Making Stimulus Packages Green

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The financial meltdown dominates agendas across the world today, in the wake of two other recent shocks--high food prices and energy price volatility--that have particularly affected many developing countries. Yet, even in a time when countries are preoccupied by pressing economic problems, we cannot afford to take our eye off the ball of another emerging crisis---global warming caused by climate change. Every crisis is an opportunity. With the right handling, we could simultaneously solve the current financial crisis and prevent the emerging climate change crisis.

The global economy is suffering from the worst crisis in eight decades after the Great Depression. A large, coordinated fiscal stimulus package adopted by both developed and developing countries simultaneously is essential for preventing the crisis from becoming a protracted, deep recession. A good approach for every country, which is already being proposed by the Obama administration and the Chinese authorities, is to direct stimulus package investments toward energy-saving technologies, alternative energy, and green economies. This will stimulate demand and provide jobs in the short run and will contribute to the mitigation of and adaptation to global warming in the long run. Spending the fiscal stimulus this way is killing two birds with one stone.

Global warming caused by unmanaged climate change has the potential to reverse the hard-earned development gains of the past decades and the progress towards achieving the Millennium Development Goals in many countries. The World Bank Group will continue to finance action against climate change in developing countries, as well as contribute to a growing body of knowledge on climate change and development. The World Bank will also redouble its efforts to help developing countries cope with the current economic crisis through standard grants and loans and as well as new initiatives such as the Vulnerability Fund.

Through this blog, we hope to share more ideas on development in a changing climate, and to learn from yours.


Justin Yifu Lin

Former World Bank Chief Economist and Senior Vice President

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