Climate Change and the Cost of Capital in Developing Countries

Bob Buhr, Ulrich Volz, Charles Donovan, Gerhard Kling, Yuen Lo, Victor Murinde, Natalie Pullin

Research output: Book/ReportCommissioned Report

Abstract

This report represents the first systematic effort to assess the relationship between climate vulnerability, sovereign credit profiles, and the cost of capital in developing countries. Climate risks are multi-dimensional, covering a range of geophysical, social, and economic issues. The intensification of these risks and the degree to which they are accurately priced by financial markets are of increasing concern to global economic stability. Integrating climate risks into financial decision-making is crucial to long-term economic and financial stability as these risks affect return on investment. Broader recognition of these risks will be necessary for sustainable development. For every USD 10 paid in interest by developing countries, an additional dollar will be spent due to climate vulnerability. This financial burden exacerbates the present-day economic challenges of poorer countries. The magnitude of this burden will at least double over the next decade. The climate consequences on poorer countries? cost of capital and overall fiscal health need to be addressed. A range of existing policy and market responses can build climate resilience in vulnerable countries and deliver demonstrable financial benefits. Investments that enhance the resilience of climate vulnerable countries are crucial to not only helping vulnerable countries deal with the consequences of climate risks, but also bring down their cost of borrowing.
Original languageEnglish
Place of PublicationLondon and Geneva
PublisherImperial College London; SOAS University of London; UN Environment
Number of pages38
Publication statusPublished - 2 Jul 2018

Fingerprint

Cost of capital
Climate change
Developing countries
Climate
Economics
Vulnerability
Economic stability
Resilience
Burden
Health
Credit
Financial markets
Market response
Financial decision making
Fiscal
Policy responses
Borrowing
Return on investment
Sustainable development
Costs

Cite this

Buhr, B., Volz, U., Donovan, C., Kling, G., Lo, Y., Murinde, V., & Pullin, N. (2018). Climate Change and the Cost of Capital in Developing Countries. London and Geneva: Imperial College London; SOAS University of London; UN Environment.

Climate Change and the Cost of Capital in Developing Countries. / Buhr, Bob; Volz, Ulrich; Donovan, Charles; Kling, Gerhard; Lo, Yuen; Murinde, Victor; Pullin, Natalie.

London and Geneva : Imperial College London; SOAS University of London; UN Environment, 2018. 38 p.

Research output: Book/ReportCommissioned Report

Buhr, B, Volz, U, Donovan, C, Kling, G, Lo, Y, Murinde, V & Pullin, N 2018, Climate Change and the Cost of Capital in Developing Countries. Imperial College London; SOAS University of London; UN Environment, London and Geneva.
Buhr B, Volz U, Donovan C, Kling G, Lo Y, Murinde V et al. Climate Change and the Cost of Capital in Developing Countries. London and Geneva: Imperial College London; SOAS University of London; UN Environment, 2018. 38 p.
Buhr, Bob ; Volz, Ulrich ; Donovan, Charles ; Kling, Gerhard ; Lo, Yuen ; Murinde, Victor ; Pullin, Natalie. / Climate Change and the Cost of Capital in Developing Countries. London and Geneva : Imperial College London; SOAS University of London; UN Environment, 2018. 38 p.
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