Global vs. Local Temperature
How often have you heard someone scoff at the changing global temperature? “A two-degree increase? Heck, it changes by twenty degrees some days—and I don’t complain,” they say with a laugh. “Is local temperature an incomplete representation of climate change?” asked Adrien Bilal, Assistant Professor of Economics, Stanford University. He posed the question at a webinar on October 3, 2024, which was part of a series of talks, the Virtual Seminar on Climate Economics, sponsored by the Federal Reserve Bank of San Francisco. The global average temperature has been increasing over the time period 1950 to 2020 (data from National Oceanic […]
How Much Will Global Warming Cool Global Growth?
More workers than ever before are being exposed to heat stress worldwide, according to a 2024 report. Heat stress has a knock-on effect for productivity and thus the gross domestic product (GDP). How much does a permanent rise in temperature decrease the GDP? Economists have tried to estimate the size of the climate change effect, in variously affected countries, with different models and different assumptions. “There’s a wide divergence in projections of how the GDP will change depending on climate change,” said Valery Ramey, Senior Fellow at Hoover Institution and Research Associate at National Bureau of Economic Research (NBER). She was […]
Investing? Climate Matters
How will climate change affect investment decisions, going forward? Are investment professionals well informed on climate risk and transition risk? “Around the world, nations are committing to net-zero emissions targets of greenhouse gases,” said Richard MacGillivray, Senior Director at CFA Institute. “What are the implications of these commitments for the value and performance of companies in the real economy?” The 2024 Global Risks Report tabled by the World Economic Forum (WEF) polled risk managers on the biggest global threat to sustainability. Over the next two years, respondents said the top risk is misinformation and disinformation. However, over the next ten […]
Resilience and Development
For developing countries, how will climate change affect the progress of their economic development? Will these countries be able to use available opportunities through institutions such as the World Bank to adapt to changing conditions and improve people’s lives? “Development and resilience are mutually reinforcing,” said Stéphane Hallegatte, Senior Climate Change Adviser at the World Bank. “Development contributes to resilience, and resilience is crucial for safeguarding gains from increasingly frequent crises.” He was speaking at a webinar on September 5, 2024, on economic development in a changing climate. This was part of the series of talks sponsored by the Federal Reserve Bank […]
Immigration Spike Eases Labor Shortage
For accurate predictions, models depend on accurate input data. For this reason, the U.S. Congressional Budget Office (CBO) routinely updates demographic information about the United States. Recently, errors on the orders of millions of people have come to light. Why are the estimates of the number of immigrants off base, and what are the effects on economic planning? “The CBO now projects that 3.3 million people on net immigrated to the United States in both 2023 and 2024,” according to an economic letter released by the Federal Reserve Bank of San Francisco (FRBSF) on July 15, 2024. “These estimates are […]
Special Report
What is it like being a climate scientist in these days of global warming? Do climate scientists truly believe the global temperature rise can be halted at 1.5 degrees C? The Guardian Weekly posted a special report on climate change May 17, 2024. To answer these questions, take a read. Author Damian Carrington surveyed 380 climate scientists and found sobering results. ♠️ Click here to go to the Guardian page with the Special Report.
The Cost of Sustainability
It seems not a newscast goes by without mention of carbon taxes, or emissions trading, or severe weather events. As wildfire season ramps up, the benefits to switching to renewable energy are apparent. Gradually—some might say too gradually—climate policy (both to mitigate and adapt to changing conditions) is being implemented. New measures chiefly target industry sectors that have the greatest carbon emissions, such as fossil fuels, agriculture, and fashion. But how does sustainability affect the cost of capital, in other words, the minimum rate of return a company must earn before generating value? “There’s plentiful research on the benefits,” said […]
Decarb Economics 101
To mitigate the consequences of climate change, the world requires international coordination. In 2015, the Paris Agreement was signed by 195 nations. Its long-term temperature goal is to keep the rise in mean global temperature to well below 2°C (3.6 °F) above pre-industrial levels, and preferably limit the increase to 1.5 °C (2.7 °F), which would reduce the worst effects of climate change. Many countries are developing policies to get themselves on a path toward achieving the agreed-upon 1.5 °C goal. Although present progress may seem piecemeal, in the words of a Chinese proverb, “A great journey begins with a single step.” The figure below […]
Free the Data
Hurricanes, floods, heat waves, droughts: weather events are increasing in severity as the earth’s atmosphere warms. The consensus is that we need to reduce greenhouse gas (GHG) emissions. Yet recent reports show waning interest in initiatives such as Climate Action 100+. “When performance is measured, performance improves,” according to Pearson’s law, and “when performance is measured and reported back, the rate of improvement accelerates.” Such is the reasoning behind the data repository known as the Net-Zero Data Public Utility (NZDPU). On February 21, 2024, three panelists from NZDPU spoke about the “why” and the “how” of their new organization. The […]
Tax or Cap?
Carbon tax or cap and trade? These are terms bandied about in the political arena as countries decide how to address global warming. “There is a clear consensus among economists,” said Roger Gordon, professor of economics at University of California at San Diego, “that the best way to address global warming is through the global use of a carbon tax on CO2 emissions.” On January 18, 2024, he was speaking at a webinar as part of the biweekly series of talks, titled the Virtual Seminar on Climate Economics, sponsored by the Federal Reserve Bank of San Francisco (FRBSF). “With a carbon tax,” […]