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 […]
Inflation Fighter
What’s being done to keep the American economy running smoothly? Who’s keeping watch over things like the employment rate and purchasing power? Does anyone care about the average citizen’s standard of living? In other words, who is the sheriff in town? “What is still bothersome is we haven’t achieved price stability,” said Mary C. Daly, the President and CEO of the Federal Reserve Bank of San Francisco (FRB-SF). She defined price stability as simply: “it’s when people don’t have to worry about inflation.” She identified this as the core mission of the FRB, which “as we all know, has come […]
Plugging into Progress
Many countries signed on to the 2016 Paris Agreement, but nine years later, how many are actively working toward decarbonization? Watchdog organizations are evaluating the progress made year over year and will encourage the 195 or so signing parties to keep the commitments they made. One such organization is the independent scientific project Climate Action Tracker (CAT), whose main graphic summarizes the goals. On May 21, 2025, the Climate Action Tracker group presented a webinar, “Plugging Into Progress: Evaluating Power Sector Decarbonization,” in which four experts on climate risk discussed the progress, or lack thereof. Louise Jeffrey began the session. […]
The Growing Protection Gap
According to a CoreLogic survey, roughly 35 million homes, or nearly a third of the nation’s housing stock, are at “high risk” of a natural disaster. How much are U.S. households willing to pay for insurance? Will this give adequate coverage? And what do changes in demand imply for the future of insurance markets? “Climate losses are increasing, with homeowners insurance premiums rising in tandem,” said Pari Sastry, Assistant Professor of Finance at Columbia Business School, “and there is widespread concern that rising premiums are making insurance unaffordable.” Parinitha Sastry was speaking at a webinar on May 15, 2025, presenting […]
Nature Risk… Climate Risk
Nature risk, or the loss of natural assets, affects humans in a wide range of ways, but it is poorly understood, and its economic impact is not adequately measured. Yet it is gaining prominence during a time of concern about climate risk. The natural world helps mitigate climate change because it provides many natural sinks that absorb carbon dioxide, such as mangrove swamps. “Nature is critical for us to get to net zero,” said Jo Paisley, president of GARP Risk Institute, referring to a fundamental goal of the 2016 Paris Agreement. “And climate change is one of the drivers of […]
Global Energy Transition
What’s changing in relation to global energy supply and production? What are the latest trends in demand? And what do the changes mean for investment opportunity and risk? These and other questions were addressed by David von Eiff, Director, Global Industry Standards at CFA Institute during a webinar on April 22, 2025, titled “Global Energy Transition: Investment Opportunity and Risks.” Since the day marked the 55th anniversary of Earth Day celebrations, he began with a review of the goals of the zero emissions agreement. “There are health benefits to renewable energy and economic benefits.” “In the U.S., renewables-based electrical generation […]