Shortly before COP26 in Glasgow, Sir David Attenborough remarked that the decisions policymakers will make this decade on climate change are “the most important in human history”.

Unmitigated global warming will have catastrophic impacts on our natural environment and our economy. As a result, climate change is also one of the major risks facing our public finances. The Office for Budget Responsibility has warned that the costs of adapting to severe increases in global temperatures could see national debt spiralling to nearly three times the size of the UK economy by the end of the century.

In response, both the UK and Scottish Governments have set targets to dramatically reduce emissions, with the UK Government aiming to be "net zero" by 2050 and the Scottish Government aiming for 2045. A carbon-neutral economy will require a radical change in behaviours across society, the growth of new industries, and major investment by both the public and private sectors.

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Of course, this brings economic opportunities. Scotland is well placed to benefit from the transition to a greener economy, with new jobs and investment in sectors where we have a potential comparative advantage such as renewables and carbon capture.

But investing in policies and processes that will support the transition to net zero, and help Scotland respond to the consequences of the now inevitable warming of the earth’s climate, will carry a fiscal cost. Governments need to plan for – and have a frank conversation with the electorate about – the scale of that investment, how it will be funded, and over what time period.

Policymakers around the world have been good at declaring "climate emergencies" and setting high-level targets. But thus far they have been less forthcoming about the practical steps to be taken to achieve the shift in environmental policies that are needed.

In many ways, this is understandable. There remain uncertainties about the role of technology, the sequencing of policy interventions and the costs of adaptation. And politically, it can be difficult to prioritise long-term investments when day-to-day budgets are being squeezed. But any hoped-for "savings" from delay is a false choice, with any gains from stalling more than wiped out by higher costs in time.

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Later this week at the Scottish Fiscal Commission we’ll be publishing our first report into climate change and the Scottish Budget. One of the challenges we highlight is the lack of detail, at both the UK and Scottish Government levels, on the fiscal plans to respond to climate change.

There are three avenues through which climate change can impact the public finances.

First, there is the damage and disruption to economic activity because of more frequent and severe weather events such as droughts and floods.

Second, there are the costs associated with adapting to the consequences of climate change, including investment in flood defences and efforts to make our infrastructure, housing and public sector building stock more resilient to higher temperatures and heavier rainfall.

Third, there is the major investment needed to decarbonise public buildings, to improve the energy efficiency of our homes and to support the use of low-carbon technologies, that will drive down emissions. Some of this will require government spending, but it will also need new tax policies, regulations and incentives to change behaviours.

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With devolution, some of the long-term fiscal risks from climate change, and the tools to support the transition to net zero, are borne by the Scottish Government. In some areas, the risks faced by current and future Scottish policymakers may be greater than elsewhere in the UK.

Understanding and managing such risks is an important aspect of Scotland’s fiscal future that has had little – if any – debate so far.

As with our earlier work on demographics, this week’s report will show that meeting the fiscal sustainability challenge posed by climate change is a shared responsibility between the UK and Scottish governments. From transport through to housing and forestry, if Scotland is to achieve net zero and to respond to the challenges of a warming climate, it will need both UK and Scottish government policy to be well coordinated.

Our report won’t have all the answers, and indeed will highlight where there are gaps in our understanding, but it should hopefully encourage a debate on the scale of the challenge facing Scotland and the steps needed to deliver upon our generation’s responsibility to tackle climate change.

Graeme Roy is professor of economics at the University of Glasgow’s Adam Smith Business School