Climate-related risks for Italy: an analysis based on the latest NGFS scenarios

Maria Alessia Aiello, Cristina Angelico (), Pietro Cova () and Valentina Michelangeli
Additional contact information
Cristina Angelico: Bank of Italy
Pietro Cova: Bank of Italy

No 847, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The paper presents an overview of the pathways of the main Italian climate and macroeconomic variables according to the updated NGFS Phase IV long-term scenarios. Our analysis shows that: 1) climate risks translate into GDP losses and higher inflation; the macroeconomic impacts due to transition risks are broadly in line with those of the EU, while those relating to physical risks are slightly greater; 2) significant government investment is needed to achieve the more ambitious climate targets, a result that is shared with the rest of the EU and, more generally, at the global level; and 3) keeping inflation under control would require higher policy rates over fairly long horizons, although deviations from the baseline level of policy rates generally tend to be fairly contained across all scenarios, except in the most ambitious climate scenarios. Such climate scenarios are one of the key policy tools for assessing the overall resilience of the economy and the financial sector for forward-looking climate scenario analysis and stress testing purposes.

Keywords: NGFS scenarios; climate change; climate stress test; scenario analysis; environmental policy (search for similar items in EconPapers)
JEL-codes: C60 D58 E50 G32 Q40 (search for similar items in EconPapers)
Date: 2024-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bancaditalia.it/pubblicazioni/qef/2024-0847/QEF_847_24.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_847_24

Access Statistics for this paper

More papers in Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().