The U.S. Budget and Economic Outlook (Presentation)
Session 3 Stephanie Pamies - European Commission
1. Including climate change risks in the
COM fiscal sustainability analysis framework
Stéphanie Pamies, European Commission
ECFIN.C – Fiscal Policy and Policy mix
OECD-World Bank-UNDP workshop on green budgeting, 17 March 2020
2. • COM activities on green related issues in the fiscal area
• COM fiscal sustainability analysis framework in a nutshell
• Our proposed strategy to introduce climate change risks in our debt / fiscal
sustainability analysis framework
Outline
3. • The Commission stated in 2019 the ambition for the EU to lead the transition
to a ‘climate-neutral and healthy planet’ => a European Green deal
• Far-reaching implications on public finances and on fiscal surveillance activity
of the Commission:
• Green budgeting
• Green public investment and SGP
• EU taxonomy for sustainable activities
• DSA / fiscal sustainability analysis
COM activities on green related issues in the
fiscal area
4. • A multi-dimensional approach to assess fiscal sustainability risks in EU
countries over the short-, medium- and long-term
• Short-term: analysis of risk of fiscal stress over the upcoming year
• Medium-term: analysis of risks to debt sustainability under different macro-financial
conditions and fiscal policies
• Long-term: analysis of fiscal sustainability risks linked to an ageing population (and other
developments such as for example technological advances in health care)
• Climate change dimension not factored-in at this stage
COM fiscal sustainability analysis framework
in a nutshell
5. • DSM 2019: first contribution including a review of the literature and current
practices, conceptual and practical considerations
• Proposed strategy: a step-by-step approach
Introducing climate change risks in the COM
debt (fiscal) sustainability analysis framework
6. • Many potential and complex economic and fiscal impacts (e.g. numerous
transmission channels, wide array of policies that affect the severity of the
phenomenon itself and countries’ resilience, uncertain behavioural changes)
• Dimension little considered so far in debt (fiscal) sustainability frameworks =>
most available reports are event studies
• Proposed ‘modules’ to analyse climate change related risks
• Important practical challenges however, linked to data gaps, large
uncertainties surrounding available quantifications of economic impacts,
limitations of current budgetary frameworks for the purpose of assessing
climate change related fiscal risks
DSM 2019: main findings
7. Overall and insured losses for relevant
natural loss events in Europe (1980-2018)
0
10
20
30
40
50
60
70
80
90
100
0
5
10
15
20
25
30
35
40
45
50
in US$, billions, in 2018 values
Overall losses Insured losses Share of insured losses (rhs)
in % of overall losses
8. • Module on extreme weather events: identification and analysis of existing
datasets, with a view to design stress tests scenarios / stochastic simulations
• Identification of vulnerable countries for case / pilot studies
• Analysis of the link between public and private financial management of
climate related physical risks and impacts; scope of climate protection gaps
in EU
• Important pre-requisites:
• Availability and coverage of existing datasets
• Other (policy) reporting tools => progress on green budgeting and others
• Cooperation across COM DGs, international institutions and national authorities
On-going work
9. Selected datasets on extreme weather events
Dataset Provider Coverage
NatCat MunichRe Worldwide including EU countries
EM-DAT
CRED (Centre for Research on the
Epidemiology of Disasters)
Worldwide including EU countries,
European Past Floods Database ETC-ICM and the EEA EU-28
European Severe Weather Database European Severe Storms Laboratory
EU Countries + Russia and other Middle
East Countries
Impacts of extreme weather and climate
related events in the EEA member
countries
EEA-MunichRE EU Countries
DesInventar UNDRR Africa, America, Asia
A High-Resolution Global Gridded
Historical Dataset of Climate Extreme
Indices
CMCC Global gridded data
A new global database of meteorological
drought events from 1951
JRC- (Spinoni et al., 2019) Global
Global Active Archive of Large Flood Events Darthmouth Flood Observatory Global
Global Risk Data Platform UNISDR Global
Natural Hazards Data, Images and
Education
National Centers for Environmental
Information
Global