Extreme climates may have a significant impact on the sustainability of public finances. This paper empirically examines the impact of extreme climates on the expansion of local government debt by taking 317 prefecture-level cities in China from 2010 to 2023 as the sample and using the number of annual extreme climate days as the proxy for extreme climates. It also analyzes the mediating mechanisms, moderating effect and heterogeneity. The results are as follows: (i) Extreme high temperature can stimulate the debt expansion, and this stimulating effect has become increasingly prominent in recent years. However, extreme low temperature and precipitation have no significant impact on debt scales. (ii) From the perspective of the “itemized- comprehensive” mediating mechanisms through which extreme high temperature affects the debt expansion, direct economic losses and infrastructure investment serve as itemized mediators, while fiscal balance pressure acts as a comprehensive mediator. Tax, on the other hand, plays a competitive mediating role. (iii) Strengthening carbon emission reduction can alleviate the impact of extreme high temperature on the debt expansion. (iv) Extreme high temperature has a more significant impact on the expansion of medium- and long-term debt, as well as on the debt in economically less-developed regions, non-climate-resilient pilot and low-vegetation-coverage cities. This paper provides valuable insights for scientifically formulating local government debt strategies to adapt to climate changes.
li et al. (2026) studied this question.