## Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Climate Risk Analysis

_IMF Staff Country Reports, June 18, 2024_

## Source details

**Canonical URL:** [Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Climate Risk Analysis](https://www.imf.org/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583)

## Other formats

- [Markdown version](/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583/index.md)
- [Structured JSON version](/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583/index.json)
- [Bundle manifest](/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583/bundle-manifest.json)

## Bibliographic details
- Published: June 18, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400279690.002

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### Summary and scope
- 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:
  - physical risks from floods; and
  - transition risks from nitrogen.

### Physical climate risk — stress test design and key findings
- 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:
  - 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.

### Transition risk — nitrogen and credit channel
- 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.

### Policy recommendations and institutional priorities
- 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.

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## Content in this bundle

- **Kingdom of the Netherlands—the Netherlands**
  - [Kingdom of the Netherlands—the Netherlands (Markdown version)](/-/media/files/publications/cr/2024/english/1nldea2024005.pdf.md){rel="alternate" type="text/markdown"}
  - [Kingdom of the Netherlands—the Netherlands (PDF)](/-/media/files/publications/cr/2024/english/1nldea2024005.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2024/06/17/kingdom-of-the-netherlands-the-netherlands-financial-sector-assessment-program-technical-550583_