Thailand - Public Revenue and Spending Assessment : Promoting an Inclusive and Sustainable Future - Chapter 7 : Responding to Climate Change (English)

This chapter introduces some of the risks to macro-fiscal stability that are posed by climate change and discusses how fiscal policy could address these risks. It examines various strategies for climate change mitigation and adaptation through a fiscal lens, assessing the possible implications for overall government spending and revenue collection. It concludes by providing recommendations to promote the adequacy, efficiency, and equity of the government's fiscal policy response to the challenges posed by climate change. Broader issues around climate change in Thailand are not explored in this chapter but will be covered in future World Bank analytical support. Thailand is highly vulnerable to climate change. Thailand is ranked as the third most vulnerable country in Southeast Asia to climate change, and the eighth most vulnerable country in the world. Its long coastlines, fragile agricultural system and susceptibility to extreme weather events make the country particularly vulnerable to climate change. As well as agriculture, the water and tourism sectors are particularly exposed to climate impacts, for example from increased occurrence of tropical storms, floods, and droughts. Environmental fiscal reform could help Thailand meet the challenges posed by climate change and the need to reduce greenhouse gas emissions, while relieving pressure on public budgets. This chapter explores the current policy framework and estimates the likely levels of public spending that will be required to reduce emissions within Thailand and to adapt to the effects of a changing climate. It demonstrates the potential to shift more of the tax burden to activities that cause environmental harm, specifically through the release of greenhouse gas emissions. It shows that such a shift in taxation need not lead to economic costs, and would result in higher quality economic growth, with greater protection for the natural environment and improvements to air quality in urban areas. Environmental taxes could help fund actions to adapt to the effects of a changing climate, and investments in further decarbonization measures to meet Thailand's international commitments on emission reductions. However, the measures assessed in this chapter would not be sufficient to fully cover the costs of responding to the climate challenge.