Assessing the Macro-Fiscal Risks from Climate Change Concepts, Methodological Approaches, and Insights from Country Practices

As climate change is increasingly recognised as a significant source of macroeconomic and fiscal risks, it becomes essential to assess its macro-fiscal impacts and integrate them into national budgetary frameworks. Recent amendments to related EU law (Council Directive 2011/85/EU) introduced new requirements for Member States to assess and disclose information, to the extent possible, on how the macro-fiscal risks from climate change may affect the medium- and long-term sustainability of public finances, on disaster- and climate-related contingent liabilities, and on the fiscal costs incurred due to disasters and climate-related shocks. This discussion paper is intended as an operational document to support reflection on how to approach assessments of the macro-fiscal risks from climate change in light of these new requirements. It outlines key concepts, explores possible methodologies and available tools, and presents country practices that illustrate emerging approaches across Europe. It also proposes a gradual approach to conducting assessments, helping to identify areas that could be further developed. This paper is structured as a modular resource, providing a flexible framework that can be adapted to national specificities. While progress is evident, current efforts to assess the macro-fiscal impacts of climate change often cover specific aspects rather than being comprehensive, and integration of climate risks into forecasts and budgets is still at an early stage. Strengthening data collection, enhancing the accessibility and use of existing tools, and building institutional capacity are essential to embed climate risks into fiscal planning. This paper aims to contribute to a shared understanding and to support more risk-informed national budgetary frameworks in line with evolving EU requirements