QUANTITATITIVE CLIMATE RISK ASSESSMENT FISCAL TOOL (Q-CRAFT)

helps governments assess the fiscal risks posed by climate change. It allows governments to conduct quantitative, long-term analysis of the impact of climate change on key macroeconomic and fiscal indicators, including government debt, under different climate scenarios. The tool uses advanced empirical data to help assess risks across various Intergovernmental Panel on Climate Change (IPCC) emission scenarios through the end of the century.

Tool   User Guide

What does Q-CRAFT do?

Q-CRAFT is a transparent, flexible, and easy-to-use Excel-based tool developed by the IMF's Fiscal Affairs Department (FAD) to help governments at all stages of development assess long-term macroeconomic fiscal risks from climate change.

  • Projects key macroeconomic variables and fiscal aggregates, such as GDP, fiscal deficit and debt-to-GDP ratio, using publicly available data and user assumptions for over 170 economies through to the end of the century.
  • Assesses how fiscal aggregates may evolve under different IPCC emission scenarios and various speeds of economic adaptation to rising temperatures.
  • Can be adapted to use national data and integrate additional shocks, such as natural disasters.
How can Q-CRAFT inform policymaking?

Q-CRAFT equips government institutions, such as Ministries of Finance and Independent Fiscal Institutions, with comprehensive, data-driven assessments of long-term macroeconomic and fiscal risks posed by climate change. By projecting key variables like GDP growth and debt-to-GDP ratios through 2100, it enables policymakers to:

  • Identify slow-building fiscal risks from climate change, by identifying long-term fiscal pressures that may not be apparent in short-term budgets or medium-term fiscal frameworks.
  • Assesses the impact of different emission scenarios on public finances, aiding in the formulation of resilience-building policies, and supporting earlier and smoother policy interventions.
  • Integrate climate risks into longer-term fiscal planning and strategy development, complementing other macroeconomic models that account for factors like aging populations.
  • Enhances long-term fiscal analysis by incorporating the impacts of climate change on fiscal variables over the long-term and extending the time horizon for fiscal policy analysis.
How is Q-CRAFT applied in Capacity Development?

Through its Capacity Development (CD) support, FAD helps member countries integrate climate considerations into their fiscal risk frameworks using Q-CRAFT. This approach not only quantifies climate-related fiscal risks but also strengthens macro-fiscal forecasting capabilities. CD initiatives have fostered cross-government collaboration and led to the inclusion of climate change fiscal risk analysis in Fiscal Risk Statements in numerous countries across the globe.