Priscilla Fialho
Adolfo Rodriguez-Vargas
OECD Economic Surveys: Switzerland 2026
Abstract
Climate change is already affecting Switzerland, calling for adaptation measures to contain and manage the economic, social and fiscal costs associated with climate change. Strengthening federal guidance can help accelerate nationwide progress in adaptation, while pooling resources from several cantons would reduce costs and increase the effectiveness of the solutions adopted. Establishing a formal and systematic coordination mechanism between central and local governments could help ensure that spatial planning is coherent with climate adaptation plans. To increase private investment in adaptation, hazard maps should be periodically improved. In the real estate sector, disclosure requirements for properties sale, lease or mortgage issuance would allow a better management of risk exposure. Building and construction standards could also be updated to enhance the resilience of buildings. Finally, although Switzerland compares well in environmental performance, reaching its target of net zero greenhouse gas emissions by 2050, while complying with new laws and meeting increasing demand for electricity, will require additional efforts.
Like other nations, Switzerland faces the simultaneous challenge of reducing greenhouse gas (GHG) emissions and adapting to more extreme weather. This chapter discusses the two facets of coping with climate change, with an emphasis on adaptation. A first section describes the expected consequences on the Swiss economy from climate change, followed by a discussion of policies to strengthen adaptation, including direct support, information provision, regulations, and economic instruments. A final section takes stock of GHG reduction efforts to date and discusses ways to fine-tune mitigation policies to meet emissions targets.
3.1.1. The economic costs from climate change are set to increase
Climate change already has and will continue to have inevitable consequences, even if mitigation targets, discussed below, are achieved to rein in the expected damage. Switzerland is already feeling the effects, with average temperatures rising faster than in most countries (Figure 3.1). The average land temperature in 2024 was 2.9°C higher than the average from 1951 to 1980. Glaciers lost 65% of their volume since 1850, with a noticeable acceleration since 2015 (Huss et al., 2025[1]). The snowline and the zero-degree line are moving upwards, with precipitation now falling more often as rain than snow.
The frequency and intensity of extreme temperatures is expected to increase significantly, with very hot days and tropical nights occurring more often, especially at low altitudes on both sides of the Alps (Figure 3.2, Panel A). Heat-related deaths are set to increase and health conditions to deteriorate, affecting vulnerable and elderly people, outdoor workers and low-income households. Climate warming could also lower productivity in heat-exposed economic activities like construction and agriculture due to business interruptions and restrictions, negative impact on livestock health, lost crops, lower yields, and more frequent diseases (FOEN, 2025[2]). Ten additional days above 30°C or 35°C could lead to reductions of 0.2 or 0.3% in firms’ annual labour productivity (Costa et al., 2024[3]). Higher temperatures could also lower yield stability for all summer crops (dos Reis Martins and Calanca, 2026[4]), lower wood harvesting potential in forests, and lower electricity supply in thermal plants due to reduced cooling water capacity.
Temperature change on land
Note: Annual mean temperature anomalies in degrees Celsius, i.e., temperature change with respect to a baseline climatology, corresponding to the period 1951–1980. Series are centred three-year averages.
Source: FAO Stat with data from the National Aeronautics and Space Administration Goddard Institute for Space Studies (NASA-GISS).
Drier conditions are expected to particularly affect the Vaud canton and cantons north of the Alps (Figure 3.2, Panel B). Under the assumption of a global warming of 3°C, a drought that occurred once every 10 years during 1991–2020 would occur almost every 3 years (FOEN, 2025[2]). Drier conditions could exacerbate heat stress and result in agriculture yield losses. Prolonged summer water shortages can cause reduction in Swiss grassland yield of up to 30–40% in extremely dry years (Calanca et al., 2022[5]). Drier conditions could also lead to decreased public water supply, to restricted hydropower production, and to lower power reserves. More frequent drought would also make forest fires more likely, with 44 days under high weather-related risk of fires compared with the average of 18 during 1991-2020 (FOEN, 2025[2]). This would result in damage in buildings and energy infrastructure, reduced wood harvesting potential, lower air quality and decreased services provided by forests.
Heavy rainfall is likely to happen more often and year-round, particularly in the Southern and Western regions (Figure 3.2, Panel C). Extreme precipitation events would be twice as likely, and maximum daily precipitation would be 9% higher (FOEN, 2025[2]). Heavy precipitation can trigger floods or mudslides, with immediate economic losses from interruptions to business operations. Damage to communication, transport and water supply infrastructure would be among the costliest. The projected increase in the frequency and intensity of rainfall could also lower agricultural productivity, as topsoil erosion would be more likely (Fuhrer et al., 2006[6]), and soil waterlogging would increase. Higher amounts of bedload and sediments from floods and surface runoff could also damage hydropower plants.
Snowfall days could decrease by at least 20 days at higher altitudes (Figure 3.2, Panel D), and the snow volume between September and May could be at least 44% smaller (FOEN, 2025[2]). Winter tourism in mountain regions will be affected by the lack of snow cover, faster glacier retreat, and a rising tree line.
Climate change will also cause increasing transformations in habitats and ecosystems. Human health could be affected by the emergence of climate-sensitive vector-borne diseases. More favourable conditions for the spread of harmful organisms and invasive species could lead to yield losses in agriculture, impaired livestock health, and lower water quality in lakes and rivers. Changes in tree species composition and more frequent bark beetle infestations, that increase combustible material in forest floors, could ease the spread of forest fires. Transformation of Alpine ecosystems and loss of glaciers could lower attractiveness for tourism.
Finally, the risk of natural disasters is growing. One in six residential buildings is in a zone threatened by natural hazards (Zürcher Kantonalbank, 2025[7]). Flooding is the most common natural hazard risk, followed by landslides. A quarter of the population and 10% of built-up area are exposed to flooding, among the highest shares in the OECD (OECD, 2025[8]). Recent research suggests that climate warming, permafrost thaw and glacier melting would significantly expand areas prone to debris flow and slope instabilities in the Swiss Alps (da Silva Correia et al., 2026[9]). Heat and drought could decrease the potential of protective forests to shield people and physical assets from landslides, avalanches, rockfall or debris flows (FOEN/WSL, 2025[10]).
