Publication: Balancing Act: Political Economy and the Pursuit of Ambitious Carbon Pricing in Developing
Countries
Loading...
Published
2024-09-09
ISSN
Date
2024-08-27
Author(s)
Editor(s)
Abstract
This report provides practical insights into the political economy challenges and opportunities for advancing carbon pricing, drawing on the experiences of select countries, including those in the World Bank’s Partnership for Market Implementation (PMI). Such countries often face different socioeconomic, political, and institutional environments than high-income economies. The review combines findings from academic literature in economics and political science, interviews with stakeholders, and an original survey of carbon pricing experts and policymakers in developing countries, to extract meaningful insights into how policymakers navigate political economy challenges to promote carbon pricing in developing countries. The report does not deal with the adoption of the broader set of climate policies that may also support mitigation. The premise of this report is that carbon pricing can be an effective and cost-effective instrument, one that has increasingly attracted government interest as a key part of the climate policy toolkit. The target audience for this report is national and subnational policymakers and other interested stakeholders seeking practical insights on realworld approaches that have worked or failed when advancing carbon pricing. The report does not prescribe best practices or cover every possible circumstance. Instead, by examining current practices at each stage of carbon pricing development, it aims to inform and assist in efforts to implement carbon pricing.
Link to Data Set
Citation
“World Bank. 2024. Balancing Act: Political Economy and the Pursuit of Ambitious Carbon Pricing in Developing
Countries. © World Bank. http://hdl.handle.net/10986/42093 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Tightening Demand to Maintain Macroeconomic Balances : Lao PDR Economic Monitor, November 2012(World Bank, Vientiane, 2012-11)Global and regional economic development continues to face uncertainties in 2012. East Asia and the Pacific region's growth is estimated to slow down compared to 2011, but remains robust compared with other regions thanks to sustained domestic investment and consumption. Lao PDR continues to maintain robust growth this year but faces a challenge to manage domestic demand. On the supply side, the construction, services, industry and agriculture sectors are the main drivers of growth; while on the demand side, public spending and private investment including demand driven by preparations for the Asia-Europe Meeting (ASEM) has played an important role in boosting the economy this year. In spite of robust growth, inflation has been declining, mostly on account of declining food and fuel inflation. However, home-grown and external risks associated with low reserves coverage, increased exposure to mining revenues, fast banking expansion with limited supervision capacity and a large number of newly announced large investment projects warrant close monitoring to preserve macroeconomic stability and sustainable growth. Stronger than expected revenue performance from the mining sector and external grants contributed to an improvement in the fiscal performance in FY11/12.With the contribution of mining revenue increasing, closely monitoring commodity price fluctuations is becoming increasingly important. The fiscal deficit in FY12/13 is expected to slightly widen as a result of a planned wage increase. Strong pressure on external reserves calls for tightening of aggregate demand. Credit growth remains high and is putting pressure on falling reserves. Credit growth has picked up in June 2012 driven by increased credit to the private sector and SOEs. Private sector credit growth is driven by buoyant performance in construction, manufacturing and service sectors. The Bank of Lao PDR's disbursements to local infrastructure projects have moderated compared to their peak in 2009, but are ongoing as a result of previous commitments.Publication Work and Family : Latin American and Caribbean Women in Search of a New Balance(Washington, DC, 2011-01)The paper examines the uneven progress women have made in the Latin American and Caribbean region in the last forty years. It examines issues such as health care, education, work-life balance, and family planning. The report states that while women in the region have made spectacular progress in the areas of education and health access, economic development amongst women has become flat and there is a challenge for policy makers to increase access to opportunities for women. This is especially apparent in the wage gap between men and women found throughout the region.Publication Estimating the Impact of Labor Taxes on Employment and the Balances of the Social Insurance Funds