January 9, 2011

Financing the Response to Climate Change

by Hugh Bredenkamp and Catherine Pattillo

- This note outlines a scheme for mobilizing financing to help developing countries confront the challenges posed by climate change. The idea is to create a “Green Fund” with the capacity to raise resources on a scale commensurate with the Copenhagen Accord ($100 billion a year by 2020). To achieve the necessary scale, the Green Fund would use an initial capital injection by developed countries in the form of reserve assets, which could include SDRs, to leverage resources from private and official investors by issuing low-cost "green bonds" in global capital markets.

Bredenkamp, H. and C. Pattillo (2010). "Financing the Response to Climate Change." International Monetary Fund, Staff Position Note SPN10/06, Mar 2010.