Climate-financial trap: an empirical approach to detecting situations of double vulnerability

The present study proposes to build a systematic approach to detecting and specifying situations of double vulnerability. Double vulnerability refers to a situation where a country combines climate and macro-financial vulnerabilities. It is defined as a situation where climate change (either in the form of occasional shocks or chronic deterioration in climate conditions) is likely to have multidimensional impacts on populations, ecosystems and economic activity, leading to an increase in fiscal imbalances and public debt ratios in the short to medium term.

In turn, this negative dynamic limits governments’ ability to deal effectively with the consequences of climate change in the future, and in particular to support the most vulnerable segments of the population. We refer to this vicious circle as a “climate-financial trap”.