Asean governments face risk of fiscal strain from climate change without policies to attract private capital

WITH the United Nations’ climate talks failing to secure the US$1 trillion climate finance target needed for developing countries to cut their emissions and cope with natural disasters, emerging markets in South-east Asia are now under greater pressure to develop the right policy framework to catalyse private capital into climate-focused investments.

Without sufficient funds, South-east Asian governments might face increasing financial strain as they will need to allocate more of their own budgets to climate-related expenditures. This further burdens public finances and diverts funds from other priorities such as healthcare and education, said Mike Lim, partner at venture capital firm Trirec.

As it is, they are already struggling to adequately fund climate resilience and adaptation projects needed to mitigate the effects of extreme weather events, the region being one of the most vulnerable to the adverse impacts of climate change. This includes rebuilding critical infrastructure such as coastal defences, early warning systems and resilient housing, as well as other sustainable development projects, observers told The Business Times.