAXATION WILLINGNESS TO PAY
spellingShingle	GREENHOUSE GAS EMISSIONS CLIMATE ACTION CLIMATE CHANGE CLIMATE CHANGE MITIGATION MITIGATION POLICY CARBON POLICY TRANSFORMATIONAL CLIMATE POLICY CLIMATE FINANCE CARBON TAXATION WILLINGNESS TO PAY Strand, Jon Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
relation	Policy Research Working Paper;No. 9251
description	This paper uses simple analytical models to study high-income donor countries' willingness to pay to supply mitigation finance to low-income countries; how this depends on modality for finance supply; and how it changes as the global greenhouse gas mitigation agenda moves forward. The paper focuses on two modalities: transformational project-based mitigation finance (transitioning from fossil to non-fossil energy use at scale), and transformational policy-based mitigation finance support (implementing comprehensive carbon taxation). These modalities are compared with conventional finance for which donors have lower willingness to pay. High-income countries' willingness to pay is higher when mitigation is combined with carbon taxation; private-sector finance is also more highly incentivized. Reaching the transformational mitigation finance stage can be challenging, as it may require large provision of mitigation finance with negative net returns to high-income countries. Willingness to pay will be higher when high-income countries collaborate in the provision of mitigation finance. The findings show that more effective collaboration can be sustained when it is enforced by an international financial institution that collects and spends the provided mitigation finance to induce efficient mitigation activity in low-income countries and collaboration among donors is enforced by simple tit-for-tat reaction strategies.
format	Working Paper
author	Strand, Jon
author_facet	Strand, Jon
author_sort	Strand, Jon
title	Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
title_short	Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
title_full	Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
title_fullStr	Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
title_full_unstemmed	Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries
title_sort	transformational climate finance : donors' willingness to support deep and transformational greenhouse gas emissions reductions in lower-income countries
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/541441589828863997/Transformational-Climate-Finance-Donors-Willingness-to-Support-Deep-and-Transformational-Greenhouse-Gas-Emissions-Reductions-in-Lower-Income-Countries http://hdl.handle.net/10986/33798
_version_	1764479539889569792

Transformational Climate Finance : Donors' Willingness to Support Deep and Transformational Greenhouse Gas Emissions Reductions in Lower-Income Countries

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