Green Economy and Fiscal Policy (UN Environment)

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This UN Environment Briefing Note introduces the importance of fiscal policy reform for a green economy. Fiscal policy provides a critical set of instruments for building green economies by pricing environmental externalities and redressing social impact. Particularly, it can shift the investments towards clean and efficient technologies, natural capital and social infrastructure. The lingering fiscal crisis in some countries provides an opportunity for governments to reform their fiscal policies, while addressing environmental concerns. When designing fiscal reforms, it is critical to consider its potential negative distributional impacts on vulnerable groups and these impacts can be mitigated through tax exemptions, reduced tax rates or direct compensation measures.