More frequent and more severe natural disasters could generate significant economic costs and changes in economic activities. Disasters destroy output, physical capital stock, and real estate, and that impact propagates to the broader economy through supply, demand, and financial channels. Estimates for OECD countries suggest that the most severe weather events can reduce GDP by 2.2%, with losses of around 1.7% persisting after five years. These losses are not confined to the location of the disaster. Severe disasters occurring within 100km lead to a GDP decline of almost 0.6% (Costa and Hooley, 2025[11]). For Switzerland, the cumulative cost of floods, debris flows, landslides and rockfalls over the 2000-2024 period has been estimated at around 1% of GDP (WSL, n.d.[12]). Climate change could also alter the conditions that drive sectoral specialisation in the economy (Conte et al., 2021[13]), imposing additional costs related to the need to adapt, relocate or stop economic activities.
Note: A, B, C: Projected change in indicators under the high-emissions scenario (Shared Socio-economic Pathway 3-7.0). Change in the average over the 2060-2079 period compared to the average under the baseline period 1995-2014. Hot days indicator: median population-weighted number of hot days (over 30°C). Drought index: Standardised Precipitation Evapotranspiration Index, lower negative values indicate drier conditions. Precipitation: average highest 5-day cumulative precipitation amount, in millimetres. D: Reduction in the number of snow days under the GWL 3.0 scenario, compared to the 1991-2020 average.
Source: A, B, C: OECD Air and climate indicators. D: Climate CH2025 scenarios.
Public finances will also be affected by increasingly damaging extreme weather events. Besides emergency response, expenditure could increase due to higher healthcare costs and social transfers to affected households or businesses, while tax revenues could be reduced due to lower productivity and economic activity in some sectors, damaged property, or trade flow disruptions (Salmon-Genel, 2025[14]).
The impact of climate change will vary across population groups. In urban areas, more precarious housing is more exposed to extreme heat than high-end residences, while residences of more vulnerable groups also tend to be more affected by floods across all levels of urbanization (Zobrist, 2025[15]). Outdoor workers in urban and rural areas, in sectors like construction and agriculture, will also be more affected by growing climate hazards. As the population ages, a growing share of the population will become more vulnerable to extreme heat.
3.1.2. Addressing climate risks will require a comprehensive policy package
Adaptation measures by the public and private sectors are crucial to managing the economic, social and fiscal costs associated with climate change. These can be reactive or ex-post, such as emergency response and disaster recovery systems, and proactive, like city development adapted to climate change, constructing flood barriers, supplementary irrigation systems, and green roofs, diversifying crop production and livelihood, reducing water pipe leakages, or changing working hours, for example. Reactive measures are highly costly and often involve long delays. A recent study shows that proactive actions can be up to ten times more cost-effective than rebuilding after a disaster (SwissRe, 2024[16]).
Public policy can promote proactive adaption actions by private firms and households. Anticipatory adaptation often involves local action, tailored to the specific climate risks regions and communities face. Local communities are also well placed to identify the most effective and innovative adaptation solutions. Yet, too often, they lack the resources and agency needed to implement them. Coordination failures, information and knowledge gaps, externalities and financial constraints call for government intervention.
Improving coordination across levels of government
The Climate and Innovation Act requires the Confederation and cantons to take precautionary measures to adapt to and protect against the consequences of climate change. The Federal Council published its first adaptation strategy in 2012 setting out the goals and principles for adaptation, and identifying areas for action. Based on this strategy, which is being updated using results from the 2025 Climate Risk Analysis (FOEN, 2025[2]), the government published the national Action Plan on Adaptation to Climate Change 2020-2025. 15 out of 26 cantons have also developed their own adaptation plans, and nine cantons intend to do so.
The national Action Plan on Adaptation to Climate Change 2020-2025 included 12 cross-sectoral measures targeting knowledge enhancement, coordination, and support for nationwide implementation, as well as 63 sectoral measures at the federal level. An interim report on the implementation of the plan showed that adaptation measures are working, with the benefits generally far exceeding implementation costs (FOEN, 2023[17]). The report also pointed to the need for further action. The revision of the adaptation plan, which is expected to follow the ongoing update of the national adaptation strategy, should ensure that adaptation measures cover all sectors of the economy, including manufacturing, transport and construction. The adaptation plan should specify time-bound and measurable objectives for each sector and what actions are linked to each objective. They should also identify which authorities and stakeholders are responsible for those actions and define coordination mechanisms among stakeholders for each action (OECD, 2024[18]).
Coordination across different levels of government, public and private actors, and across sectors is essential to ensure that adaptation efforts remain relevant, effective, and that potential positive externalities are exploited (OECD, 2023[19]) (OECD, 2025[20]). The CO2 Act states that the federal government is responsible for coordinating adaptation activities. To that end, the Climate Change Adaptation Network brings together the federal government, cantons, communes, cities, businesses, the scientific community, and the civil society. A steering group is responsible for strategic leadership, while specialised topics are carried out in specific committees. Coordination and dialogue forums help disseminate and harmonise information. Furthermore, the Confederation coordinates cross-territorial cooperation through staff of cantonal environmental offices who are responsible for adaptation. A coordination conference for all cantonal adaptation officers is organised every year, and every five years cantons must submit mandatory reports on their adaptation efforts. The latest report took place in 2021/2022, but the Federal Office for the Environment (FOEN) is currently conducting a survey.
Measuring investment and progress in adaptation is essential to adjust policies, priorities and practices. Instruments that link budgets to climate action, such as green budgeting practices, are a good starting point, as they can help understand how public spending impacts cross-cutting climate and environmental goals. Based on that assessment, governments can better prioritise public expenditure, ensuring coherence with environmental objectives, and improving public spending efficiency. Many OECD countries have introduced some form of green budgeting in the last years (OECD, 2024[21]). In Switzerland, however, an overall consolidated view on public funds committed to climate action, including mitigation and adaptation, is still lacking. Switzerland could consider developing a green budgeting tool, following the guidance and principles developed by the OECD (OECD, 2021[22]) (OECD, 2022[23]), applying to consolidated federal and cantonal expenditures.
