Environmental tax reforms can reduce emissions, increase domestic revenues, and generate positive welfare effects in developing countries, while preventive public investments and measures to build fiscal buffers can help safeguard stability and growth in the face of rising climate risks. This report provides actionable advice on how to design and implement fiscal policies for both development and climate action.

Format: Paperback / softback
Length: 244 pages
Publication date: 30 December 2018
Publisher: World Bank Publications

Fiscal policies play a crucial role in promoting development and addressing climate change. This report offers actionable advice on designing and implementing fiscal policies that can achieve these goals. Based on extensive research in development and environmental economics, the report argues that well-designed environmental tax reforms can be particularly valuable in developing countries. These reforms can reduce emissions, increase domestic revenues, and generate positive welfare effects such as cleaner water, safer roads, and improved human health. Moreover, environmental tax reforms can be implemented without harming competitiveness. New empirical evidence from Indonesia and Mexico suggests that raising fuel prices can actually increase firm productivity under certain conditions. Finally, the report discusses the role of fiscal policy in strengthening resilience to climate change. It provides evidence that preventive public investments and measures to build fiscal buffers can help safeguard stability and growth in the face of rising climate risks. In this way, environmental tax reforms and climate risk-management strategies can lay the much-needed fiscal foundation for development and climate action.

Fiscal Policies for Development and Climate Action

Fiscal policies play a crucial role in promoting development and addressing climate change. This report offers actionable advice on designing and implementing fiscal policies that can achieve these goals. Based on extensive research in development and environmental economics, the report argues that well-designed environmental tax reforms can be particularly valuable in developing countries. These reforms can reduce emissions, increase domestic revenues, and generate positive welfare effects such as cleaner water, safer roads, and improved human health. Moreover, environmental tax reforms can be implemented without harming competitiveness. New empirical evidence from Indonesia and Mexico suggests that raising fuel prices can actually increase firm productivity under certain conditions. Finally, the report discusses the role of fiscal policy in strengthening resilience to climate change. It provides evidence that preventive public investments and measures to build fiscal buffers can help safeguard stability and growth in the face of rising climate risks. In this way, environmental tax reforms and climate risk-management strategies can lay the much-needed fiscal foundation for development and climate action.

Weight: 642g
Dimension: 219 x 280 x 16 (mm)
ISBN-13: 9781464813580