The head of the International Monetary Fund (IMF) has proposed to establish a multi-billion dollar Green Fund that would provide developing countries with the financing to aid in sustainability to combat climate change.
At the World Economic Forum in Davos, Switzerland, IMF Managing Director Dominique Strauss-Kahn said the funding needed could amount to $100 billion a year within a few years. "We are going to provide some ideas built around a Green Fund devoted to finance the $100 billion a year, which is the figure which is commonly accepted that is needed for addressing the problem, based on a capitalization of this fund coming from central banks, backed by special drawing rights issued by the Fund, said Strauss-Kahn.
He said climate change financing is such a big issue that "it cannot be seen as a problem that cannot be solved."
Strauss-Kahn said alternative solutions are needed and announced that the IMF will release a paper in a few weeks setting out ideas on how the proposal can be financed. While Strauss-Kahn is correct, it is important to recognize that a proper model be established in these countries that is appropriate for their fragile infrastructure. We have to "think out of the box," said Strauss-Kahn. "If it’s obvious that developing countries don’t have the money to pay for adaptation and mitigation of the climate change problem because they have this debt sustainability problem, directly linked to the solution we provide for this crisis, then we’ll have to find innovative ways to finance it." However, creating a fund will help in financing, but if proper methods aren’t put in place – even the best of intentions aren’t effective.
"You know, the credibility for global action is going to be tested by the Doha round, not by climate change. That’s a very important issue, but it’s a longer-term issue," Montek Ahluwalia, deputy chairman of the Planning Commission of India, said in regards to the stalled trade negotiations of the World Trade Organization which began in November 2001.
Countries like those in Africa not only need money, but solutions that will remain in place long after the Green Fund has been depleted. Everyone should be thinking in terms of longevity. There is also the problem with developing countries becoming too dependent on this sort of financial backing. The point with renewable energy is to build a sustainable environment to make countries more independent. However, developing countries also need to realize that Rome wasn’t built in day.
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