Climate change poses risks to public finances through various channels: adaptation and mitigation measures may demand higher public spending, governments may have to divert resources from productive investments to new climate change-mitigating technologies, and the effects of climate change may weigh on prices of sovereign bonds. The cost of emergency assistance and post-disaster reconstruction can have a direct fiscal impact, while indirect effects may include lower tax revenues caused by production disruptions or additional spending on food and energy support schemes as a result of changes in commodity prices. These mechanisms can interact with sovereign debt dynamics in complex ways. […]