This paper examines the interaction between macro-financial and climate-related risks. It brings together different strands of the literature on climate-related risks and how these relate to macro-financial management and risks. Physical impacts of climate change as well as the transition toward a resilient low-carbon economy pose significant challenges for macro-financial management, as they can damage the balance sheets of governments, households, firms, and financial institutions due to the adverse and possibly abrupt impacts on investment and economic growth, fiscal revenue and expenditure, debt sustainability, and the valuation of financial assets. In turn, macro-financial risks translate into weakened resilience to physical climate risks and constrained capacity for climate adaptation and mitigation efforts. The paper finds that many countries face the "double jeopardy" of simultaneous elevated climate-related and macro-financial risks. Reducing macro-financial risks in countries under double jeopardy is an important component of international efforts to tackle climate change to complement and support country-specific efforts.
Details
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Author
Feyen,Erik H.B., Utz,Robert Johann, Zuccardi Huertas,Igor Esteban, Bogdan,Olena, Moon,Jisung
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Document Date
2020/01/14
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Document Type
Policy Research Working Paper
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Report Number
WPS9109
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2020/01/14
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Disclosure Status
Disclosed
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Doc Name
Macro-Financial Aspects of Climate Change
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Keywords
trade and investment; impact of climate change; climate-related risks; Research Support; capacity for climate
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Citation
Feyen,Erik H.B. Utz,Robert Johann Zuccardi Huertas,Igor Esteban Bogdan,Olena Moon,Jisung
Macro-Financial Aspects of Climate Change (English). Policy Research working paper,no. WPS 9109 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/223161579009566321/Macro-Financial-Aspects-of-Climate-Change