in Turkey(World Bank, Washington, DC, 2009-04)High labor tax wedges and slow formal employment growth have combined to make labor tax reform an important economic policy issue in Turkey. This synthesis report presents the results of a series of empirical studies of the impact of a labor tax reform. The analysis was undertaken before the social contribution reforms that were introduced as part of the 2008 employment package. Using data from firms, households, and social insurance files, the research finds that employment does respond to changes in labor costs at levels that are comparable to those found in other middle-income and Organization for Economic Co-operation and Development (OECD) countries. The results show that reducing labor costs could significantly boost registered employment. However, the actual effect of lower taxes on employment would be diluted because a significant portion of the reduced tax will be captured by workers through higher wages rather than by employers through lower labor costs. As a result, tax cuts targeted towards low-wage labor would be more cost-effective than across-the-board reductions. To achieve overall fiscal neutrality, compensating additional revenues from other sources or reduced expenditures will be needed to accompany lower contribution rates.Publication Colombia - Recent Economic Developments in Infrastructure : Balancing Social and Productive Needs for Infrastructure, Volume 1. Executive Summary(Washington, DC, 2004-11-01)The purpose of this study is to provide an integral evaluation of recent economic developments in Colombia's infrastructure sectors. Specifically, the study covers the electricity, natural gas, telecommunications, water, and transport sectors. Colombia presents high levels of access to basic household services compared to its Latin American peers, while access to services in the country is relatively equitable across the income spectrum, but relatively inequitable between urban and rural areas. However, Colombia lags behind its peers as regards paved roads, internet access, and electricity generation capacity. Energy use is strongly driven by the underlying structure of the economy, and paved road density is driven by the internal spatial distribution of economic activity. Moreover, there is mixed evidence as to the relative quality, and efficiency of Colombia's infrastructure service providers. The report stipulates Colombia needs to enhance its performance on productive infrastructure, while preserving its achievements in the social sphere. On the basis of this comparative assessment, the challenge for Colombia would appear to lie primarily in reorienting its infrastructure investments towards the productive sectors, without jeopardizing its strong performance in social infrastructure. While the private sector can play an important role in addressing the deficits in energy and telecommunications, the key challenge of financing improvements in the road network will necessarily remain a predominantly public responsibility, given that the limited scope for toll roads has already been largely exploited.Publication Striking a Better Balance : Volume 5. Final Workshop Report and Stakeholders Submissions or Comments(Washington, DC, 2003-12)In July 2001, the extractive industries review (EIR) was initiated with the appointment of Dr. Emil Salim, former Minister of the Environment for Indonesia, as eminent person to the review. The EIR was designed to engage all stakeholders-governments, nongovernmental organizations (NGOs), indigenous peoples' organizations, affected communities and community-based organizations, labor unions, industry, academia, international organizations, and the World Bank Group (WBG) itself-in a dialogue. The basic question addressed was, can extractive industries projects be compatible with the WBG's goals of sustainable development and poverty reduction? The EIR believes that there is still a role for the WBG in the oil, gas, and mining sectors-but only if its interventions allow EI to contribute to poverty alleviation through sustainable development. And that can only happen when the right conditions are in place. This report makes major recommendations on how to restore the balance in the WBG - promote pro-poor public and corporate governance in the EI, strengthen environmental and social components of WBG interventions in these industries, respect human rights, and rebalance WBG institutional priorities. These recommendations have as the ultimate goal: to lift up civil society so it is balanced in the triangle of partnership between governments, business, and civil society; to raise social and environmental considerations so they are balanced with economic considerations in efforts at poverty alleviation through sustainable development; and to strive for a human-rights-based development that balances the material and the spiritual goals of life.
