CLIMATE CHANGE: RESILIENCE BUILDING

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IMF staff are integrating the risks of climate change damages and natural disasters, along with the finance needed for mitigation and adaptation strategies, into their work with countries.
Analysis of appropriate adaptation policies must be inherently local and customized to the evolving climate impact on specific regions or sectors, including resilience-building strategies to help prepare for and rebound from disasters.
Developing country governments can face very large adaptation costs; the need for growth-enhancing scaled up infrastructure provides an opportunity for climate-resilient, low-carbon infrastructure spending.
Management of adaptation spending, and of financial assistance for it, should be undertaken within a medium-term financial framework consistent with available resources, macro-stability, and debt sustainability.

In some countries, disaster-related economic losses have exceeded 200 percent of GDP (example cited when Hurricane Maria struck Dominica in 2017).
The damage from the 2011 floods in Thailand amounted to around 10 percent of Thailand’s GDP.
By some estimates, the total costs of the 2018 wildfires in California were up to $350 billion, or 1.7 percent of U.S. GDP.
Over the past decade, direct damages from climatic disasters are estimated to add up to around US$ 1.3 trillion (or around 0.2% of world GDP on average, per year).

Adaptation and resilience-building should be integrated into medium-term financial frameworks to ensure consistency with available resources, macro-stability, and debt sustainability.
There is an opportunity to align growth-enhancing infrastructure investment with climate-resilient, low-carbon objectives.
IMF engagement recognizes policy trade-offs in building resilience to natural disasters and the need to strengthen fiscal frameworks and improve the spending mix, particularly in small and vulnerable states.
Enhancing financial safety nets and tailored IMF support mechanisms for developing countries vulnerable to large natural disasters are part of the institutional response.

The Climate-Climate Public Assessment (CCPA) is a joint IMF-World Bank assessment introduced on a pilot basis in 2017 that provides an overarching assessment of countries’ climate strategies as articulated in their Nationally Determined Contributions (NDCs) and other government documents.
CCPAs are intended to help countries build coherent macro-frameworks for responding to climate change, which could improve prospects for attracting external finance and put future revisions to NDCs on a sound footing.

Adaptation policies must be locally customized to the evolving climate impacts on specific regions or sectors.
Scale up climate-resilient, low-carbon infrastructure as part of growth-enhancing investment plans.
Manage adaptation spending within medium-term financial frameworks that preserve macro-stability and debt sustainability.
Use joint assessments like the CCPA to align national climate strategies with macro-fiscal planning and to improve prospects for external finance.