Financing the Fight Against Climate Change

Development banks are well placed to contribute to the fight against climate change. Projects can be designed to help lower greenhouse-gas emissions, and new climate bonds can be issued to help countries and institutions as they move toward meeting enforceable carbon-dioxide reductions commitments.

PARIS – Climate change is already wreaking havoc throughout the developing world. Vietnam, for example, has reported that natural disasters, some of them exacerbated by climate change, have caused annual losses equivalent to 2% of its GDP. In agriculture-dependent countries like Ethiopia, longer droughts and more frequent flooding are threatening livelihoods and food supplies.

As the international community gears up for the United Nations Climate Change Conference in Paris in December, identifying and streamlining sources of financing for the fight against climate change must be a top priority. Development banks like the French Development Agency (AFD), where I am CEO, are well placed to contribute.

For starters, development banks can finance projects that benefit both development and the environment. Global warming is now a vital factor to consider when planning any development project. For example, the effects of climate change can pose critical risks to infrastructure – agricultural irrigation, public transportation, or nearly anything else. Meanwhile, rising incomes – a goal of any development effort – nearly always means increased consumption of natural resources and energy, resulting in more emissions and further warming.

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