FEEM working papers "Note di lavoro"
Date: 30/10/2020

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

Wolfgang Buchholz (University of Regensburg, CESifo); Dirk Rübbelke (Technische Universität Bergakademie Freiberg)
JEL n.: H41, H87, Q54, Q56
Keywords: Ancillary Benefits, CDM, Climate Finance, Co-benefits, Global Environment Facility, Incremental Cost, International Transfers, Paris Agreement, Premium Prices


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 warm-ing, 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 Agree-ment 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, W.,  D. Ruebbelke, (2020), 'Overstraining International Climate Finance: When Conflicts of Objectives Threaten its Success', Nota di Lavoro 17.2020, Milano, Italy: Fondazione Eni Enrico Mattei

Download file
Download file

FEEM Newsletter & Update

Subscribe to stay connected.

Your data will be processed by FEEM - Eni Enrico Mattei Foundation - Data Controller - to receive the Foundation's Newsletter & Update via e-mail. To send the requested information, the Data Controller uses e-mail sending service providers established in the U.S.A .: for this, your consent to the transfer of your email address to the U.S.A. is required, without which it will not be possible to comply with your request. We invite you to consult the complete information to obtain detailed information to protect your rights.