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 […]
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 […]
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 […]
Credible Scenarios
What are the best practices for environmental and climate risk management in the financial sector? Are the standard input scenarios actually suitable for financial modeling? Economic scenarios are an essential tool in assessing the financial risks of the ever-changing world. Given that the average global temperature is increasing, and storms are becoming more severe, year over year, those who construct financial models of risk must set up new, realistic scenarios. Estimating gains and losses on portfolios is difficult because of the deep uncertainty of climate impacts, but modelers must start somewhere. “Using relevant scenarios is crucial,” said Irene Monasterolo, Professor […]
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. […]
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 […]
The Case for CBAM
In 2003, a devastating heat wave in Europe killed an estimated 70,000 Europeans, many of them elderly people living alone. This, and a series of other extreme weather events, have persuaded many countries to take climate change seriously. The European Union enacted the carbon border adjustment mechanism (CBAM). It came into effect as of October 1, 2023, and is designed to account for the carbon cost of producing imported goods, with the ultimate aim of reducing greenhouse gas emissions. “I’m a huge fan of CBAM,” Catherine Wolfram, professor of economics at MIT Sloan, said, joking that the name sounded like something […]
Distributional consequences
Climate change marches on. To prepare for worse storms, droughts, and wildfires, the infrastructure must be improved. Governments have different ways to handle the costs of adapting to climate change. How will these additional costs be borne? “Transition to a carbon-neutral economy is at the top of the policy agenda around the globe,” said Moritz Kuhn, professor of economics at the University of Mannheim. Private households account for about two-thirds of carbon emissions. “Governments can introduce policies to speed up the adoption of green technologies,” he said, but the heterogeneity of consumption and carbon emissions could present problems. These will […]
Dirty Deals
“The global plastic waste trade is an environmental disaster hiding in plain sight, fuelling organised crime, working conditions that amount to human rights violations and devastation to human health and the environment.” This is according to a report released on November 5, 2024, by the Environmental Investigation Agency (EIA) in Britain. ♠️ Click here to access “Dirty Deals Part 2″ from the EIA website.