Abstract
Developing effective climate governance policies requires a comprehensive understanding of climate change's costs. However, the existing literature investigates the impacts of climate change on the private sector but neglects to evaluate the fiscal costs. Using fiscal data from Chinese county governments and meteorological data from weather stations from 1995–2019, this paper empirically examines the impacts of climate change, represented by changes in extremely high temperatures, on fiscal sustainability. Our results document that extremely high temperatures significantly increase fiscal expenditure and fiscal balance pressures on local governments. Mechanistically, extremely high temperatures have increased public demand for social and health spending, forcing local governments to increase expenditure. This paper reveals the substantial climate risks embedded in the fiscal sector. Local governments should incorporate the fiscal cost of climate change into their decision-making frameworks when making fiscal decisions and recalculate the costs and benefits of mitigation and adaptation policies.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.