Comparability across subnational jurisdictions can be an important challenge in measuring investment and progress in adaptation (OECD, 2024[24]) (OECD, 2022[23]). Cantons implement most climate adaptation actions. According to the OECD Subnational Government Climate Finance database, subnational governments in Switzerland account for 63% of total public climate-significant expenditure and 70% of climate-significant investment (OECD, 2026[25]). Cantons also assess progress and report efforts to the Federal government, but have discretion on how to do it, which can lead to significant discrepancies among cantons in how progress is defined and measured, and in the identification of remaining risks. Strengthening federal guidance can help lower discrepancies and improve measurement of investment and progress in adaptation.
Local authorities are well positioned to foster climate change adaptation, but their capacities might fall short of local adaptation needs. National authorities can support sub-national governments by providing financial support, technical capacity, and harnessing the efforts of local communities (OECD, 2023[26]). A pilot programme between 2013 and 2023, called “Adaptation to climate change”, promoted the collaboration of ten federal offices with subnational authorities over 81 innovative projects at the local level in two phases. The federal government provided a total of CHF 9.4 million to co-finance the projects over ten years, as well as a platform for sharing details and results of pilot projects, helping strengthen local technical capabilities (OECD, 2023[26]). More recently, the federal government developed the Adapt+ programme to co-finance measures at the local level (see below), by up to CHF 3.5 million each year. The federal government is also supporting local adaptation efforts through information services and technological tools like mapping of current hazards and projected impacts of climate change, as well as early warning systems (see below).
Local governments will eventually need to seek additional revenues to finance climate adaptation investment, unless the federal government increases transfers to cantons for that purpose by adapting the revenue equalisation formula to take climate damage into account. Municipalities could rely more extensively on user charges for property owners in new developments, for example. Introducing incremental land-value taxes on owners of land that is rezoned to higher density or higher value activities is another way to provide resources for local projects (Chapter 2). Local governments could also consider issuing green bonds linked to adaptation goals, as done in Japan. Pooling specialised resources from several cantons can reduce costs and increase the effectiveness of solutions, by capitalising on scale and joint expertise (OECD, 2023[27]).
Direct financing by the federal government of adaptation measures may be necessary when there are large positive externalities, or when firms and individuals face financial constraints. Macroeconomic and fiscal planning need to consider present and prospective climate risks and the multi-year financing needs of adaptation to climate change (OECD, 2024[18]).
Land-use planning can mitigate effects of climate change by limiting development in hazard-prone areas and mandating risk prevention measures for new and existing construction. Each canton determines which areas of its territory may be used and how, and the federal government checks whether these plans comply with the Spatial Planning Act before approving them. The federal government, cantons, cities, municipalities, and private actors, jointly developed the Swiss Spatial Concept, a framework to guide decision-making for future spatial development, which has been updated in 2026. However, participation in the framework is purely voluntary. Having a formal and systematic coordination mechanism between central and local governments could help ensure that spatial planning remains coherent with climate adaptation plans. For example, the Austrian Conference on Spatial Planning develops the Austrian Spatial Development Concept, which covers a period of 10 years and provides guidelines for national spatial development for all levels of government. Every three years, the Conference publishes a Spatial Planning Report analysing relevant developments. It has also developed an online tool to provide indicators for spatial planning at the municipal and regional level (Örok-Atlas, 2026[28]). The Conference includes all federal ministers and representatives of associations of local governments and is chaired by the Federal Chancellor.
Switzerland’s disaster prevention and response framework is robust and flexible (Box 3.1). Yet, continuously assessing and improving the current framework is essential to ensure that the system remains effective and the costs from emergencies contained. A recent report drew lessons for improving the Swiss Civil Protection based on structural and procedural changes implemented in Germany, Austria, France, and Italy after severe disasters (Eriksen et al., 2023[29]). Increasing and formalising knowledge sharing derived from first-hand experience abroad enables stakeholders to enhance their preparations and decision-makers to adapt to increasingly complex risk scenarios. Having the Civil Protection participate in the EU’s UCP Knowledge Network can give access to a wealth of information and experience from European countries.
Municipalities are first in line. Their competences differ across cantons and might include identifying and assessing natural hazards at the local level, implementing measures to reduce exposure to risks, formulating emergency preparedness measures, handling emergency response to disasters, and maintaining regional steering committees for coordination.
Cantons have the primary responsibility for operational disaster response. They are responsible for the quality of local hazard maps; implement and finance prevention; mitigation; and emergency preparedness measures. The latter might entail periodically surveying the conditions of infrastructure. Cantons also develop planning measures at the regional scale, as well as cantonal emergency management. Cantons also oversee reconstruction and rehabilitation after disasters, and organise Civil Protection.
The federal government develops legislation and policies, provides guidance for the management of natural hazards, and gives financial support for risk reduction and disaster response activities. The Swiss Federal Office for Civil Protection (FOCP) is the lead authority in disaster prevention and response at the national level. FOCP operates the National Emergency Operations Centre (NEOC), whose main task is to monitor the country’s situation to protect the population. NEOC shares information both daily and in an emergency with the authorities, critical infrastructure operators, and relevant international bodies.
The National Platform for Natural Hazards (PLANAT) brings together the federal and cantonal governments, the research community, and the private sector. PLANAT fosters risk awareness, and coordinates efforts to avoid duplication and increase synergies. The Steering Committee Intervention in Natural Hazards (LAINAT) informs and prepares the population for disasters by bringing together federal agencies in charge of forecasting and warning.
Several other federal-level entities have competences in disaster prevention and response, including the Federal Office for the Environment (FOEN), MeteoSwiss, the Swiss Federal Institute for Forest, Snow and Landscape Research, the Federal Office for Spatial Development, and the Federal Roads Office.
Source: Swiss Federal Office for Civil Protection; (OECD, 2017[30]): Boosting Disaster Prevention through Innovative Risk Governance.
Closing information gaps to increase economic resilience
Greater awareness and understanding of climate risks can help economic agents in their decision-making, spurring private-sector investment in adaptation solutions (OECD, 2024[18]). Efforts to close information gaps include developing technological tools to help produce and disseminate information and introducing regulatory measures to promote climate-risk disclosure.
Hazard maps are a valuable communication and planning tool to guide adaptation efforts. Cantons are mandated to produce detailed hazard maps within settled or designated building zones, as well as illustrative hazard maps for broader areas. Hazard maps show the location and expected intensities of floods, landslides, rockfall, and avalanches. Federal laws oblige the cantons to use these maps for the identification of danger zones in land use planning and for the preparation of protective measures. The maps are developed and updated by the cantons with support from the Confederation and can be viewed in an online platform (Geoportal) (Geoportal, 2026[31]). Maps in Geoportal also contain other useful information besides hazards. Users can access data on land suitability for agriculture, erosion risk, agricultural zone boundaries, and surface and ground waters, among other information. Other maps are also available showing projected effects of climate change across the country, which can also help raise risk awareness and guide adaptation strategies. However, comprehension and use of hazard maps can be challenging (Marti, Stauffacher and Wiemer, 2019[32]). People living in high-risk areas often do not perceive the threat to their property and health as higher than those living less in risky areas (Basig, 2023[33]). Periodically evaluating the ease of use of hazard maps and keep improving their functionalities can help increase user engagement and hazard awareness.
Providing timely information through early warning systems protects lives and helps to minimise economic losses during fast-onset hazards by allowing evacuations, coordination, and resource mobilisation. Switzerland has a modern and comprehensive early warning system. Several federal agencies monitor the natural hazard situation and issue warnings, including MeteoSwiss for dangerous weather conditions, the Federal Office for the Environment (FOEN) for forest fires, floods, and landslides, and the Institute for Snow and Avalanche Research for avalanches. These agencies coordinate through the Natural Hazards Steering Committee, rank the severity of hazards on a 1-5 scale, and issue joint warning for hazards that concern more than one agency. Warning broadcasts are obligatory for hazards rated 4 and 5. Moreover, several platforms aggregate and disseminate hazard information. The Joint Information Platform for Natural Hazards (GIN) combines available data on natural hazards for use by emergency management stakeholders, like emergency services, cantonal staff, and civil defense. An integrated, publicly available online portal presents detailed real-time information for 12 hazards and provides recommendations to the public on how to act (Naturgefahrenportal, 2026[34]). A national drought platform, for early detection and warning, also began operating in 2025 (Trockenheitsplattform, 2026[35]). Yet, the early warning system could be strengthened further. Several key parameters for hydrological model forecasts are not available in real time, for example, and forecasts for small or medium-sized drainage areas are less accurate, as they often rely on only a few monitoring stations (FOEN, 2025[36]). The GIN platform does not include impact-specific details, which undermines timely and informed decisions during hazard events (GoBeyond, 2025[37]).
Climate-related corporate disclosures help companies and investors make better decisions by providing information on risks and showing where additional action is needed. Disclosure requirements also help to hold companies accountable for meeting their climate goals. The Swiss Ordinance on Climate Disclosures, in effect since 2024, requires large firms, including public companies, banks and insurance companies, to report publicly on climate issues. Companies must disclose the potential climate-related financial risks they are exposed to, and the effect of their activities on climate. Companies must also devise transition plans to reduce greenhouse gas emissions, with clear targets and measures to achieve them. A recent review of 15 large Swiss companies revealed that all of them conduct climate-scenario analysis, which far exceeds the global average, and nearly all of them have climate transitions plans that are quantitively tracked, with clear targets and metrics (EY Switzerland, 2025[38]).
Increasing transparency about the vulnerability of financial institutions to climate change can help protect clients, improve business decisions, and guide institutions and regulators to address weaknesses, ultimately strengthening the resilience of the financial system. FINMA, the financial system regulator, has published the Circular 2026/1, aiming to enhance the resilience of supervised institutions to climate-related financial risks, and more broadly, to nature-related financial risks (FINMA, 2024[39]). Banks and insurers must periodically identify relevant nature-related financial risks and assess their financial materiality for the institutions’ risk profile. Nature-related financial risks assessed as material must be appropriately integrated into the bank's or the insurer's institution-wide risk management. To manage material nature-related credit risk, banks are expected to conduct due diligence on nature-related risk profiles before accepting new clients, among other measures. Systemically important banks must gradually integrate any nature-related risk they face into their stress tests and their internal assessment of the adequacy of financial resources. For these large institutions, the circular entered into force on January 1st, 2026, while all other institutions will have one extra year to implement it. Challenges for the implementation of the circular include information gaps, especially for small and medium-sized enterprise clients, lack of standardisation for identifying and assessing nature-related financial risks, and limited internal expertise (EY Switzerland, 2025[40]).
Reducing information asymmetries about natural hazards between participants in real estate transactions can lower risk exposure for the population and help reduce losses from climate-related incidents. In Switzerland, there is no legal obligation for hazard risk disclosure in property transactions. It is the responsibility of the buyer to conduct due diligence with respect to the property to be acquired (ICLG, 2025[41]). Estimates show that although property values located in hazard zones are 1-5% lower, the proportion of transactions in the highest-risk locations has remained stable, which might in part be due to insufficient risk awareness (Wüest Partner, 2025[42]). Disclosure requirements for properties sale, lease or mortgage issuance are considered an effective policy instrument to accelerate sustainable real estate investment and reduce risk exposure (OECD, 2025[43]). Several OECD countries have introduced this type of disclosure requirement, like France, Japan, Australia and the United States. In Victoria, Australia, sellers are required to inform buyers if the property is in a flood-risk zone designated by the municipality and whether any restrictions on redevelopment apply (OECD, 2019[44]). In the United States, the state of California requires a natural hazard disclosure statement for properties in flood, fire, or seismic hazard zones, and more than half of states have adequate flood-risk disclosure requirements (NRDC, 2025[45]).
Mainstreaming adaptation in standards and regulations
The regulatory environment can be an important driver of adaptation investments. The case for imposing regulations and standards is particularly strong in economic sectors that are heavily exposed to the impacts of climate change, but where prices are less responsive to such risks. Residential, commercial, and industrial buildings, for example, are vulnerable on their own and influence the vulnerability of their occupants. Similarly, damages to critical infrastructure can cause large economic disruptions on telecommunications, transportation and energy utilities. Several studies show that constructing climate-resilient buildings and infrastructure is more cost-effective than constantly repairing them (OECD, 2024[46]). This could entail building a flood-resistant factory with elevated foundations, robust drainage systems and climate-resilient materials, or a greater use of concrete to pave roads due to its higher temperature resistance.
Since private players do not necessarily internalise such long-term benefits, the case for updating building and construction standards to reflect modern resilience requirements is strong. The Swiss Society of Engineers and Architects (SIA), the Federal Office for the Environment (FOEN), the Canton of Zurich Building Department, MeteoSwiss, and Lucerne University of Applied Sciences and Arts (HSLU), have compiled hourly climate data projections, allowing to evaluate the future indoor temperature in buildings, to optimise heating and cooling systems and climate-proof future constructions. Cantons and the federal government have also developed the “Minergie” standard certifying low energy buildings and considering buildings’ value preservation. The use of these data and labels by building designers and other stakeholders, however, remains optional. The Building Codes (MoPEC/MuKEn) imposes limits on the energy consumption of buildings, but it does not set any requirement for adaptation measures.
Climate-resilience outcomes are also not mandatory in the development of infrastructure projects. Based on an OECD survey, only 12 out of 26 countries specifically require the integration of adaptation measures into transport infrastructure design (OECD, 2024[46]). Moreover, less than half of OECD countries with available data evaluate the costs and benefits of climate disaster resilience in infrastructure projects, only 10 use the results to inform project selection and prioritisation, and only 9 conduct comparative assessments of alternative infrastructure solutions based on climate resilience (OECD, 2025[47]). Switzerland is not part of these countries. Regulations could set a minimum climate-security standards without being overly prescriptive on the choice of technology. Canada, for example, created the “2021-2026 Standards to Support Resilience in Infrastructure Program” to develop new design, construction, and operation requirements throughout the lifecycle of infrastructure and buildings.
Embedding climate-resilience metrics into private-public partnerships and public procurement would be another way of safeguarding infrastructure’s long-term returns and value for money. It can also help driving adaptation across organisations and supply chains. Recent data shows that less than 3% of public administrations and public companies worldwide have incorporated operational methods, criteria and tools to require their suppliers to contribute to climate resilience (CDP, 2023[48]). Switzerland’s “Sustainable Public Procurement (SPP)” is part of the broader national Strategy for Sustainable Development 2030. To guide and support the implementation of sustainable public procurement, the Swiss Federal Procurement Conference (CA) has also developed some guidance documents and a set of recommendations to integrate sustainability criteria across the different phases of procurement procedures. However, only climate mitigation measures that have an indirect effect on adaptation are considered. Adaptation measures on their own are not contemplated. The authorities could use available toolkits to mainstream resilience on public procurement strategies and public private partnerships, such as (OECD, 2024[49]) and (Frisari et al., 2020[50]).
The structure of economic regulation also has an impact on infrastructure owners and providers’ willingness and capacity to invest in climate adaptation. Expenses by electricity grid developers towards climate resilience should be considered allowable investments, for example. Making operators compensate customers or imposing other penalties for disrupted service can be an efficient way to incentivise adaptation investments, while preserving flexibility over the chosen solution. Regulators can also raise awareness of climate risks through requirements to undertake stress tests, identify interdependencies and report on adaptation plans, like FINMA’s Circular 2026/1 for the financial sector (OECD, 2024[51]).
Other regulations affecting businesses and industry, such as health, safety and working conditions, also need to encourage adjustments to adapt to the impact of climate change. Climate change is expected to increase the risk of overheating for those working outside, for example. Labour rules in the Ticino and Geneva cantons already ban afternoon activity in construction sites on very hot days. Other cantons could follow suit.
Strengthening economic instruments
Insurance to cover damages on residential properties and commercial buildings caused by fire or natural hazards is mandatory in almost all cantons, except Geneva, Valais, Ticino and Appenzell Innerrhoden. Even in cantons with no mandatory insurance against damage from natural hazards, coverage rates are high. The minimum scope of the insurance is set by law and covers a wide range of natural events: high water, floods, storms, hailstorms, avalanches, snow pressure, rockfall, rockslides, and landslides. This cover must be included in any fire insurance policy for buildings as well as for contents. Rates are the same for all insurance providers, based exclusively on the value of the property, and are subject to approval by the Financial Market Supervision Authority (FINMA). This means that rates do not increase if a building or estate is in a high-risk area, such as near waterways that are prone to flooding, for example. Insurance providers operating in cantons where property insurance against natural hazards is not mandatory must also abide to the minimum scope set by law and premiums regulated by FINMA. Insurance against climate-related hazards for movable property more generally, including cars, livestock, or machinery, however, is optional.
The Swiss natural hazard insurance system also relies on the principle of solidarity. As insurance premiums are uniform and regulated by FINMA for the basic compulsory package, insurers could be tempted to underwrite only "good" risks and refuse cover to the "bad" ones. To prevent insurers in risk-prone areas from making substantial losses and becoming insolvent, insurance providers established a voluntary association to optimise risk diversification and risk exposure, called the ES-Pool (“Elementarschaden-Pool”). When there is a claim, insurers in the ES-Pool jointly bear 80% of the costs in proportion to their market share. The remaining 20% is paid by the insurer that provided coverage.
By being compulsory for immovable properties in most cantons, the share of insured losses from climate-extreme events is high in international comparison (Figure 3.3). Affordability is safeguarded by regulated rates that do not depend on risk exposure. Availability and sustainability, on the other hand, are guaranteed by the principle of solidarity among insurers. Because premiums cannot be increased based on climate-related risk, incentives for insurance companies to take a proactive role in preventing damage are preserved. Insurance companies have been involved in discussions regarding building standards, for example. They have also collaborated with the authorities in developing risk maps.
Higher frequency of events and their clustered nature could nonetheless threaten the stability of the system in the medium to long-term. Extreme climate events are expected to become more frequent, but also more damaging. In fact, wealth gains and inflation are expected to increase damage costs. Properties equipped with photovoltaics, for example, will be more expensive to repair. Moreover, insurance relies on risks being independent, yet climate events affect an entire region at once. Since the phenomena is global, market conditions for reinsurance will become tighter. If reinsurers increase prices and decrease coverage, profit margins for insurers will narrow. As prices for the basic mandatory package are regulated, insurance companies might be tempted to compensate by increasing premiums on other products, including insurance against climate-related hazards for movable property. Other consequences would be more exclusions and limitations, or yet higher deductibles.
