Climate Change Brings Stormy Days: Case Studies on the Impact of Extreme Weather Events on Public Finances

Abstract

This paper explores some implications of climate change for fiscal policies by assessing the impact of extreme weather events on public budgets. It presents selected case studies on the basis of available data for extreme weather events in the EU and the US that have occurred since 1990. We derive estimates for the budgetary impact of such events on the basis of the estimated economic damage and with respect to public relief payments. Based on these, we discuss implications for fiscal policy and publicly-provided disaster insurance. Our policy conclusions point to the enhanced need to reach and maintain sound fiscal positions given that climate change is expected to cause an increase in the number and severity of natural disasters.