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Effect of climate finance on environmental quality: A global analysis

Author

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  • Zoungrana, Tibi Didier
  • Lompo, Aguima Aimé Bernard
  • Toé, Daouda Lawa tan

Abstract

Climate finance is an increasingly sought-after instrument for reducing greenhouse gas emissions by financing adaptation and mitigation measures. There is a global commitment to achieve the Sustainable Development Goals (SDGs), particularly with regard to tackling climate change. The mobilization and use of climate finance could influence environmental quality. This paper focuses on analyzing the impact of climate finance on environmental quality in 111 countries worldwide over the period 2000-2019. This study uses the generalized method of moments (GMM) in panel data. The main results indicate a positive effect of climate finance on environmental quality, reflecting the theory of financial ecology. More specifically, climate finance targeting climate change mitigation measures has a significant effect on environmental quality. Member countries of the United Nations Framework Convention on Climate Change (UNFCCC) and private sector actors should implement strategies to monetize climate finance and invest heavily in mitigation and adaptation measures to improve environmental quality.

Suggested Citation

  • Zoungrana, Tibi Didier & Lompo, Aguima Aimé Bernard & Toé, Daouda Lawa tan, 2024. "Effect of climate finance on environmental quality: A global analysis," Research in Economics, Elsevier, vol. 78(4).
    • Handle: RePEc:eee:reecon:v:78:y:2024:i:4:s109094432400053x
    DOI: 10.1016/j.rie.2024.100989
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    Keywords

    Climate finance; CO2 emissions; Ecological footprint; GMM; World;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • G0 - Financial Economics - - General

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