IMF-MIT study shows immediate — but realistic — actions are needed to confront climate change.
As global leaders prepare to gather for the Rio+20 sustainable development summit in Brazil next week, the International Monetary Fund (IMF) and a collection of economists from MIT and other organizations has released a report to help leaders confront the price tag associated with climate change. The publication — “Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers” — details the most effective methods to reduce emissions and contain costs, namely through carbon pricing.
Until now, leaders have focused on slowing warming to 2 degrees Celsius to prevent catastrophic changes associated with climate change. Because this would mean taking drastic measures to hold emissions at about today’s levels, researchers at MIT argue that leaders should be realistic and start smaller because the time to act is quickly running out. Their research — “Emissions Pricing to Stabilize Global Climate” — is a chapter within the IMF guide.
“Negotiations on the exact emission-reduction target have been going on for a long time without much substantial progress,” says Sergey Paltsev, lead author of the MIT study and associate director for economic research at the Joint Program on the Science and Policy of Global Change. “But it is better to start with some policy that reduces emissions because even a small initial step is important as it sets the process on track.”
IMF Managing Director Christine Lagarde points to a tax or trade system.
“Perhaps we can help with a simple concept that everybody can understand — getting the prices right,” Lagarde said this week in a speech at the Center for Global Development. “Getting the prices right means using fiscal policy to make sure that the harm we do is reflected in the prices we pay. I am thinking about environmental taxes or emissions trading systems under which governments issue — and preferably sell — pollution rights.”