IMF on Climate Change: We Want to Play

[Confederate Kahanist]

http://blog.heritage.org/2010/03/08/imf-on-climate-change-we-want-to-play/



The International Monetary Fund (IMF) is attempting to do what couldn’t be done at the international climate change conference in Copenhagen last December: Transfer large sums of wealth from developed countries to developing ones in the name of climate change. From BusinessWeek:

    Dominique Strauss-Kahn, head of the International Monetary Fund, said the organization is helping to set up a “green fund” that would raise $100 billion a year by 2020 to mitigate the effects of climate change in developing countries.

    Strauss-Kahn indicated the fund may use its quotas, which reflect member countries’ financial capacity and obligations within the IMF, to raise initial funding. The IMF would not manage the money raised, he said. Last year, an increase in quotas allowed the institution to boost global liquidity by more than $250 billion at the request of the Group of 20 leaders.”

There are prudent ways to help developing countries protect against natural disasters but more foreign aid isn’t one of them. Heritage Senior Policy Analyst Ben Lieberman, who witnessed many of the developing countries’ pleas for handouts, lists several problems with foreign aid: “In many cases only a fraction of the funds were well spent, and aid can encourage the perpetuation of the very reasons (and regimes) that gave rise to the need for assistance in the first place. Foreign aid doled out to fight global warming has another big drawback – the problem it addresses is an overstated one.”

More economic freedom will allow developing countries to actually develop and build houses and buildings more resistant to natural disasters. Take the recent tragic setbacks in Haiti and Chile, for instance. In the 2010 Heritage Index of Economic Freedom, Chile ranks 10th and is categorized as “mostly free.” Haiti ranks in the “mostly unfree” category at 141st. Income per capita is much higher in Chile and its citizens can afford soundly-constructed infrastructure. Although the earthquake that hit Chilean land was stronger than that of Haiti’s, there was far less casualties and structural damage because “Chileans, on the other hand, have homes and offices built to ride out quakes, their steel skeletons designed to sway with seismic waves rather than resist them.”

Instead of establishing green funds, we should be working to open up markets to help countries improve both their economy and their environment. “Engaging in freer trade is a fundamental part of a strategy to better promote the evolution of sensible environmental regulations by empowering countries with the economic opportunity to develop and raise living standards,” writes Senior Trade Policy Analyst Daniella Markheim.

We do have opportunities to help developing countries become more sustainable and economically prosperous. But they don’t involve the IMF and hundreds of billions of dollars annually in wealth transfers.