{
  "title": "Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Climate Risk Analysis",
  "publication": "IMF Staff Country Reports, June 18, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583",
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  "summary": "This paper presents a technical note on climate risk analysis in The Netherlands. The Netherlands is exposed to both physical and transition risks from climate change.",
  "sections": [
    {
      "heading": "Summary and scope",
      "content": "- Presents a technical note on climate risk analysis in The Netherlands.\n- Assesses exposure to both physical and transition risks from climate change.\n- Part of the Financial Sector Assessment Program (FSAP) analysis of potential risks to financial stability posed by:\n  - physical risks from floods; and\n  - transition risks from nitrogen."
    },
    {
      "heading": "Physical climate risk — stress test design and key findings",
      "content": "- Bank stress tests were conducted against flood events under a range of scenarios encompassing diverse regions, climate conditions, and flood protection reinforcement plans with different return periods.\n- Despite the sizeable land area in the Netherlands susceptible to flooding, the physical climate stress test has demonstrated that the banking sector exhibits resilience to flood events.\n- Recommendation on scenario design:\n  - Flood scenarios designed with detailed flood maps under future climate conditions would provide a more accurate assessment of both climate change impact and adaptation measures."
    },
    {
      "heading": "Transition risk — nitrogen and credit channel",
      "content": "- As the government’s efforts to reduce nitrogen depositions continue, the banking sector could face transition risks through the credit channel.\n- Transition risk concentration is particularly relevant if loans are extended to financially vulnerable firms in high nitrogen-emitting sectors."
    },
    {
      "heading": "Policy recommendations and institutional priorities",
      "content": "- Strengthen data sharing and collaboration with floods and climate experts.\n- Improve flood scenario design with detailed flood maps under future climate conditions to better assess climate change impact and adaptation measures.\n- Monitor credit exposures to firms in high nitrogen-emitting sectors and assess borrower vulnerability to policy-driven transition shocks.\n\n---\n\n Content in this bundle\n\n- Kingdom of the Netherlands—the Netherlands\n  - Kingdom of the Netherlands—the Netherlands (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Kingdom of the Netherlands—the Netherlands (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: June 18, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400279690.002",
    "Presents a technical note on climate risk analysis in The Netherlands.",
    "Assesses exposure to both physical and transition risks from climate change.",
    "Part of the Financial Sector Assessment Program (FSAP) analysis of potential risks to financial stability posed by:",
    "Bank stress tests were conducted against flood events under a range of scenarios encompassing diverse regions, climate conditions, and flood protection reinforcement plans with different return periods.",
    "Despite the sizeable land area in the Netherlands susceptible to flooding, the physical climate stress test has demonstrated that the banking sector exhibits resilience to flood events.",
    "Recommendation on scenario design:",
    "As the government’s efforts to reduce nitrogen depositions continue, the banking sector could face transition risks through the credit channel.",
    "Transition risk concentration is particularly relevant if loans are extended to financially vulnerable firms in high nitrogen-emitting sectors.",
    "Strengthen data sharing and collaboration with floods and climate experts.",
    "Improve flood scenario design with detailed flood maps under future climate conditions to better assess climate change impact and adaptation measures.",
    "Monitor credit exposures to firms in high nitrogen-emitting sectors and assess borrower vulnerability to policy-driven transition shocks.",
    "**Kingdom of the Netherlands—the Netherlands**"
  ],
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