IMF considers impact of climate change on economy

By Lesley Wroughton

WASHINGTON (Reuters) - The International Monetary Fund will spell out the economic implications of climate change in research and discussions set for early 2008, a senior IMF official said on Wednesday, as governments gather in Bali for post-Kyoto negotiations.

In the IMF's first news conference to discuss the economic effects of climate change, Takatoshi Kato, the IMF's deputy managing director, said these global changes posed "many and complex" challenges as shifting and unreliable weather patterns force governments to adapt and climate-proof their economies.

"This research will analyze in greater depth the macroeconomic implications of climate change and policy responses to it, both in terms of mitigation and adaptation," Kato said.

"The IMF executive board will discuss possibly early next year the fiscal implication of climate change," he added.

The IMF was considering new tax mechanisms and other fiscal measures for countries affected by climate change, he said.

According to the IMF, economic challenges from climate change will include direct negative impacts on output and productivity; weaker traditional tax bases and increased spending; balance of payments problems due to reduced exports of goods and services such as agricultural products, fish and tourism; and private economic costs from higher energy prices.

While fiscal positions could deteriorate, there were also opportunities to boost revenue from efficient carbon-pricing schemes, he added.

Kato will join world leaders in Bali next week for U.N. climate change negotiations to shape a global agreement for when the Kyoto Protocol expires in 2012.