Climate change public budget tagging: Connections across financial and environmental classification systems

Identifying and evaluating climate expenditures in the public sector, known as budget tagging, has generated increasing attention from multiple stakeholders, not only to assess the government’s climate change policy, but also to monitor fiscal risks associated with increasing and unpredictable climate change impacts. This paper explores the issues raised by climate change budget tagging in the context of a broader discussion on the connections with fiscal and environmental statistical classification systems. It argues that, for climate change budget tagging efforts to be successful, the definitions and classifications of climate change expenditures must be consistent with statistical standards currently in use, such as the Government Finance Statistics Framework and the System of National Accounts.