Starting with 2025, the Vienna School of International Studies will be home to the research project "Development Finance in the Face of Climate Change" funded by the OeNB Jubiläumsfonds and led by Katja Kalkschmied, Postdoc in International Economics at the Department of International Economics. The project has its second home at the Wegener Center for Climate and Global Change at the University of Graz, with Alexander Marbler and Stefan Borsky being the cooperation partners.

While there is a growing recognition that climate change exacerbates economic vulnerabilities and inequalities, particularly in low- and lower-middle-income countries, the role of climate risk remains underexplored in studies of development finance. For this project, the development economist from the Vienna School of International Studies and the two climate economists from the Wegener Center for Climate and Global Change will integrate high-resolution weather data, georeferenced development finance and socioeconomic outcome data. They will conduct spatio-temporal analysis to examine (i) whether development finance is directed toward or avoids regions with high climate risk, (ii) how climate risk impacts the effectiveness of development projects in the regions, and (iii) whether climate risk increases project implementation costs. Climate risk in the regions will be measured with the experienced weather fluctuations in a certain period and the climate history of the regions. In their analyses, the research team will move from pooling development projects to group-specific estimates for different types of financing, project sectors, sources of financing and world regions in order to obtain first a general and then an increasingly differentiated picture of the role of climate risk in the allocation and effectiveness of development financing.

With the project "Development Finance in the Face of Climate Change" the research team aspires to provide valuable insights into whether climate vulnerabilities are adequately factored into development financing decisions, with the ultimate goal of informing more climate-responsive policies. The project will last three years and the research insights will be presented at a final conference in spring 2028.

Research team

Katja Kalkschmied

Alexander Marbler

Stefan Borsky