Towards A Just Policy
The global average temperature is on track to increase over 2026. A single glance at who can afford to own and run air conditioning shows how unevenly climate change affects the poorest households. Is it possible to address the inequality through good design of climate change policy? “For a given global emissions reduction goal, the most efficient policy may not be the most equitable,” said Stéphane Zuber, Director of Research at CNRS, Paris School of Economics. He was presenting a webinar on April 16, 2026, as part of the Virtual Seminar on Climate Economics (VSCE), a series organized by the […]
The Right to Pollute?
Who owns the environment? Who has the right to pollute the environment? Climate policy is essentially a negotiation over who owns the environment and the allocation of economic, technological, and developmental costs and benefits among nations. Yet, how should we determine the fairness of this distribution? The economic analysis of climate change is a broad and growing area. “A central debate in international climate policy is the distributional consideration,” said Simon Lang, a postdoctoral researcher in the Sustainability Economics Group at ETH Zurich. He was presenting a webinar on April 2, 2026, as part of the Virtual Seminar on Climate […]
Weathering Poverty
The first and most prominent of the United Nations’ Sustainable Development Goals is “to end poverty in all its forms, everywhere, and leave no one behind.” Instead, reports shows that climate risk disproportionately affects poor countries, particularly in sub-Saharan Africa and Asia, which are projected to experience many more heat-related deaths as the average global temperature climbs. Yet the developed world becomes further enmeshed in geopolitical conflicts and ignores what is happening to the environment. “Climate risk is rising, with the world becoming hotter and weather shocks such as flood and drought increasing in number and severity,” said Clare Balboni, […]
Designing Climate Policy
Environmental protection seems to come and go, depending on the whim of the party that gets voted into office. A citizen might wonder, how is climate policy designed, anyway? Is there a method to the madness? New climate policy is developed through an iterative process that blends scientific data, public consultation, and political negotiation to meet long-term net-zero goals. Effective design usually combines “carrots” (tax credits, rebates, etc.) with “sticks” (carbon pricing, fines, etc.) to accelerate the transition. “Fighting climate change requires implementing ambitious carbon reduction policies,” said Thomas Bourany, postdoctoral research scholar of economics at Columbia University. “The free-rider problem is […]
Heat Shocks & Farm Size
In developing countries, many households, even those where adults work in non-agricultural sectors, depend on small farms for food and income. These farms operate at a lower rate of productivity, unable to benefit from economies of scale. Typically, these households are uninsured against negative income shocks. What happens, then, when weather shocks occur, such as heat waves or drought? Economic researchers recently studied the link between small farms and income shocks in Colombia, a country of 52 million, with one-tenth the land size of the U.S. “We found that temperature shocks increased the number of land sales and mortgages, with […]
Supply Chains & Climate Risk
Supply chain disruptions during the pandemic made average citizens aware of how vulnerable supply chains are, and how severe the knock-on effects can be. Supply chains continue to be exposed to risk in many ways: geopolitics, labour, and weather, to name a few. In this month alone, floods and atmospheric rivers have caused major disruption of supply chains, such as can be seen in the December flooding in British Columbia’s Fraser Valley and Washington state. As companies continue to manage supply chains in the face of climate change, what are the trade-offs between cost minimization and resilience? What are the […]
Carbon Leakage
When raking leaves, some folks may be tempted to push the debris from their yard into the next yard. Raking leaves is analogous to cleaning up greenhouse gas emissions, and pushing those leaves elsewhere is analogous to “carbon leakage.” What happens when one country decides, ahead of others, to implement ambitious policies to encourage carbon-neutral production? The asymmetry in climate policies can create carbon leakage, where global emissions are not reduced but are instead shifted to a different location with less stringent environmental policies. The United Kingdom has committed to reaching net zero carbon emissions by 2050. Carbon will be […]
U.S. Climate Politics
Climate change is recognized as having large effects on health and economic well-being. Peer-reviewed scientific studies show the impact of temperature/weather/pollution on mortality, GDP, health, crime, and civil conflict. Yet, according to a recent working paper series by Burke et al., adaptation to counteract the problem has been muted. “The climate change response has stalled. Are democracies equipped to handle this problem? asked Francesco Trebbi, Professor of Political Economics at the University of California, Berkeley School of Business. “Policies to curb the climate crisis, such as the carbon tax, are often democratically opposed. Are non-democracies like China better able to deal […]
Carbon Price Volatility
Greenhouse gases generated by human activities are contributing to the problem of climate change. For those who care about mitigating extreme weather and wildfires, the key global policy objective of this decade is to reduce carbon emissions. One approach is the policy known as cap-and-trade, used by jurisdictions that create about 18 percent of global emissions. “Cap-and-trade” is shorthand for emissions trading, which is a market where regulators issue a limited number of emissions permits, and firms trade these permits among each other. But lately the markets have been volatile. How well do cap-and-trade systems function when the global markets […]
Fostering Clean Growth
To address environmental concerns, many governments impose pollution regulations on companies or firms. A key goal of such regulations is to spur the development of innovative clean technologies. Empirical evidence suggests that such strategies do, in fact, work. But how effective are regional regulations when dealing with multinational corporations in a globalized economy? “Environmental policies are often confined to local jurisdictions, whereas industrial production operates on a global scale. This mismatch poses a challenge for policymakers,” said Wei Xiang, Assistant Professor of Economics at the University of Michigan. “Firms, especially multinationals, can move their pollution-intensive operations to foreign jurisdictions. This […]