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Nicoletta Batini, Mario di Serio, Matteo Fragetta, and Mr. Giovanni Melina
This paper provides estimates of output multipliers for spending in clean energy and biodiversity conservation, as well as for spending on non-ecofriendly energy and land use activities. Using a new international dataset, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar’s worth of economic activity. Although not all green and non-ecofriendly expenditures in the dataset are strictly comparable due to data limitations, estimated multipliers associated with spending on renewable and fossil fuel energy investment are comparable, and the former (1.1-1.5) are larger than the latter (0.5-0.6) with over 90 percent probability. These findings survive several robustness checks and lend support to bottom-up analyses arguing that stabilizing climate and reversing biodiversity loss are not at odds with continuing economic advances.
Mr. Michael Keen and Benjamin Jones

their emissions cause (through carbon pricing) . A cautious shift towards more aggressive carbon pricing (though taxation or tradable emission permits) need not impede recovery . Stronger emissions pricing could make a substantial and efficient contribution to restoring fiscal positions damaged by the crisis . Achieving such pricing requires resisting political pressures to overcompensate producers, notably by awarding them emissions permits free of charge . While carbon pricing is important,“greenstimulus measures have a useful role to play in sustaining

Nicoletta Batini, Mario di Serio, Matteo Fragetta, and Mr. Giovanni Melina

protection of wildlife and ecosystems—can generate more than a dollar’s worth of economic activity. The estimated multipliers associated with green spending are about 2 to 7 times larger than those associated with non-eco-friendly expenditure, depending on sectors, technologies and horizons. These findings survive several robustness checks and suggest that ‘building back better’ could be a win-win for economies and the planet. JEL Classification Numbers : C11, H50, O44, P18, Q00, Q01, Q20, Q43, Q50 Keywords : green multiplier, green stimulus, clean energy, conservation

Mr. Pragyan Deb, Davide Furceri, Mr. Jonathan David Ostry, and Nour Tawk

a “very good opportunity to undertake a necessary step change in the public spending component of environmental policies and to start working through a backlog of public investment to improve the environment.” Drawing lessons from the Global Financial Crisis, Agarwal et. al. (2020) provides evidence that the implementation of timely and properly designed green stimulus measures can generate economic growth, create jobs and bring about environmental benefits, but they note the trade-offs between competing economic, environmental and social policy objectives

Ian Goldin

concerted action. The pandemic has highlighted our lack of immunity to natural threats, but also created an opportunity to reset our economies. There is no shortage of ideas regarding green stimulus policies, which offer the potential to build back better and accelerate the transition from fossil fuels. Global protests, from climate to race, have demonstrated the appetite for fresh thinking. And COVID-19 has also demonstrated that citizens are prepared to change their behavior when required to do so. All that remains is for governments to act. Networked solutions

Benjamin Jones and Mr. Michael Keen

at a given price). Such measures are not without their own difficulties, however. It would be best to address the underlying causes of volatility—for example, by expanding the sectoral and geographic coverage of the chosen measures. Stimulating a green recovery Expenditures on environmental programs (green stimulus measures) have helped sustain aggregate demand and employment in the short term. Studies suggest that these could confer stronger growth effects than conventional measures such as general consumption or income support. A review of the recovery

Mr. Pragyan Deb, Davide Furceri, Mr. Jonathan David Ostry, and Nour Tawk
Lockdowns resulting from the COVID-19 pandemic have reduced overall energy demand but electricity generation from renewable sources has been resilient. While this partly reflects the trend increase in renewables, the empirical analysis presented in this paper highlights that recessions result in a permanent, albeit small, increase in energy efficiency and in the share of renewables in total electricity. These effects are stronger in the case of advanced economies and when complemented with environment and energy policies—both market-based measures such as taxes on pollutants, trading schemes and feed-in-tariffs, as well as non-market measures such as emission and fuel standards and R&D investment and subsidies—to incentivize and hasten the transition towards renewable sources of energy.
Mr. Michael Keen and Benjamin Jones
Negotiations toward a successor to the Kyoto Protocol on climate change have come to a critical point, and domestic climate policies are being developed, as the world seeks to recover from the deepest economic crisis for decades and looks for new sources of sustainable growth. This position paper considers the challenge posed by these two policy imperatives: how to exit from the crisis while developing an effective response to climate change. Blending the objectives of a sustained recovery and effective climate policies presents both challenges and opportunities. Although there are potential “win-win” spending measures conducive to both, the more fundamental linkages and synergies lie in the broader strategies adopted toward each other. Greater climate resilience can promote macroeconomic stability and alleviate poverty; and carbon pricing, essential for mitigation, can contribute to the strengthening of fiscal positions that is expected to be needed in many countries. There are, nevertheless, also difficult trade-offs to face, notably in the somewhat greater caution now warranted in moving to more aggressive emissions pricing. However, the simple policy guidelines for addressing climate issues remain fundamentally unchanged; the need to deploy a range of regulatory, spending, and emissions pricing measures.
Mr. Michael Keen and Benjamin Jones

Fankhauser , Nicholas Stern , and Dimitri Zenghelis , 2009 , “An Outline of the Case for a Green Stimulus” ( London : Grantham Research Institute on Climate Change and the Environment ). Burtraw , Dallas , and Karen Palmer , 2008 , “Compensation Rules for Climate Policy in the Electricity Sector,” Journal of Policy Analysis and Management , Vol. 27 , No. 4 , pp. 819 – 47 . Commission of the European Communities , 2008a , “Package of Implementation Measures for the EU’s Objectives on Climate Change and Renewable Energy for 2020: Impact