The geographic distribution of the economic impact of climate finance

The research analyzes how climate finance investments generate economic value added not only in recipient countries but also in third countries through international trade, termed 'spill-overs'. Using a GMRIO model, the study finds that on average 28.6% of the total economic impact spills over to other countries. The ability to retain value added varies by country, with India and Brazil retaining around 80%, while Mexico and Indonesia retain no more than two thirds. The EU is the primary beneficiary of these spill-overs. The study also identifies that different types of climate actions produce varying levels of spill-overs: renewable energy technologies often generate high spill-overs (exceeding 35% for some), whereas forestry and coastal protection generate fewer than 20%. The authors suggest that donor countries may be influenced by these spill-over prospects when allocating funds, and recipient countries should improve industrial competitiveness to retain more economic gains.

• On average, international spill-overs—economic impacts occurring outside the country where climate finance is spent—account for 28.6% of the total economic impact.
• The capacity of recipient countries to retain the value added from climate investments varies significantly: India and Brazil retain approximately 80%, China retains 72%, and Mexico and Indonesia retain no more than two thirds.
• The European Union is the region that benefits most from international spill-overs, capturing 9% of impacts from investments in China and 7% from Brazil, Indonesia, and Mexico.
• The United States captures a disproportionately high share of spill-overs from investments in Mexico (15%), but less than 3% from other recipient countries.
• Spill-over effects vary by the type of climate action, ranging from 17% to 45%. High spill-overs (over 35%) are associated with ocean power, solar thermal power, onshore wind, surface geothermal, hydropower, and renewables in buildings.
• Climate actions with the lowest spill-over rates (less than 20%) include the forestry sector, building insulation, and coastal protection.
• For recipient countries, the most effective actions for stimulating domestic growth are forestry and capacity building (M&A), coastal protection, social protection, and waste management (adaptation), building insulation (EE), and biofuels, deep geothermal, large biomass, and CSP (RE).
• Donor countries capture an average of 2% to 7% of the impact, with renewable energy investments providing the highest potential spill-overs (between 2% and 8%).
• The study suggests that the observed bias in climate finance toward energy sector mitigation projects may be partially explained by the substantial spill-overs these projects generate for donor countries.

APA

Román, M. V., Arto, I., & Ansuategi, A. (2016). The geographic distribution of the economic impact of climate finance. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20160831090045937970897.pdf

Chicago

Román, María Victoria, Iñaki Arto, and Alberto Ansuategi. The geographic distribution of the economic impact of climate finance. Basque Centre for Climate Change, 2016. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20160831090045937970897.pdf.

Wikipedia

{{cite report |last1=Román |first1=María Victoria |last2=Arto |first2=Iñaki |last3=Ansuategi |first3=Alberto |title=The geographic distribution of the economic impact of climate finance |publisher=Basque Centre for Climate Change |date=July 2016 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20160831090045937970897.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{romn2016geographic, author = {Román, María Victoria and Arto, Iñaki and Ansuategi, Alberto}, title = {{The geographic distribution of the economic impact of climate finance}}, institution = {Basque Centre for Climate Change}, year = {2016}, month = jul, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20160831090045937970897.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }