Greening Development Lending in the Americas: Trends and Determinants

Latin America and the Caribbean (LAC) faces a $110 billion-dollar annual gap in financing for climate change. This paper shows that development banks operating in the Americas are falling far short of playing the key role they need to assume in filling these gaps. According to our estimates, development banks provide just $7 billion per year in terms of green finance in general, and climate finance in particular is just $4.4 billion per year. A corresponding econometric analysis shows green financial flows tend to go to countries with higher human development scores and left of center governments, and derive from development banks where the majority of the shareholder governments have strong environmental performance in their home country.