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<p>Despite the growing international efforts, financing for adaptation in developing countries remains insufficient, fragmented, and poorly aligned with structural vulnerabilities. This paper investigates whether domestic tax revenue can serve as a more stable and effective source of financing for climate resilience. Using panel data for 129 countries and robust regression methods, we find that traditional tax revenues significantly outperform other adaptation financing tools such as climate funds and environmental taxes. Furthermore, the application of the recent Quantile-on-Quantile Regression (QQR) method reveals an asymmetric nonlinear relationship. Specifically, low levels of tax revenue could exacerbate vulnerability under low-climate vulnerability contexts, while stronger tax revenue mobilization contribute to reducing vulnerability, especially in high climate stress, and inversely. Mediation analysis further identifies four key channels through which tax revenues influence resilience, notably public expenditure, political stability, informality, and equal access to public services. Heterogeneity analyses reveal important divergences across regions, income levels, and vulnerability sectors (habitat, food, health, ecosystems). The results emphasize the central role of domestic taxation as a policy-relevant and context-sensitive source of climate adaptation finance.</p>

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Resilience Starts with Revenue: Does Domestic Taxation Outperforms Climate Funds in Reducing Climate Vulnerability?

  • 期刊论文

  • 发表日期：

    2026年1月29日

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  • Henri Atangana Ondoa,
  • Arnold Dilane Momou Tchinda

摘要

Despite the growing international efforts, financing for adaptation in developing countries remains insufficient, fragmented, and poorly aligned with structural vulnerabilities. This paper investigates whether domestic tax revenue can serve as a more stable and effective source of financing for climate resilience. Using panel data for 129 countries and robust regression methods, we find that traditional tax revenues significantly outperform other adaptation financing tools such as climate funds and environmental taxes. Furthermore, the application of the recent Quantile-on-Quantile Regression (QQR) method reveals an asymmetric nonlinear relationship. Specifically, low levels of tax revenue could exacerbate vulnerability under low-climate vulnerability contexts, while stronger tax revenue mobilization contribute to reducing vulnerability, especially in high climate stress, and inversely. Mediation analysis further identifies four key channels through which tax revenues influence resilience, notably public expenditure, political stability, informality, and equal access to public services. Heterogeneity analyses reveal important divergences across regions, income levels, and vulnerability sectors (habitat, food, health, ecosystems). The results emphasize the central role of domestic taxation as a policy-relevant and context-sensitive source of climate adaptation finance.