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Overstraining International Climate Finance: When Conflicts of Objectives Threaten Its Success

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  • Buchholz, Wolfgang
  • Rübbelke, Dirk
Abstract
Expectations concerning international climate finance have increased considerably. In particular, provisions for international transfer schemes are an important element in the Paris Agreement. Yet, climate finance is not only seen as a tool to efficiently combat global warming, but also to solve development problems in the recipient countries. Thereby, conflicts between distributive and allocative objectives arise, which threaten overall performance of such transfer schemes. Given the severity of the climate change problem, we raise concerns whether the world can afford climate transfer schemes that do not focus on prevention of (and adaptation to) climate change, but are considered as a vehicle of rent-seeking by many agents. In line with the famous Tinbergen rule we argue that other sustainability problems and issues of global fairness should not be primarily addressed by climate finance but should be mainly tackled by other means. Future designs of international transfer schemes within the framework of the Paris Agreement are to be based on experience gained from existing mechanisms. Therefore, we con-sider different existing schemes using a graphical technique first proposed by David Pearce and describe the conflicts between allocative and distributional goals that arise.

Suggested Citation

  • Buchholz, Wolfgang & Rübbelke, Dirk, 2020. "Overstraining International Climate Finance: When Conflicts of Objectives Threaten Its Success," FACTS: Firms And Cities Towards Sustainability 307983, Fondazione Eni Enrico Mattei (FEEM) > FACTS: Firms And Cities Towards Sustainability.
    • Handle: RePEc:ags:feemff:307983
    DOI: 10.22004/ag.econ.307983
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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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