Strand, Jon2012-03-192012-03-192009-09https://hdl.handle.net/10986/4245This paper discusses possible macroeconomic implications for low-income countries of increased revenue inflows that may follow from implementing certain global greenhouse gas mitigation policies. Such revenue sources include revenue from emissions offset mechanisms, direct investments, and financial transfers that form parts of possible future mitigation treaties. In the short run such revenue will come mainly from offset markets and donor-sponsored programs, with some additional financial inflows due to foreign direct investments. In the longer run, comprehensive global cap-and-trade or carbon tax schemes could provide a potentially much larger revenue flow to many low-income countries. The author argues that the macroeconomic implications of such flows are manageable in the short run, but the larger revenues resulting from global emissions schemes could overwhelm this capacity and lead to a number of potential macroeconomic management problems.CC BY 3.0 IGOABATEMENTADAPTATION FINANCINGAGRICULTUREAID EFFECTIVENESSALLOCATIONBALANCE OF PAYMENTSBENEFICIARYBONDBUYING POWERCAPACITY BUILDINGCAPITAL ACCUMULATIONCAPITAL INFLOWCAPITAL MARKETCAPITAL MARKET REGULATIONSCAPITAL MOBILITYCAPITAL STOCKCARBON PRICECARBON TAXCARBON TRADINGCASH TRANSFERSCENTRAL BANKCLEAN TECHNOLOGIESCLIMATECLIMATE CHANGECLIMATE CHANGE SCIENCE PROGRAMCLIMATE POLICYCOMMODITYCOMPETITIVENESSCORPORATE INVESTMENTCORPORATE TAXCORPORATE TAX RATESCORRUPTIONCOUNTRY RISKCREDIT WORTHINESSCURRENCYCURRENCY APPRECIATIONDAMAGE FROM HURRICANESDAMAGESDEADWEIGHT LOSSESDEBTDEBT LEVELDEFICIT SPENDINGDEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT PATHSDEVELOPMENT PROJECTSDIFFERENTIAL TAX TREATMENTDIRECT FOREIGN INVESTMENTDIRECT INVESTMENTSDISBURSEMENTDISBURSEMENTSDISCOUNT RATEDOMESTIC EXCHANGEDOMESTIC MARKETDOMESTIC PRODUCTIONECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC PERFORMANCEEFFECT OF GOVERNANCEEMISSIONSEMISSIONS TRADINGENERGY EFFICIENCYENVIRONMENTAL SUSTAINABILITYEXCHANGE RATEEXCHANGE RATE REGIMEEXCHANGE RATESEXCISE TAXESEXPENDITUREEXPENDITURESEXPORT SECTOREXPORT SECTORSEXPORTSEXTERNAL FINANCINGEXTERNAL FUNDSEXTREME WEATHEREXTREME WEATHER EVENTSFACTORS OF PRODUCTIONFINANCIAL DEVELOPMENTFINANCIAL EXPOSUREFINANCIAL FLOWSFINANCIAL INFLOWFINANCIAL INFLOWSFINANCIAL TRANSACTIONSFINANCIAL TRANSFERSFINANCING NEEDFINANCING NEEDSFINANCING REQUIREMENTSFISCAL POLICYFIXED EXCHANGE RATEFLEXIBLE EXCHANGE RATEFLEXIBLE EXCHANGE RATE REGIMEFOOD PRICESFOOD PRODUCTIONFOREIGN CURRENCIESFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN FUNDSFOREIGN INVESTMENTFORMAL ECONOMYGDPGDP PER CAPITAGLOBAL ECONOMYGOOD GOVERNANCEGOVERNANCE INDEXGOVERNANCE ISSUESGOVERNMENT BONDSGOVERNMENT BUDGETGOVERNMENT DEFICITGOVERNMENT PURCHASESGOVERNMENT SPENDINGGROWTH POTENTIALGROWTH RATEGROWTH RATESHARMONIZATIONHOST COUNTRYHOST ECONOMYHUMAN CAPITALHURRICANEIMPORT SUBSTITUTIONIMPORTSINCOMEINCOME DISTRIBUTIONINCOME TAXESINCOMESINEFFICIENCYINFLATIONINFLATION RATEINFLATIONARY PRESSUREINFLATIONARY PRESSURESINFRASTRUCTURE INVESTMENTSINSTITUTIONAL CAPACITYINSTRUMENTINSURANCEINTEREST RATEINTEREST RATE POLICYINTEREST RATESINTERNATIONAL BANKINTERNATIONAL CREDITINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL RESERVESINVENTORYINVESTINGINVESTMENT FUNDSINVESTMENT PROJECTSLABOR PRODUCTIVITYLEVYLIABILITYLIQUIDITYLOSS OF REVENUELOW-INCOME COUNTRIESLOW-INCOME COUNTRYMACROECONOMIC MANAGEMENTMACROECONOMIC POLICYMACROECONOMICSMARGINAL COSTMARKET ECONOMYMARKET FINANCEMARKET TRADINGMONETARY AUTHORITIESMONETARY POLICYMONEY MARKETMONEY SUPPLYNATURAL RESOURCENATURAL RESOURCESNEGATIVE INCOME SHOCKSOPEN MARKETOPEN MARKET ECONOMYOUTPUTOUTPUT PER CAPITAOUTSIDE ASSISTANCEPOLICY RESPONSEPOLITICAL ECONOMYPOLITICAL STABILITYPOSITIVE EFFECTSPROFIT MOTIVEPROFIT SEEKINGPUBLIC FUNDSPUBLIC SPENDINGRATE OF UNEMPLOYMENTREAL EXCHANGE RATERELATIVE PRICEREMITTANCEREMITTANCESRENEWABLE ENERGYRENT SEEKINGRESERVESRETURNRETURNSRULE OF LAWSAVINGSSAVINGS RATESAVINGS RATESSECONDARY TRADINGSECONDARY-MARKETSOURCE OF FUNDSSTRUCTURAL PROBLEMSWAPTAXTAX BURDENTAX POLICIESTAX POLICYTAX RATETAX RATESTAXATIONTECHNICAL ASSISTANCETECHNOLOGY TRANSFERSTRADINGTRADING VALUETRADING VOLUMESTRANSACTIONTRANSACTION COSTTRANSITION ECONOMIESTRANSPARENCYTREASURYTREASURY BILLSTREATIESUNCERTAINTIESWorld Bank10.1596/1813-9450-5053