The Washington PostDemocracy Dies in Darkness

Opinion The complex commitments to funding climate liabilities

A demonstrator holds a sign that reads “pay up clean up shut up” at a Nov. 12 protest at the COP27 U.N. Climate Summit in Sharm el-Sheikh, Egypt. (Peter Dejong/AP)

The Nov. 21 editorial “Climate progress is in jeopardy,” a summary of the outcomes from the United Nations climate conference in Sharm el-Sheikh, Egypt, made many good points but did not accurately describe the developed-country commitment of climate finance to help the most vulnerable poor countries.

The promise was to “jointly mobilize” $100 billion per year, a sum that includes private investment leveraged by public support — thus an increasing focus on proposals to reform the World Bank and other international financial institutions to catalyze greater private investment. Notably, fully commercial investments made without public funds, a much greater amount, are not counted, while Oxfam and other nongovernmental organizations would count only grant funds, a much smaller amount. The figure of about $80 billion shown in the graphic included in the editorial doesn’t capture this complex reality.

Alan Miller, Rockville

The writer was a climate finance specialist at the World Bank from 1997 to 2014.

The U.N. climate conference shows that dealing with climate change is largely a money problem. Americans must stop treating dollars like scarce resources and learn that the government creates them by running budget deficits.

Mitch Daniels’s Nov. 9 op-ed, “Modern Monetary Theory, debunked,” illustrated the mistake. Stripped of the clever language, he made two points: Some of the recent government spending was made with borrowed dollars, and it added three percentage points to the current inflation. The points are self-contradictory. Either the government borrowed dollars from the economy and paid the same number back, or it created and added new dollars to the economy by spending them. It couldn’t do both at the same time. Had it just paid back the same amount that it borrowed, it wouldn’t have added dollars to the economy and its payments couldn’t have been inflationary. Its payments did tend to be inflationary because they added dollars to the economy.

All worries about mountains of debt, spiraling interest costs and possible bankruptcy are nonsense. Inflation is a serious problem but a different one. Climate change will have both inflationary and deflationary effects that will make the problems worse, like droughts that cut grain crops and shrink rivers used to bring them to market. But the government will have to run deficits to create the dollars needed for climate change experimentation, mitigation, adaptation and loss-compensation that the private sector cannot do or will not do soon enough.

Thornton Parker, Rockingham, Va.

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