Mainstreaming of climate extreme risk into fiscal and budgetary planning: application of stochastic debt and disaster fund analysis in Austria

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http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/83979 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/83979 http://eprints.org/relation/issmallThumbnailVersionOf https://pure.iiasa.ac.at/id/document/83979 archive 353 disk0/00/01/52/63 2018-05-09 06:26:42 2025-03-26 05:00:15 2018-05-09 06:26:42 article show Mochizuki J. 2027 0000-0003-1000-4251 Schinko T. 8847 0000-0003-1156-7574 Hochrainer-Stigler S. 7958 0000-0002-9929-8171 Mainstreaming of climate extreme risk into fiscal and budgetary planning: application of stochastic debt and disaster fund analysis in Austria pub prog_risk Stochastic debt assessment; Climate extremes; Flood risk; Public contingent liability While ageing-related costs are perceived as the major drivers of fiscal pressure in the EU, concerns over climate-related public expenditures have received comparatively little attention in securing the EU’s long-term fiscal sustainability. Using the Shared Socioeconomic Pathways (SSPs) scenarios as bridging concept for linking the assessment of public cost of demography- and climate-related expenditures, this study proposes a climate risk mainstreaming methodology. We apply a stochastic debt model and assess the potential flood risk in Austria to the public debt and the national disaster fund. Our results indicate that public debt under no fiscal consolidation is estimated to increase from the current level of 84.5% relative to GDP in 2015 to 92.1% in 2030, with macroeconomic variability adding further risk to the country’s baseline public debt trajectory. The study finds that the estimated public contingent liability due to expected flood risk is small relative to the size of economy. The existing earmarked disaster risk reduction (DRR) funding will likely reduce the risk of frequent-and-low impact floods, yet the current budgetary arrangement may be insufficient to deal with rising risk of extreme floods in the future. This prompts the need for further discussions regarding potential reforms of the disaster fund. As many EU member states are in the early stages of designing climate change policy strategies, the proposed method can support the mainstreaming of climate-related concerns into longer-term fiscal and budgetary planning. 2018-10 published Springer 10.1007/s10113-018-1300-3 209 272 126 public Regional Environmental Change 18 7 2161-2172 TRUE 1436-378X Economics of climate change adaptation in Europe (ECONADAPT, FP7 603906) RESPECT FALSE yes info:eu-repo/grantAgreement/EC/FP7/603906/EU/Economics of climate change adaptation in Europe/ECONADAPT info:eu-repo/semantics/article info:eu-repo/semantics/openAccess