Maximizing the Impact of Climate Finance: Funding Projects or Pilot Projects?

Abstract

NBER WORKING PAPER SERIES MAXIMIZING THE IMPACT OF CLIMATE FINANCE: FUNDING PROJECTS OR PILOT PROJECTS? Matthew J. Kotchen Working Paper 23023 http://www.nber.org/papers/w23023 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2017 The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2017 by Matthew J. Kotchen. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Maximizing the Impact of Climate Finance: Funding Projects or Pilot Projects? Matthew J. Kotchen NBER Working Paper No. 23023 January 2017 JEL No. G18,H2,Q4,Q5 ABSTRACT This paper contributes to the understanding of how to maximize the impact of publicly provided climate finance to leverage the private sector. Agencies seeking to promote private investment in support of climate change mitigation and adaptation may have a choice between subsidizing projects or pilot projects. Pilots are either scaled down versions of full projects or an experimental phase that generates better information about whether a full project is likely to succeed or fail. …

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