At G20, agreeing to agree

Why in the news?

With the leaders’ meeting approaching at the G20, India has its proposal for arriving at a convergence to address the most-pressing global problems.

Probable areas of convergence:

1. India’s proposal on LiFE, adopting a lifestyle that protects the environment
2. Sharing of digital public infrastructure
3. Emerging and developing economies (EMDEs) tend to emphasise development financing for reaching SDG goals
4. Advanced economies (AEs) emphasise the creation of global public goods (GPGs) particularly for the mitigation of climate change risk.

Reasons for coming together in the G20 agreement:

1. There is large overlap between SDGs and GPGs proposed by the EMDEs and AEs as it includes,
   1. Flood resistant drainage systems in cities
   2. smart green infrastructure
   3. better air quality that improves health and development goals
   4. reduce distress migration to AEs
2. Using public funds by AEs to leverage private lending in EMDEs rather than compensating them for all the carbon AEs have put in the atmosphere.
   1. As AEs assume that they have less to spare after spending on the pandemic and the Ukraine war effort.
   2. Current estimates of requirements for EMDE mitigation financing stand at $4 trillion pa till 2030, but the $100bn pa promised has itself been not delivered.
   3. Since private finance finds EMDEs risky, public funds can play an essential role in de-risking lending to EMDEs and reducing its cost through
      1. the Multilateral Development Bank system and local development finance institutions
      2. Blended investment programmes that combine public, philanthropic, institutional and private investors with optimal allocation of risk to each
      3. Financial innovations such as hybrid and first loss funds.
   4. AE spending boost their own economies since using public funds to leverage private lending could create opportunities for their own companies.
3. The effects of climate change are becoming more visible in the forms of unprecedented heat waves, fires and floods are affecting so many countries regardless of location. Therefore, creation of public goods that benefit all countries, and to which each contributes has become a necessity.