Climate change not only affects weather conditions, patterns, and the frequency and severity of extreme weather events but also changes the structure of government spending. Agriculture is an important sector of the European Union (EU). However, by 2050, the industry will most likely decrease by 16%. One-third of the EU’s budget has been spent on agricultural funding, adaptation, and climate action. The effect of climate change on agriculture is mixed and dependent on the location of the region. The southern EU is adversely affected, while the northern EU is positively affected by the changes in weather patterns. The main goal of this paper is to gain insight regarding the effect climate change has on public spending in relation to the agricultural sector of the EU, using the pooled Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM) methodology. The study concludes that public spending is influenced by government expenditure and government support in agricultural research and development in the EU region. In the southern EU region, the variables impacting public spending are greenhouse gases from the agricultural sector, temperature, and GDP, while in the northern region, no variable has a significant impact on public spending proxied by agricultural subsidies. The policy recommendations include a better allocation of agricultural subsidies, reconsideration of the efficiency of Common Agricultural Policy (CAP), and a focus on expanding investment in research and development in the agricultural sector.

Climate change not only affects weather conditions, patterns, and the frequency and severity of extreme weather events but also changes how governments spend money. Agriculture is an important sector of the European Union (EU), and it is projected to decrease by 16% by 2050, therefore a third of the EU budget has been spent on agricultural funding, adaptation, and climate action. The effect of climate change on agriculture is mixed and dependent on the country and its location. The southern EU is adversely affected while the northern EU is positively affected by the changes in weather patterns. The main goal of this paper is to gain insight regarding the effect that climate change has on public spending in relation to the agricultural sector of the EU, by using the pooled OLS and GMM methods. The study concluded that agriculture has a significant impact on public spending in the southern countries of the EU, where it represents a significant portion of the GDP. Inflation influences public spending in the whole EU region, the northern and southern countries of the EU. Rain has a moderately significant impact on public spending in the whole EU region. It is advised that governments maintain a controllable level of inflation using fiscal and monetary policy that will implicitly control public spending.

This study investigates the determinants of public debt sustainability in the European Union (EU) countries, focusing on the combined effects of the COVID-19 pandemic and the Ukraine conflict. Utilizing the Generalized Method of Moments (GMM) for the 2000-2022 period to address the endogeneity and heterogeneity aspects, the research incorporates various factors, such as military and healthcare expenditures, private debt, and political stability to provide a comprehensive analysis of public debt dynamics. The findings revealed that lagged debt has a significant positive impact on current public debt, indicating its persistence over time. Economic downturns, military spending, and private debt are identified as key drivers of rising public debt, especially during periods of geopolitical tension and economic instability. Additionally, the study highlighted the roles of GDP per capita, inflation, and government expenditure in influencing fiscal stability. The research underscores the importance of adopting long-term fiscal discipline and counter-cyclical measures to manage public debt, particularly during crises. The study offers a comprehensive and original perspective upon the dynamics of EU countries’ public debt and suggests that fiscal policies encouraging investments and supporting political stability contribute to the sustainable management of public debt.