The Financial Market Supervisory Authority (FINMA) should continue monitoring market developments to adapt regulated rates over time and make sure that the system remains sustainable. Changes in the baseline premium for property insurance could be based on forward-looking risk indicators rather than past events and insured losses, as is the case now, as these are unlikely to reflect on-going and expected developments. Insurers could be allowed to grant premium discounts to those able to prove that protective measures have been taken to prevent damages from natural hazards on their property. Models used to calculate the price of the insurance policy would need to be adapted to consider the risk reduction potential of measures such as installing flood-resistant barriers or waterproof walls. Qualifying adaptation measures should be clearly defined and include nature-based solutions, such as better land management or developing rain gardens. This would help quantify the economic value of such ecosystem services, increasing incentives for their development. Newly built properties in high-risk areas should face full market pricing to prevent further urban development in vulnerable places, like done in the United Kingdom. Finally, Switzerland could consider extending mandatory insurance coverage to movable property, as done in Norway.
Note: OECD is an unweighted average of the 26 countries in the figure.
Source: European Environment Agency with data from RiskLayer GmbH.
Other economic instruments could complement the role played by climate-related hazard risk insurance. Tax breaks for developers and homeowners to encourage the adoption of pro-active adaptation measures are one example. In Switzerland, up until now, housing maintenance and renovation costs, as well as contributions to condominium renovation funds, could be deducted from taxable income. Energy-saving investments and other measures that help protecting the environment and adapt to climate change, such as insulating floors, walls, ceilings and roofs, or fitting heat-insulating windows, could also be deducted, even if these measures were value-enhancing. However, with the abolition of the personal income tax on imputed rental value (Chapter 2), approved by popular vote in September 2025 and expected to come into force in 2029, such deductions will be abolished for homeowners, both for primary and secondary residences. Cantons will retain the authority to allow deductions for energy efficiency measures in subnational taxes but given that they are already expected to lose out financially from the abolition of the imputed rental value, they are unlikely to admit additional revenue shortfalls.
When access to finance is the main constraint, subsidising adaptation investment may be one way forward. Targeted grants and low-interest loans are some of the options. The federal programme “Adapt+”, introduced in 2025, grants financial support to cantons, communes, households and firms, for the implementation of adaptation measures that have already been successfully applied elsewhere. Federal support cannot exceed 50% of the costs to eventually mobilise private capital, expertise, technology and best practices. In 2025, 105 applications were submitted, and 40 projects have been accepted, for a total of CHF 3.5 million to be disbursed over several years. Further calls for applications are planned for the years ahead, subject to approval by the Federal Council. Annual allocations of CHF 7 million in 2027 and CHF 10 million from 2028 onward are currently under discussion.
However, not all federal funds available for the programme were used in 2025 during the first call for applications. The timeline for applications was short, and applicants had little time and administrative support to prepare and submit project proposals. For the second call, the federal government is planning to launch a specific website with all the necessary information, to organise a webinar for all interested parties, and offer feedback on project proposals before the submission deadline. These measures should help increase the reach and effectiveness of the “Adapt+” programme.
Potential inefficiencies could nonetheless arise if households and firms benefiting from these funds would have invested even without public support (OECD, 2024[52]). Determining the level of financial support based on the funding gap, i.e. the aid needed to attract an investment that would not occur otherwise, would help reducing such inefficiencies. This gap is usually measured as the difference between the net present value of the investment costs and the net present value of its expected benefits.
For cantons and communes, public support could target less developed areas, hence also contributing towards reducing regional disparities. The federal and cantonal “Buildings programmes” could be another form of public support towards adaptation investment. To increase its effectiveness, however, the “Buildings programmes” would need to be adapted to encourage comprehensive renovations instead of staged renovations which are not always effective (OECD, 2021[53]). Pro-active climate adaptation investments that are compatible with the objective of reducing GHG emissions in the buildings sector should be eligible for these programmes. Grants to support adaptation investment can be very costly and create market distortions. Therefore, beyond being well-targeted to minimise negative income effects and distortionary effects on output and employment in business services and construction (OECD, 2025[54]) (OECD, 2026[55]), such programmes should also be time-limited and subject to regular review (OECD, 2024[51]).
Creating synergies between adaptation and mitigation can increase the cost-effectiveness of climate actions (IPCC, 2007[56]). Some sectors have greater potential for synergies than others. More efficient energy use and renewable sources, for example, can reduce local pollutant emissions, with positive consequences on health. When revenues from carbon taxes are used to reduce carbon emissions in buildings, this often involves technical solutions that also improve resilience to heat and other consequences of climate change (UNFCCC, 2022[57]). This section will discuss mitigation actions that remain coherent with climate adaptation objectives.
3.2.1. Balancing climate objectives with electricity affordability and supply security
Switzerland remains one of the least emission-intensive OECD economies, as measured by production-based GHG emissions per unit of GDP and per capita (OECD, 2025[58]). This is largely explained by its service-oriented economy and its comparatively clean energy matrix. More than half of total energy supply is now sourced from low-carbon sources. Domestic energy production has been nearly carbon-free for decades, comprising about 46% of nuclear energy, 29% of hydropower, 20% of biofuels and waste, and intermittent renewable energy sources for the remaining 5%. Domestic electricity production is almost 60% from hydropower, almost 30% from nuclear energy, and about 7% from solar photovoltaic solar (IEA, 2025[59]).
In January 2025, the Federal Council approved Switzerland's new emission reduction target under the Paris Agreement: by 2035, GHG emissions should fall by at least 65% compared to 1990 levels, and by 59% on average between 2031 and 2035. Based on a recent OECD study, without additional measures, Switzerland will likely fall short of reaching these targets (Figure 3.4) (OECD, 2025[54]).
Further progress on renewable energy sources will be a key challenge for the years to come. On one hand, electricity demand will rise with the ongoing electrification of transport, heating and industry. This electrification is key for achieving net zero greenhouse gas emissions by 2050, as highlighted in the 2024 OECD Economic Survey of Switzerland (OECD, 2024[60]). A recent study estimates that annual electricity demand could increase from 56 terawatt hours (TWh) currently to around 75 TWh by 2050 (VanLiedekerke et al., 2025[61]). On the other hand, the “Energy Strategy 2050” pledged to phase out nuclear power by introducing a ban on the construction of new reactors, which was approved by popular vote in 2017. To prevent nuclear energy from being replaced with emission-intensive sources, the “Electricity Act”, approved by referendum in June 2024, stipulates that by 2050, 60% of electricity demand should be met with renewable energy sources excluding hydropower, and net imports of electricity in winter should not exceed 5 TWh per year.
