Who's Going Green and Why? Trends and Determinants of Green Investment

Eyraud, Luc; Zhang, Changchang; Wane, Abdoul Aziz; Clements, Benedict

doi:10.5089/9781463927301.001

Cited by 42 publications

(23 citation statements)

References 20 publications

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“…This evidence is in line with the findings of Hicks, Parks, Roberts, and Tierney (2008) in their broader study of environmental aid, which supports earlier and more recent studies that show that economic performance determines decisions about environmental aid and green investment (Eyraud, Wane, Zhang, & Clements, 2011;Lewis, 2003). Little research has compared environmental aid with more traditional poverty aid.…”

Section: Introductionsupporting

confidence: 88%

Climate mitigation finance across developing countries: what are the major determinants?

Halimanjaya

2014

Climate Policy

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This empirical study assesses the relationship between the characteristics of developing countries and the amount of official climate mitigation finance inflow. A two-part model and robustness checks were used to analyse 1998-2010 Rio Marker data on 180 developing countries. The results show that developing countries with higher CO 2 intensity, larger carbon sinks, lower per capita gross domestic product (GDP) and good governance tend to be selected as recipients of climate mitigation finance, and receive more of it. CO 2 emission is not used as a determinant of mitigation finance until the actual financial disbursement. Poverty aid tends to be allocated to countries with low CO 2 emissions, possibly to avoid diverting aid from poorer developing countries. However, such a diversion is unavoidable if the share of mitigation finance in climate finance and in overall official development assistance (ODA) continues to escalate. This study calls for an equitable allocation of total ODA mitigation and adaptation finance in addition to the 0.7% ODA/gross national income target, and for transparent criteria and the verification of reporting on the allocation of mitigation finance.

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Section: Introductionsupporting

confidence: 88%

Climate mitigation finance across developing countries: what are the major determinants?

Halimanjaya

2014

Climate Policy

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“…Developing countries that have more developed domestic financial intermediation have tended to show a higher correlation between national saving and national investment than poorer countries with less developed financial intermediation, which suggests that emerging market economies are likely to use domestic funds to a greater extent to finance upward steps in investment rates as their domestic financial systems mature (a feature that is likely to be amplified if advanced industrial countries baulk at increasing steadily climate finance payments to middle-income developing countries). Eyraud et al (2011) provide evidence that countries with sound domestic financial systems tend to have higher levels of green investment, suggesting that financial development facilitates finance for low-carbon infrastructure investment.…”

Section: Past Sources Of Finance For Incremental Investment and Develmentioning

confidence: 98%

“…Pioneering efforts to measure and model broader "green investment" flows show that green investment has been a major impetus behind total energy-supply investment Table 2. Investment shares and current account balances in recent years across countries and China has accounted for a large part of the increase in green investment (Eyraud et al, 2011). 14 Thus, where and when increases in investment are required for climate-change mitigation, the pace of the necessary increases is by no means unprecedented.…”

Section: Incremental Investment Needs Compared With Past Variations Imentioning

confidence: 99%

A Macroeconomic Perspective on Climate Change Mitigation: Meeting the Financing Challenge

2014

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Transitioning to a low-carbon economy will require significant investment to transform energy systems, alter the built environment and adapt infrastructure. A strategy to finance this investment is needed if the limit of a 2 C increase in global mean temperatures is to be respected. Also, high-income countries have pledged to pay the "agreed full incremental costs" of climatechange mitigation by developing countries, which are not necessarily the same as incremental investment costs. Building on simulations using Integrated Assessment Models and historical evidence, this paper explores some of the issues posed by this dual financing challenge. We discuss the "fiscal self-reliance" of the energy sector, finding that carbon pricing would generate sufficient fiscal revenues within each region to finance total investment in energy supply. Even when allowing for trade in emission permits, regional carbon fiscal revenues should still suffice to cover both their own investment in energy supply and permit purchases from abroad. We show that incremental energy-supply investment (and saving) needs are well within the range of past variation of aggregate investment, and argue that the challenge is rather to ensure that revenues from carbon pricing and other sources are complemented by investment in the appropriate sectors. But fairness and equity are likely to warrant transfers from advanced industrial countries to developing nations.

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“…The report argues that if investment consultants and other parties do not include environmental, social and governance (ESG) aspects into their services, they face "a very real risk that they will be sued for negligence". Eyraud et al (2011) provide a definition of green investments from a macroeconomic perspective: "The investment necessary to reduce greenhouse gas and air pollutant emissions, without significantly reducing the production and consumption of non-energy goods". Rozenberg et al (2014) compare two policies for the optimal switch towards green capital: having a climate tax or subsidising green investments in one economy.…”

Section: Green Investments Literaturementioning

confidence: 99%

Unconditional aid and green growth

Altaghlibi

Wagener

2019

Journal of Economic Dynamics and Control

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Environmentally motivated aid can help developing countries to achieve economic growth while mitigating the impact on emission levels. We argue that the usual practice of giving aid conditionally is not effective, and we therefore study aid that is given unconditionally. Our framework is a differential open-loop Stackelberg game between a developed country (leader) and a developing country (follower). The leader chooses the amount of mitigation aid given to the follower, which the follower either consumes or invests in costly nonpolluting capital or cheap high-emission capital. The leader gives unconditional mitigation aid only when sufficiently rich or caring sufficiently about the environmental quality, while the follower cares about environmental quality to some extent. If aid is given in steady state, it decreases the steady state level of high-emission capital and capital investments in the recipient country and the global pollution stock, but it has no effect on the levels of non-polluting capital and non-polluting investments. It accelerates the economic growth of the follower; this effect is however lower than what static growth theory predicts since most of the aid is consumed. Moreover, we find that the increase in growth takes place in the nonpolluting sector.

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Who's Going Green and Why? Trends and Determinants of Green Investment

Cited by 42 publications

References 20 publications

Climate mitigation finance across developing countries: what are the major determinants?

Climate mitigation finance across developing countries: what are the major determinants?

A Macroeconomic Perspective on Climate Change Mitigation: Meeting the Financing Challenge

Unconditional aid and green growth

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