Though the science behind climate change projections has been taking a beating recently, one important institution is preparing for the worst. The International Monetary Fund is proposing a global climate adaptation fund as insurance for countries facing the disastrous consequences of a warming climate.
While the IMF has not historically crafted environmental policies, it has long been worrying about and planning for the macroeconomic and fiscal consequences of climate change. Temperature fluctuations could severely inhibit productivity, natural disasters could demand huge cash infusions, and permanent economic adaptation could require large up-front investment -- all developments that would involve the IMF.
In a paper that will be released later this week, the IMF models its scheme upon its own system of assigning member nations a quota based on their economic profiles. This quota determines countries' contributions, voting power, and access to financing. (Quota assignations were recently revised in order to better represent low-income countries and emerging markets.)
The World Bank predicts that adapting to climate change will cost $75 to $100 billion annually between 2010 and 2050. Much of this sum will be needed to help developing nations mitigate the droughts, floods, and famines that are expected to accompany higher global temperatures. In Copenhagen this December, a group of large nations floated a $100 billion annual fund by 2020 that would help poor countries manage these consequences. The IMF's proposal will provide much needed details to achieve this goal.