Tackling climate change is a matter of survival and economic rationality. Investing in climate mitigation and adaptation, while expensive, will reduce the long-term human and economic costs of climate change. Debt is needed to fund these large-scale investments and distribute the financial burden of climate action across generations, generating complicated questions around how to balance debt sustainability with climate sustainability and how to design debt instruments to best support global climate action.  

The 25th Geneva Report on the World Economy discusses how, and by whom, climate mitigation and adaptation should be paid, considering debt instruments such as sovereign bonds, carbon credits, conditional official grants, and debt relief from both public and private sources. The authors provide six policy proposals to jointly address climate change and debt sustainability by focusing on financial instruments as a means of incentivizing governments to do the right thing and providing fiscal space for climate investment in countries that could not otherwise afford it. Progress can only be made through the utilization of policies which best suit individual country circumstances, bearing in mind their limitations and the potential trade-offs.

Report authors: Patrick Bolton, Lee Buchheit, Mitu Gulati, Ugo Panizza, Beatrice Weder di Mauro and Jeromin Zettelmeyer

The events will be streamed live for viewing only on the PIIE website and YouTube channel.

To submit questions for the Q&A, please send them in advance to [email protected].

Join Adam Posen and Beatrice Weder di Mauro at this launch in Washington, hosted by PIIE and CEPR.