"Climate change is a potentially catastrophic global externality and one of the world's greatest collective action problems," the IMF said in releasing analytical chapters of its twice-yearly World Economic Outlook.

To curb global warming, the IMF suggests a worldwide long-term scheme of gradual increases in carbon prices. Carbon-dioxide emissions are largely blamed for the rise in greenhouse gases that are heating the planet.

Such a framework would "induce the needed shifts in investment and consumption away from emission-intensive products and technologies."

For example, the IMF said, staff estimates showed that mitigation policies introduced in 2013 and aiming to stabilize carbon-dioxide-equivalent concentrations at 550 parts per million by 2100 would entail only a 0.6 percent reduction in the net present value of world consumption by 2040.

"Even with this loss, world GNP (gross national product) would still be 2.3 times higher in 2040 than in 2007," said the 185-nation institution, whose core mission is to maintain global financial stability.

"Over the long term, carbon pricing should help enhance economic growth, as it would create incentives for people and businesses to innovate and shift to using more efficient, low-emissions products and technologies."

For the multilateral policy to be effective, the IMF said that all countries must participate because emerging and developing economies are expected to produce 70 percent of global emissions during the next 50 years.

"Any policy framework that does not include large and fast-growing economies (such as Brazil, China, India, and Russia) ... would be extremely costly and politically untenable," it said.

The chapter, entitled "Climate Change and the Global Economy," was released ahead of next week's WEO world growth forecasts and the spring meetings of the IMF and the World Bank on April 12-13 in Washington.

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