2023-11-12 07:38:33
In a world threatened by the impact of greenhouse gas emissions, 2023 is on track to become one of the hottest years on record. As countries acknowledge the seriousness of the threat and set climate targets to limit global warming, current policies may not be sufficient to achieve the goals of the Paris Agreement. Addressing climate change requires an economic transformation. Radically, which might impose unbalanced costs and benefits on individuals, companies, and countries.
Despite international efforts, the economic costs may be high and constitute a major challenge. Policies that rely heavily on spending, such as increasing public investment and supporting renewable energy, may be acceptable, but they cause large financial costs that may make public debt unsustainable.
Here the dilemma arises. Excessive reliance on spending to achieve the goal of net zero emissions may raise public debt by up to fifty percent of domestic product, and this puts debt on an unsustainable path. However, failure to take climate action will leave the world vulnerable to negative consequences.
But the future may be more sustainable through sound policies, as studies indicate the necessity of a combination of policies that take into account economic efficiency, administrative aspects, and political viability. For full details, follow the Debt and Credit episode with CNN economic correspondent, Paula Novel.
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