This paper, featured in the Journal of Sustainable Finance & Investment, presents the necessity of having sufficient finances to implement measures contained within Nationally Determined Contributions (NDCs). Based on a dynamic model to capture the link between emissions and government budget balance, the analysis estimates the cost associated with implementing emission-reducing policy. It also measures the gap between what is likely to be funded through existing resources, and what needs to be supplemented through climate finance. For that purpose, an international comparison analysis has been conducted to quantify public climate finance needs for each country. Using panel data for 40 countries over the period of 1998–2012, the empirical results show that economic growth and commensurate greenhouse gas emissions generate budgetary surpluses, and that these surpluses must be offset by public climate finance if countries are to reduce emissions commensurate with their NDCs. The approach of this paper provides a method for determining the actual amount of public finance required to offset the budgetary shortfall from the climate finance pledged under the Paris Agreement. The paper is available for purchase at Taylor & Francis Online.
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