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The fiscal risks of climate change facing countries in Asia and the Pacific are immense. Climate-related weather disasters and public spending on the climate change mitigation and adaptation investments needed to avoid worst-case climate scenarios and protect livelihoods are placing a significant strain on public finances. But governments in Asia and the Pacific are already taking wide-ranging measures to proactively address these risks.

This governance brief explores ways that climate change poses risks to public finances and a number of practical solutions to mitigate these risks. Main takeaways include the following: (i) Policymakers in Asia and the Pacific have access to a broad suite of analytical tools that they can use to better assess the fiscal risks posed by climate change and to develop ways to mitigate these risks. (ii) Many countries in the region already have experience utilizing these tools and are generating important lessons learned that others can consider using these tools. (iii) These tools can be tailored to each country’s own needs and challenges in managing the fiscal risks of climate change.