The macroeconomic impact of climate change on public finances
Research group: Macroeconomy and public finances Research began: 2021 Research ends: 2022 Sponsored by: Prime Minister's Office (VN TEAS funding)

Responsible for research:

The macroeconomic impact of climate change on public finances

The macroeconomic impact of climate change on public finances

This research project examines the effects of climate change on Finnish public finances from different perspectives. The project gathers information on global and local climate risks and specifies their effects on Finland and its economic sectors. The risks of climate policy to public finances are mapped regionally.

The aim of this research project is to create a framework for a comprehensive assessment of the impact of climate policy on public finances. The framework gathers information on the mechanism of action of public finances and builds risk scenarios for Finland, which can be used to better understand the various effects of climate change on the sustainability and risks of public finances. The project also evaluates various modeling tools and continues to apply them to scenario-based calculations of the magnitude of effects of climate change on public finances.

The result of this research project will be a clear and structured understanding of the overall economic impacts of climate change and an assessment framework aimed at developing public finance assessments. Furthermore, a regional-level assessment of the risks to public finances posed by climate change and a mapping of cost-effective management strategies will be produced.

Research questions

  1. How does climate change affect the sustainability and risks to public finances?
  2. Which channels of influence, inc. global effects, are the most important from the point of view of public finances for Finland?
  3. What are the challenges of modeling the effects of climate change on public finances and what methodological approach offers best opportunities for modeling?
  4. What is the magnitude on public finances of climate change and policies designed to mitigate and adapt to it?

 

The project coordinated by Etlatieto Oy also involves Finnish Environment Institute and Demos Helsinki.

Responsible for research: