The impact of climate change on budget balances and debt in the Middle East and North Africa (MENA) region

Abstract

Lower tax revenues and greater government spending result in higher deficits and public debt. As a result, determining the degree of budgetary effects is vital, but important to assess the persistence of these effects. We aim to investigate the impact of climate change on the fiscal balance and public debt in the countries of the Middle East and North Africa. The empirical analysis relies on panel data in the period 1990-2019 and employs various models. The findings show that temperature changes adversely affect the government budget and increase debt, but we find no significant impact of changes in rainfall. The average temperature decreases fiscal balance by 0.3 percent and increases debt by 1.87 percent. Using projections of temperature and rainfall over the years 2020 to 2099, we find a significant decrease in the fiscal balance at 7.3 percent and an increase in the public debt at 16 percent in 2060-2079 and 18 percent in 2080-2099 under the assumption of a high greenhouse gas (GHG) emission scenario. On the contrary, under the low GHG emission scenario, the fiscal balance deteriorates by 1.

Analyzing EU’s Agricultural Sector and Public Spending under Climate Change

“…Due to climate change, debt-to-GDP has a positive effect on public spending. This result is supported by a few research papers [25,29,31]. Therefore, the increase in public spending due to subsidies in agriculture will implicitly cause an imbalance in the public budget, increasing debt.…”

“…Looking at the impact that climate change, proxied by temperature and rain, has on public spending and budget balance, the results do not reach a consensus regarding the impact each variable has on public spending. Giovanis and Ozdamar [29] revealed that temperature has a negative effect on the government's budget, and it increases debt. The average temperature reduces the budget balance by 0.3% and expands the debt by 1.87%.…”

COP27: The Prospects and Challenges for the Middle East and North Africa (MENA)

“…5 Centre for Global Chronic Conditions, London School of Hygiene and Tropical Medicine, London, UK. 6 Health Services Management Research Center, Institute for Futures Studies in Health Kerman University of Medical Sciences, Kerman, Iran. 7 School of Epidemiology, Public Health and Preventive Medicine, University of Ottawa, Ottawa, ON, Canada.…”

“…With agriculture as the largest sector in terms of its water consumption (82%), over 60% of MENA citizens live in the areas of water-stress, against the 35% global average. 6 Desertification, changes in rainfall patterns, and rising sea levels in coastal areas have exposed MENA to various climatological hazards, especially drought, dust, and floods. Taken together, these developments mean that the region is severely exposed to many adverse health effects of climate change, such as food insecurity, child malnutrition, and vector-borne diseases, eg, Zika and dengue fever, 7 , 8 among others.…”

High-Resolution Precipitation Mapping for Morocco: Integrating Orographic and Geographic Influences

“…For instance, climate models require accurate identification of spatial disparities in precipitation patterns in order to ascertain future trends. The climate fluctuations and changes has become realistic and are weighing on the economies of many countries (Pichura, Potravka, & Barulina, 2023) (particularly in the MENA regions which are characterized by strong climate fluctuations and scarce rainfall), making precipitation distribution studies particularly critical (Giovanis & Ozdamar, 2022;Waha et al, 2017).…”