Climate Risk and Urban Fiscal Systems: A Review of Impacts and Policy Responses

DOI: https://doi.org/10.62517/jel.202614213

Author(s)

Yue Sun*

Affiliation(s)

School of Business, Soochow University, Suzhou, Jiangsu, China *Corresponding Author

Abstract

As global climate change intensifies, climate risk has evolved from an environmental challenge into a critical concern for the sustainability of urban public finance systems. This paper systematically reviews recent research on the impacts of climate risk on urban public finance and the corresponding policy responses. The literature indicates that climate risk undermines the local fiscal revenue base through multiple channels, including suppressed economic growth, industrial structure disruption, and infrastructure damage. At the same time, it increases fiscal expenditures on climate adaptation and disaster response. The pressure on both revenue and expenditure exacerbates local fiscal imbalances and debt risks. In terms of response strategies, prior studies have proposed policy recommendations from two main dimensions: fiscal institutional reform and the optimization of investment and financing mechanisms. Finally, this paper identifies the limitations of the current literature and outlines directions for future research.

Keywords

Climate Risk; Fiscal System; Climate Change; Fiscal Sustainability

References

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