Flood Economics
When it comes to natural disasters such as flooding, does it make more economic sense to control the flood? Or to sit back, suffer the consequences, and count on insurance? Climate change leads to more frequent and more intense flooding. As these risks intensify, public funds will often be used to protect communities. Recent work done by economists estimates the amount and distribution of benefits from a major form of public flood risk adaptation, flood control levees. A levee is an embankment built to prevent the overflow of a river. The efficiency and equity implications of levees were investigated by […]
World Energy Outlook
On October 24, 2023, the International Energy Agency (IEA) released its annual report, World Energy Outlook (WEO), to an international audience. The agency states that the energy world “remains fragile but has effective ways to improve energy security and tackle emissions.” Agency analysts looked at how close the countries of the world are to meeting the objectives of the Net Zero Emissions by 2050 (NZE) Scenario, which limits global warming to 1.5 °C, a goal signed by many countries and often referred to as the Paris Agreement. [As of March 2021, 194 states and the European Union have signed the […]
Bearing Witness
Climate change is the biggest issue of the present day. It affects the physical world, and will irrevocably change economics and business. For scientists coping with climate changes, today we at TextMedic pause to consider: How does it feel to know you are studying the last of certain species? or ecosystems that are irreparably damaged? Today’s weekly magazine of the New York Times calls itself “the climate issue.” Several pieces of excellent journalism speak about climate change. The most poignant article in the climate issue profiles 7 scientists whose life’s work will soon be made irrelevant, due the destructive power […]
The Role of Insurance in Recovery
Climate change is bringing on events, such as hurricanes and wildfires, of greater severity and frequency than ever before. How does insurance help communities rebuild? What economic barriers arise during recovery? Is insurance the best way to provide disaster relief? These are some of the questions tackled by Carolyn Kousky of the Environmental Defense Fund (EDF) in her recent book and research. She is a co-editor of A Blueprint for Coastal Adaptation and author of Understanding Disaster Insurance: New Tools for a More Resilient Future. On October 19, 2023, Carolyn Kousky, Associate VP, Economics and Policy Analysis at EDF, gave a presentation on […]
Managing Water Risk
Flooding, drought, and the polluted quality of water pose a business risk to the agricultural sector, which affects everything from geopolitical risk to inflation. What is the cause of water risk, and how can it be mitigated? On October 3, 2023, Catherine David, Director of Collaboration and Change at Waste and Resources Action Programme (WRAP) and a specialist in water risk, spoke about water management designed for sustainability. The webinar was sponsored by the Global Association of Risk Professionals (GARP) and was moderated by Jo Paisley, President, GARP Risk Institute. “According to the FAO,” David said, “by 2030, global demand for […]
The Greenium
Does the average household want to invest in climate-friendly assets? If so, what proportion of assets are earmarked for green investments? What kinds of assets (equity or fixed income) are preferred? “Green investments are popular, but only about one-third of German households have some kind of green account,” said Monika Piazzesi, Professor of Economics at Stanford University. She was speaking at a webinar titled “Household Climate Finance: Theory and Survey Data on Safe and Risky Green Assets,” held on September 7, 2023, as part of the Virtual Seminar on Climate Economics sponsored by the Federal Reserve Bank of San Francisco (FRBSF). Her […]
Heat Lowers the GDP
Every season, but particularly summer, reminds us that global warming is occurring at an alarming rate. The average global temperature will continue to rise over time if people do not take substantial action to reduce greenhouse gases, especially carbon emissions. What effect will soaring temperatures have on economic productivity? How will warming effects be distributed over the globe? Will these have a long-lasting effect on the GDP? Recent research by economists at the Federal Reserve Bank of San Francisco (FRBSF) delves into these questions. “Our findings show that total global losses in output per person could be substantial,” say the […]
The Meerkat Way
Given that climate change is the biggest economic upheaval of our age, what can risk professionals do? What, exactly, is meant by a “net-zero transition,” and why does each organization need a transition plan to reach it? How should risk professionals get started? On May 23, 2023, the membership of the Global Association of Risk Professionals (GARP) was invited to a one-hour webinar titled “Net-Zero Transition Plans” that promised to answer these questions and more. Tony Rooke, Executive Director and Head of Transition Finance at the Glasgow Financial Alliance for Net Zero (GFANZ), delivered the webinar. GFANZ is a global […]
Carbon Pricing
What is the best way to address climate change? If too much carbon is released in the air, how can emissions be reduced? By regulating corporations or by imposing costs on consumers in the form of a carbon tax? Moreover, even if a solution is found, not all nations, and not all people within nations, will agree on how to tackle the problem. In the words of Professor Barry Rabe, author of Can We Price Carbon? “Compelling ideas from economics do not necessarily suspend the laws of politics.” On May 4, 2023, Jessica Green, professor of political science at University […]
Heated Exchange
Climate-related natural disasters are increasing in frequency and severity and costs. Since climate change is not equal across countries, how does a country’s exchange rate respond to such shocks? Furthermore, is it possible to build an economic model to predict future changes? On April 6, 2023, Galina Hale, professor of economics at the University of California at Santa Cruz, delivered a webinar about the effect of climate change on exchange rates. This was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. She reported results from […]