Planning and Mainstreaming Adaptation to Climate Change in Fiscal Policy

Staff Climate Notes, March 23, 2022

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Canonical URL: Planning and Mainstreaming Adaptation to Climate Change in Fiscal Policy

Part of a series of three Staff Climate Notes: IMF Staff Climate Note 2022/001, 2022/002, and 2022/003.
This third Note (Staff Climate Note No 2022/003) focuses on translating adaptation principles and estimates of climate impacts into effective fiscal policies.
Authors: Emanuele Massetti, Matthieu Bellon.
Publication date: March 23, 2022.

Note 1 (Bellon and Massetti 2022) examines economic principles to integrate climate change adaptation into fiscal policy:
- Argues adaptation should be part of a holistic, sustainable, and equitable development strategy.
- Recommends prioritizing among all development programs, including but not limited to adaptation, to maximize the impact of scarce resources.
- Suggests using cost-benefit analysis while ensuring decision-making reflects society’s preferences about equity and uncertainty.
Note 2 (Aligishiev, Bellon, and Massetti 2022) examines macro-fiscal implications:
- Reviews evidence on effectiveness of adaptation at reducing climate change damages and on residual risks.
- Reviews adaptation investment needs.
- Suggests ways to integrate climate risks and adaptation costs into national macro-fiscal frameworks to guide fiscal policy.
- Emphasizes 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 builds on the above to consider operational translation of principles and impact estimates into policy measures and planning.

Mainstream adaptation into broader development planning and fiscal decision-making rather than treating it as a siloed agenda.
Use economic appraisal tools (e.g., cost-benefit analysis) to prioritize adaptation investments across competing development programs, while embedding considerations of equity and uncertainty in the appraisal process.
Integrate adaptation needs, costs, and climate risks into macro-fiscal frameworks to inform budgeting, debt management, and fiscal risk oversight.
Recognize differentiated needs and capacities: lower-income vulnerable countries require increased international support to meet adaptation challenges and investment needs.
Emphasize evidence-based design: assess effectiveness of adaptation interventions in reducing damages and identify residual risks to guide policy mixes (public investment, insurance, contingency financing, etc.).

Pages: 27
Volume: 2022
Issue: 003
Series: Staff Climate Note No 2022/003
DOI: https://doi.org/10.5089/9798400201950.066
Stock No: CLNEA2022003
ISBN: 9798400201950
ISSN: 2789-0600
Citation provided on the page: Emanuele Massetti, and Matthieu Bellon. "Planning and Mainstreaming Adaptation to Climate Change in Fiscal Policy", Staff Climate Notes 2022, 003 (2022), accessed 9/20/2026, https://doi.org/10.5089/9798400201950.066

Source: Planning and Mainstreaming Adaptation to Climate Change in Fiscal Policy, Staff Climate Note No 2022/003 (March 23, 2022).