Compliance with the new laws and ambitious targets while meeting increasing demand for electricity will require expanding the installed domestic capacity of intermittent renewable energies. Based on recent estimates, the installed capacity of photovoltaics would need at least a four-fold increase, and wind energy would need to expand over 80 times its current capacity (VanLiedekerke et al., 2025[61]). At the moment, the contribution of solar and wind remains modest compared to other OECD and European countries (IEA, 2025[59]). Stepping up the ambition on the deployment of intermittent renewable energy is therefore welcome. However, this is not without challenges, both from a technical and public-acceptability point of view. Policymakers need to identify an effective strategy to accelerate the energy transition while balancing economic competitiveness, energy security, and energy affordability goals. Moreover, the costs associated with an electricity system relying increasingly on renewable energies will depend on the system’s storage capacity and flexibility. The power grid must be adapted to allow greater diversity and decentralisation of potentially variable sources of energy supply. Currently, the system’s flexibility and running capacity is based primarily on nuclear and hydroelectric plants, but the reduction of the share of nuclear power will significantly reduce the flexibility and running capacity of the electricity system. Efforts to upgrade and adapt electricity transmission and distribution networks, and to develop energy storage and electricity demand management solutions will need to accelerate.
Over the last ten years, domestic production has not been sufficient to cover electricity requirements, and Switzerland depends on electricity imports during the peak-demand winter months. In 2024, Switzerland imported about 26 TWh of electricity from abroad (IEA, 2025[59]). If the restriction to import electricity beyond 5 TWh in the winter months is strictly enforced, electricity will have to be supplied from more expensive internal production sources. Moreover, hydro pump storage units would find it more difficult to use their flexibility for arbitrage, that is, importing from neighbours at low price hours and exporting at high price hours. Overall, the wholesale electricity price could increase by 141% (VanLiedekerke et al., 2025[61]). Switzerland’s central geographical position in Europe and flexible hydroelectric resources has also been critical in balancing electricity demand and supply for its neighbouring countries.
Trading across borders has been an effective avenue for reducing electricity costs, by buying cheaper electricity elsewhere when domestic costs would be higher, and ensuring reliable supply, when demand exceeds domestic production. Switzerland and the European Union (EU) negotiated a new bilateral electricity agreement in December 2024, approved by the Federal Council in June 2025, but it still requires the final approval of the parliament and citizens. Under the agreement, the Swiss transmission system operator will be fully integrated into the European electricity transmission processes. This would imply lifting the restriction to import electricity from beyond 5 TWh in the winter months. Swiss electricity market participants will be able to participate in EU trading platforms and technical committees relevant for grid operation, crisis preparedness and security of supply. Neighbouring EU states won’t be able to restrict cross-border capacities to Switzerland, even in the event of an energy crisis.
Moreover, if the new Swiss-EU electricity agreement enters into force, the electricity market will offer more choices in line with EU requirements. To date, only companies with an annual consumption over 100 000 kWh can choose their supplier freely. Other end-users have been “captive customers”, obliged to consume electricity from their local supplier. As part of the reform, all households and companies will be able to choose their electricity supplier freely. Intensified competition and a larger number of active end-users regularly switching suppliers are expected to reduce retail electricity prices over time. By some estimates, electricity prices in 2050 are likely to be 14% lower with the new electricity agreement (Hafner et al., 2025[62]).
The future of nuclear energy in Switzerland will also be a determinant for the cost of achieving carbon neutrality, as suggested by estimates by the Nuclear Energy Agency (NEA, 2022[63]). Nuclear energy can be one option to balance energy security, energy affordability, and climate objectives, complementing the role of intermittent renewables in the transition to net zero emissions, although concerns involve high-impact negative risks in case of severe nuclear accidents (IEA, 2022[64]). According to these estimates, a scenario where Switzerland disposes of 2.2 GW of nuclear capacity from the long-term operation of two nuclear reactors, with the remainder being provided by solar photovoltaic and wind, would be the least costly way to achieve net zero emissions by 2050. Such a scenario would require additional investments into existing reactors to fulfil the safety retrofits required by the Federal Nuclear Safety Inspectorate (ENSI). Several OECD countries have planned long-term operations of existing nuclear power plants for 60 or even 80 years. The second least costly option would involve the construction of new Generation III+ nuclear reactors providing 3.2 GW of nuclear baseload in 2050. This would require reconsidering the ban on the construction of new reactors in case the long-term operation of the existing plants proves unviable, as proposed by the Federal Council in August 2025 and adopted by parliament in June 2026, which might still be subject to a popular vote. When assessing options, it is important for nuclear and any other energy project, to be underpinned by transparent and comprehensive life-cycle cost-benefit analyses that inter alia account for the cost of constructing power plants, storing nuclear waste and decommissioning disused power plants. Such analysis must also consider the direct and indirect subsidies granted through the entire production cycle.
3.2.2. Accelerate efforts to reduce GHG emissions while building public support
Climate change mitigation calls for far-reaching changes in sectors other than electricity (Figure 3.4). Carbon pricing can be a cost-effective way to induce lower emissions across a wide range of sectors (D’Arcangelo et al., 2022[65]). Carbon pricing can also lead to reductions in resource use, helping to address Switzerland’s high level of consumption-based emissions (OECD, 2024[60]). Based on OECD simulations, carbon pricing instruments such as the Swiss ETS and the CO2 Levy deliver the strongest short- to medium-term mitigation effects (OECD, 2026[55]). At around EUR 150 per tonne of emissions, Switzerland has the highest net effective carbon rate of all countries in Figure 3.5. Most of that is explained by the fuel excise tax, called the Mineral Oil Tax and thus unrelated to differences in carbon content and emission intensity across fuels.
A stronger role for instruments based on actual emissions, and a higher carbon price, would help Switzerland achieve its emission reduction targets. Both the explicit carbon tax, called the CO2 levy, and the Emissions Trading Scheme are pricing carbon emissions (OECD, 2024[66]). Raising the carbon price through these two instruments would therefore be a natural choice. However, a popular vote in June 2021 rejected an ambitious package of measures to curb GHG emissions, including a one-off increase in the CO2 levy from CHF 120 to CHF 210 per tonne of emissions. This has made the political economy of raising carbon prices on a broad basis more difficult. The carbon tax has remained unchanged since and the revised package of measures that entered into force in January 2025, addressing public concerns, is far less ambitious than the original bill.
