Insights into Advancing Climate Finance Effectiveness:Analyzing Determinants of Heatwave Budgeting

While climate finance has increasingly focused on mitigation strategies such as greenhouse gas reduction, little attention has been paid to short-term and localized disasters like heatwaves. Heatwave-related budgets are typically embedded across departments, including welfare and safety, and rarely analyzed as independent fiscal categories, highlighting a critical policy and academic gap. Climate finance serves as a critical framework for mobilizing and allocating the necessary resources to address and mitigate the impacts of climate-related disasters effectively. Climate change is intensifying the frequency, severity, and duration of heatwaves, making short-term, behavioral responses increasingly inadequate. To address this growing threat, budgeting as a long-term and systematic adaptation measure is imperative. This study analyzes heatwave budgets across 228 local governments in South Korea (2016–2023), focusing on urban development factors such as population density, land use, and infrastructure, while controlling for political, financial, and socioeconomic variables. Using Panel Generalized Least Squares (GLS) to address heteroscedasticity and autocorrelation, the analysis reveals two critical findings. First, non-financial factors outweigh financial considerations in determining heatwave budgets. Local governments with financial constraints often allocate higher budgets for heatwave responses compared to urban governments. This highlights the importance of governance capacity, public demand, and urban planning priorities in driving resource allocation, suggesting that financial limitations are not a decisive barrier to effective heatwave adaptation. Second, metropolitan status is a stronger predictor of heatwave budget allocations than municipal classification. Metropolitan governments allocate more resources and exhibit stronger correlations with urban development factors, including population density, infrastructure, and land use. This underscores the critical role of urban development dynamics in shaping climate adaptation strategies, as they provide clearer indicators of vulnerability and resource needs than traditional administrative divisions. These findings emphasize the need to shift from administrative boundaries to urban development characteristics as the basis for climate resilience planning. By prioritizing urbanization factors, policymakers can design more tailored, effective strategies for addressing the growing threat of heatwaves under climate change.