The transition to a green economy in Portugal involves updating fiscal, regulatory and financial instruments that allow for the integration of environmental objectives into the functioning of the economy. This framework is aligned with principles already present in Green Taxation, created by Law No. 82D/2014, which introduced incentives and environmental taxes to promote efficiency in the use of resources, reduce energy dependence and guide behaviors towards more sustainable practices.
In parallel, national economic analyzes show that climate risks exert measurable effects on macroeconomic variables. The Public Finance Council identifies potential impacts on the productivity of sectors such as agriculture, tourism, energy and infrastructure, as well as effects on tax collection, public spending and the cost of sovereign financing. The integration of these risks into projections makes it possible to adjust growth estimates, identify vulnerabilities and assess the impacts of phenomena such as droughts, floods or fires.
Green budgeting practices also contribute to improving the accuracy of financial information by classifying expenses and revenues with climate relevance, allowing us to understand how the public budget reacts to physical and transition risks. The use of climate scenarios – which incorporate the frequency of extreme phenomena, technological changes and potential regulatory trajectories – reinforces the robustness of estimates on GDP, inflation and tax revenue
In the field of risk management, several studies highlight the importance of financial mechanisms capable of responding to climate events in a predictable way. Among these is the proposal to create a loss and damage fund, with clear eligibility and action criteria. The literature also identifies complementary instruments, such as catastrophe bonds, that transfer part of the risk to private investors and reduce the fiscal volatility associated with extreme events.
The growing exposure to physical risks also poses challenges to the insurance sector. In several countries, there is an adjustment of premiums or restriction of coverage in areas of greater risk, highlighting the need for mechanisms that ensure continuous protection for critical infrastructures and activities. Public-private solutions have been identified as effective approaches to guarantee coverage in high climate risk contexts, avoiding the loss of insurability of essential assets.
The articulation between a Green Economy Reform, the integration of climate risks into macroeconomic planning and the creation of financial management instruments reinforces the country’s ability to anticipate impacts and promote economic resilience. These elements are aligned with sustainable financing practices, widely used in countries with high climate risks and significant adaptation needs, directing capital towards resilient projects compatible with the climate transition. Only in this way will we be able to increase the competitiveness of the Brazilian economy and reduce losses resulting from the impacts of climate change. There are already several examples around the world. I know that there are now several wars that torment us, but that doesn’t mean the storms will calm down in Portugal.
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