This Staff Climate Note is part of a series of three Notes (IMF Staff Climate Note 2022/001, 2022/002, and 2022/003) that discuss fiscal policies for climate change adaptation. A first Note (Bellon and Massetti 2022, henceforth Note 1) examines the economic principles that can guide the integration of climate change adaptation into fiscal policy. It argues that climate change adaptation should be part of a holistic, sustainable, and equitable development strategy. To maximize the impact of scarce resources, governments need to prioritize among all development programs, including but not limited to adaptation. To this end, they can use cost-benefit analysis while ensuring that the decision-making process reflects society’s preferences about equity and uncertainty. A second Note (Aligishiev, Bellon, and Massetti. 2022, henceforth Note 2) discusses the macro-fiscal implications of climate change adaptation. It reviews evidence on the effectiveness of adaptation at reducing climate change damages, on residual risks, and on adaptation investment needs, and suggests ways to integrate climate risks and adaptation costs into national macro-fiscal frameworks with the goal of guiding fiscal policy. It stresses that lower-income vulnerable countries, which have typically not contributed much to climate change, face exacerbated challenges that warrant increased international support. This third Note considers how to translate adaptation principles and estimates of climate impacts into effective policies.
-specific climate vulnerabilities, adaptation policies, and financing needs to build resilience), and focused climate-related support (on topics such as green PFM).
MainstreamingAdaptation in Public Financial Management 2
MainstreamingAdaptation in Public Financial Management
Well-integrated planning and budgeting functions are key for implementing adaptation plans . Planning establishes a framework of government goals, policies, and targets, including on adaptation, while budgeting puts these policies into a defined fiscal envelope. The medium-term fiscal
Climate Change: MainstreamingAdaptation in Sierra Leone 1
The strong linkage between climate vulnerability and development calls for mainstreamingadaptation into national development agenda, while macro vulnerability requires fiscal policies to balance the needs of climate actions and debt sustainability Enhancing the capacity to tap into external grants will be critical to fulfil the climate commitments while maintaining debt sustainability. Meanwhile, gradually adapting the existing PFM practices to integrate climate targets within and beyond the budget
disasters through expansion of the use of index insurance as a risk management tool in ACP countries. GIIF seeks to introduce a new and more efficient approach (indexed or parametric insurance) for mitigating weather/catastrophic risks in developing economies.
Global Climate Change Alliance (GCCA) South Pacific
Secretariat of the Pacific Community, Secretariat of the Pacific Regional Environment Programme: Overall development and poverty reduction, coastal zone management, health, infrastructure
vulnerability, by promoting greater social inclusion and strengthening disaster risk management.
The CAS, which covers the period FY 2006–09, does not include any lending to Antigua and Barbuda under the base case scenario. However, during the implementation period, the country could benefit from participation in the Catastrophe Risk Insurance Facility financed through on-lending, possibly through the Caribbean Development Bank. Antigua and Barbuda could also benefit from a GEF-funded MainstreamingAdaptation to Climate Change Environmental Protection project, which seeks
Ezequiel Cabezon, Ms. Leni Hunter, Ms. Patrizia Tumbarello, Kazuaki Washimi, and Mr. Yiqun Wu
Natural disasters and climate change are interrelated macro-critical issues affecting all Pacific small states to varying degrees. In addition to their devastating human costs, these events damage growth prospects and worsen countries’ fiscal positions. This is the first cross-country IMF study assessing the impact of natural disasters on growth in the Pacific islands as a group. A panel VAR analysis suggests that, for damage and losses equivalent to 1 percent of GDP, growth drops by 0.7 percentage point in the year of the disaster. We also find that, during 1980-2014, trend growth was 0.7 percentage point lower than it would have been without natural disasters. The paper also discusses a multi-pillar framework to enhance resilience to natural disasters at the national, regional, and multilateral levels and the importance of enhancing countries’ risk-management capacities. It highlights how this approach can provide a more strategic and less ad hoc framework for strengthening both ex ante and ex post resilience and what role the IMF can play.