Quantifying the fiscal consequences of extreme climate events
Climate change is already causing a visible impact on biological, physical, and human systems and this trend will likely continue. For countries and regions to be adequately prepared for the increased risks posed by climate change, longer-term assessments will be crucial. Longer-term drivers of extreme climate risks include factors such as changes in hazard frequency and intensity due to climate change and socioeconomic trends such as urbanization, aging, and other land-use changes. Longer-term fiscal assessments of climate extremes must integrate these underlying risk drivers.
The CATSIM Stochastic Debt Assessment has been applied in the assessment of flood risk in 28 EU countries.
The model is currently being applied in Austria to assess flood and drought risk under climate change.
IIASA’s Risk and Resilience team has built a CATSIM module which quantifies the fiscal cost of extreme climate risks. Building on IIASA’s expertise in longer-term scenario-based integrated assessments, the CATSIM Stochastic Debt Assessment estimates the fiscal risk under alternative Shared Socioeconomic Pathways (SSPs) and Representative Concentration Pathways (RCPs). This software module has been built as part of the CATSIM framework, and may be used in policy assessment and capacity building activities. Further software development including interfacing and other visualization tools is being planned.
Application of the Stochastic Debt Assessment: The ECONADAPT Project
The Risk and Resilience Program participated in the European Union's ECONADAPT Project to research the effects of natural disasters on the economy. The CATSIM stochastic debt assessment was built for, and used in this project.
To read the results of their study, please click here.
Last edited: 14 October 2019
Schinko T , Mechler R, & Hochrainer-Stigler S (2016). A methodological framework to operationalize Climate Risk Management: Managing sovereign climate-related extreme event risk in Austria. Mitigation and Adaptation Strategies for Global Change: 1-24. DOI:10.1007/s11027-016-9713-0.
Mochizuki J , Vitoontus S, Wickramarachchi B, Hochrainer-Stigler S, Williges K, Mechler R, & Sovann R (2015). Operationalizing iterative risk management under limited information: fiscal and economic risks due to natural disasters in Cambodia. International Journal of Disaster Risk Science 6 (4): 321-334. DOI:10.1007/s13753-015-0069-y.
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