Several policy options could be considered to strengthen carbon pricing and accelerate GHG emissions reduction, without having to increase the statutory rate of the CO2 levy. Coverage of emissions can still improve, for instance. Only about 75% of GHG emissions are covered by a positive price, compared to 81% in Italy, more than 85% in Germany, and 87% in Luxembourg (Figure 3.5, Panel B). The Mineral Oil Tax applies to the consumption of liquid and gaseous fossil fuels, affecting transport, buildings, and agriculture. The Emissions Trading Scheme covers large emitters in industry, the energy sector, internal aviation, and flights connecting Switzerland with the EU, the European Economic Area (EEA), and the United Kingdom. The CO2 levy applies to buildings and firms not covered by the ETS but excludes transportation and firms that enter voluntary agreements with the government, called “reduction obligation agreements”.
Greenhouse gas emissions
Note: The current policies scenario considers key climate mitigation policies in the transport, buildings, and industry sectors – the most important sources of GHG emissions. The model uses historic emission projections from the JRC-EU-TIMES model from the Paul Scherrer Institute for the CO2 emissions and data from the EDGAR data base for the other GHGs.
Source: Federal Office for the Environment FOEN, GHG Inventory; OECD IFCMA (OECD, 2025[54]).
Exemptions to the CO2 levy in the form of “reduction obligation agreements” reduce the policy’s effectiveness, and the 2024 Economic Survey recommended reassessing them (Table 3.1). To be exempted, firms must apply to the Federal Office for the Environment, submitting a decarbonisation roadmap up until 2040, with targets based on what is “economically viable”. The targets are validated by a certified energy consultant in accordance with guidelines from the Federal Office of Energy. The reduction obligation agreements do not contribute to significant emissions reductions, as discussed in previous surveys (OECD, 2024[60]) (OECD, 2022[67]). Besides, “reduction obligation agreements” are costly to administer and enforce, adding to foregone tax revenues. The high administrative burden from this programme is also likely to favour larger and more productive firms. The reduction obligation agreements could be gradually phased out.
The impact on emissions from the CO2 levy is also weakened by general equilibrium effects (OECD, 2025[54]). Two thirds of revenues from the CO2 levy, about CHF 0.8 billion each year, 0.4% of GDP, are redistributed. The revenue from the CO2 levy paid by households is redistributed equally to all residents insured under the Federal Health Insurance Act (HIA). This means that every individual receives the same amount, regardless of energy consumed, income earned, and proximity to the public transportation system. The revenue from the CO2 levy paid by firms is redistributed in proportion to the wage bill, favouring larger and more productive firms. While this redistribution mechanism has a positive effect on incomes, OECD simulations show that it reduces the effectiveness of the policy (Figure 3.6Figure 3.6).
Redistributing revenues from the CO2 levy to provide targeted relief to vulnerable households, rather than broad-based support, would increase the policy’s impact on emissions reduction. Higher-income households would not be significantly affected, while the carbon tax would become more acceptable for low-income households. Survey data collected by the OECD on attitudes toward climate change policies demonstrate that households prefer targeted and means-tested support mechanisms rather than broad-based support (Dechezleprêtre et al., 2022[68]). Increasing the share of CO2 levy revenues that is used to reduce carbon emissions in buildings, fund renewable energies, and promote innovative companies, as originally intended in 2021, would also improve the effectiveness of the tax.
In the medium-term, the CO2 levy could be progressively replaced by a strengthened Emissions Trading Scheme. Emissions Trading Schemes (ETSs) tend to be more acceptable politically than carbon taxes (Parry, Black and Zhunussova, 2022[69]). ETSs have also been found to be more welfare enhancing as they offer greater incentives to innovate and can be more easily adjusted to market conditions (Pan et al., 2024[70]). In a welcome move, an ETS on buildings and transport sector, replacing the CO2 levy, is planned as part of the revision of the CO2 law after 2030, mirroring similar developments under the EU ETS II, although -in contrast to the EU ETS II- with price caps to be defined at the level of current CO2 prices. These price caps should be either reconsidered or progressively lifted to make sure that they do not hamper the effectiveness of the ETS in these additional sectors. In the meantime, the Swiss ETS has been aligned to the revised EU ETS under the Fit-for-55 package starting from January 2025. For stationary installations and aviation, the same linear reduction factors as in the EU ETS will apply to reduce the respective caps from 2024 to 2030. Additionally, carbon capture and storage, and under certain conditions foreign biogas use, can now be accounted for in the scheme. In aviation, free emission allowances will be phased out by 2026. Although the Swiss ETS is not subject to the EU ETS Market Stability Reserve, Switzerland developed its own market stabilisation mechanism, and the emission allowance price has closely followed EU levels since both systems were linked in 2020 (OECD, 2024[60]).
Expanding the coverage of carbon pricing instruments could raise production costs, putting domestic firms at disadvantage compared with competitors and shifting emissions abroad. As a small open economy with high living standards, much of the environmental impact of Swiss consumers is embodied in the import of goods and services. Focusing on consumption-based measures of GHG emissions, Switzerland’s performance becomes worse than the OECD average (OECD, 2025[58]). A recent OECD study finds that unilateral changes in the stringency of climate mitigation policy could increase Switzerland’s imported emissions by as much as 32% on average across manufacturing sectors (Hemmerlé, Kruse and Pisu, 2025[71]). Switzerland will not be required to introduce the EU Carbon Border Adjustment Mechanism (CBAM) under the new Switzerland-EU agreements, but it could consider the development of a similar model that is compatible with rules-based trade. Behavioural insights can also help policy makers design and implement measures to encourage more sustainable consumption and investment patterns (OECD, 2017[72]). Some OECD countries have implemented measures including enabling a right to repair, prohibiting planned product obsolescence, and combating greenwashing used in marketing, for example.
Source: Pricing Greenhouse Gas Emissions 2024.
Note: Panel B: a positive (negative) value means that indirect effects reinforce (reduce) the direct effect.
Source: IFCMA (OECD, 2025[54]).
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