Insights Blog

A Win for Green Bonds in New York

February 1, 2023

Willi Semmler, a SCEPA Senior Fellow and NSSR Professor of Economics, has for many years argued that green bonds are a powerful tool for financing the transition to a low-carbon economy. That policy proposal is getting attention — New York state recently overwhelmingly approved a $4.2 ballot measure called the Clean Water, Clean Air and Green Jobs Environmental Bond Act of 2022.

Semmler's World Bank paper, written with Joao Paulo Braga, Andreas Lichtenberger, Marieme Toure, and Erin Kate Hayde, examines which fiscal policies work best and can be a guide to policy makers as they consider the most effective ways to achieve a low-carbon future. The report finds clear evidence that green bonds can support carbon taxation by acting as a bridge financing instrument, smoothing the path toward a low-carbon transition and overcoming financial market practitioners’ and governments’ short-termism. These findings were particularly timely as governments worldwide are looking for ways to recover and rebuild from the devastating impacts of COVID-19.

New York state may be among the first to do so. In November 2022, voters overwhelmingly approved a ballot measure — the Clean Water, Clean Air and Green Jobs Environmental Bond Act — that would make $4.2 billion available to fund investments in environmental justice, climate change mitigation, shoreline restoration, flood resilience, water quality, open space land conservation, recreational resources, and green jobs. The largest environmental bond in state history and the first in New York since 1996, the Bond Act authorizes:

  • $1.5 billion for climate change mitigation;
  • $1.1 billion for restoration and flood risk reduction;
  • $650 million for water quality improvement and resilient infrastructure;
  • $650 million for open space land conservation and recreation; and
  • $300 million for other projects not specifically allocated in the act.


As Semmler et al. note, "global warming, climate disasters, and climate transition risks can move the economies of advanced and developing countries into a lower growth regime and toward greater financial instability." Green bonds, in combination with carbon taxation, have the potential to mobilize revenues, provide environmental and welfare benefits, and speeding up climate protection, while also generating better intergenerational equity and reducing countries’ climate vulnerability. We're pleased to see this policy win in Albany and look forward increased uptake across the world.