Users also downloaded
Showing related downloaded files
Publication Finance and Prosperity 2024(Washington, DC: World Bank, 2024-08-29)While financial sector risks in the larger and higher per capita countries are moderate, half of lower-income countries face significant risks over the next 12 months. Nearly 70 percent of countries facing high financial sector risks are currently not adequately prepared to handle financial stress. The report also identifies a particular risk facing financial sectors in several countries: a large and growing exposure to sovereign debt. This exposure surged to its highest level in the past decade. Finally, the report looks at how countries can enable more climate finance through the banking sector without compromising on the important goals of financial sector stability and inclusion for underserved people.Publication State and Trends of Carbon Pricing(Washington, DC: World Bank, 2023-12-08)As developing nations grapple with the largefinancing needs required to achieve our climate goals, the urgency to mobilize sub stantial capital towards communities, nature, and broader developmental efforts is resoundingly clear. In this context, carbon markets, both under the Paris Agreement and the voluntary carbon market (VCM), can channel much-needed finance towards climate action. In all, 120 nations have considered the role of international carbon markets to support mitigation action and achievement of their nationally determined contribution (NDC) targets, and many corporations are seeking high-quality carbon credits to meet their voluntary climate commitments. Done right, carbon markets can help us get the resources we need now, at scale, and accelerate action by providing much needed source of finance. They can also encourage accelerated action to meet NDCs, providing financing needed to implement them. In its annual State and Trends of Carbon Pricing Report, the World Bank has been tracking domestic carbon pricing policies, such as carbon taxes and emissions trading systems, that are critical to incentivize action to reduce emissions. With the growing potential for carbon markets as a means to increase climate finance under both the Paris Agreement and VCM, there is a renewed interest in understanding carbon market developments. This report aims to supplement the annual State and Trends report and contribute to the global effort to promote market transparency and trust by providing digestible insights into the state of play of international carbon markets.Publication Choosing Our Future(Washington, DC: World Bank, 2024-09-04)Education can propel faster and better climate action in two crucial ways. First, education can galvanize behavior change at scale - not just for tomorrow, but also for today. Second, education can unlock skills and innovation to shift economies onto greener trajectories for growth. At the same time, education needs to be protected from climate change. Extreme climate events and temperatures are already eroding hard-won progress on schooling and learning. Climate change is causing school closures, learning losses, and dropouts. These will turn into long-run inter-generational earnings losses putting into jeopardy education’s powerful potential for spurring poverty alleviation and economic growth. Governments can act now to adapt schools for climate change in cost-effective ways. This report outlines new data, evidence, and examples on how countries can harness education to propel climate action. It provides an actionable policy agenda to meet development, education, and climate goals together, recognizing that tackling climate change requires changes to individual beliefs, behaviors, and skills – changes that education is uniquely positioned to catalyze.Publication State and Trends of Carbon Pricing 2024(Washington, DC: World Bank, 2024-05-21)This report provides an up-to-date overview of existing and emerging carbon pricing instruments around the world, including international, national, and subnational initiatives. It also investigates trends surrounding the development and implementation of carbon pricing instruments and some of the drivers seen over the past year. Specifically, this report covers carbon taxes, emissions trading systems (ETSs), and crediting mechanisms. Key topics covered in the 2024 report include uptake of ETSs and carbon taxes in low- and middle- income economies, sectoral coverage of ETSs and carbon taxes, and the use of crediting mechanisms as part of the policy mix.Publication Rising to the Challenge(Washington, DC: World Bank, 2024-10-31)About 1.2 billion people - one in five people in the world – are at high risk from climate-related hazards, but much can be done to make people, business, communities, and countries more resilient. The new World Bank flagship report “Rising to the Challenge” argues that reducing climate and disaster impacts requires a combination of more rapid development, more resilient development, and targeted adaptation interventions. Development plays a key role as nobody can be resilient without access to basic infrastructure and social services, decent housing, or while living in poverty. While a 10-percent increase in income is associated with a decrease in the population at high risk by close to 100 million people, current development patterns will not be enough. An assessment of 44 countries shows that, in spite of growing attention and adaptation planning, most countries are still lagging in implementing resilience interventions, especially those related to policies and macro-fiscal dimensions, and in the monitoring and evaluation of their actions. However, the report dispels the idea that no progress is being done: a collection of case studies - with firms, governments, and public-private partnerships - shows that the private and public actors are undertaking promising adaptation and resilience efforts with measurable results and good practices that can replicated to scale up action and to build resilience for all.