Alex Armand, Ivan Kim Taveras, 11 April 2021

When discussing the socioeconomic effects of climate change, little attention has been given to the role of the ocean. This column presents new evidence of the effect of ocean acidification on early-childhood mortality in low- and middle-income countries. Small increases in exposure to water acidity while in utero have significant effects on neonatal mortality. A closer look at possible mechanisms highlight the role of the ocean for nutrition and how overfishing represents an additional threat.

Christian Gollier, 06 April 2021

Any global temperature target must be translated into an intertemporal carbon budget and an associated cost-efficient carbon price schedule. This column uses an intertemporal asset-pricing approach to examine the impact of uncertainties surrounding economic growth and abatement technologies on the dynamics of efficient carbon prices. It finds evidence of a positive carbon risk premium and suggests an efficient growth rate of expected carbon prices of around 4% plus inflation. This is lower than the growth rates found in many public reports and integrated assessment models, and justifies a higher carbon price today in order to satisfy the carbon budget.

Patrycja Klusak, Matthew Agarwala, Matt Burke, Moritz Kraemer, Kamiar Mohaddes, 25 March 2021

Enthusiasm for ‘greening the financial system’ is welcome, but does the explosion of ‘green’ finance indicators reflect the science? This column reports research that uses artificial intelligence to construct the world’s first ‘climate smart’ sovereign credit rating. The results warn of climate-driven downgrades as early as 2030.

Patrick Bolton, Marcin Kacperczyk, 24 March 2021

A company’s carbon-transition risk – associated with curbing carbon emissions within a relatively short period of time – is proportional to the size and growth rate of the company’s carbon emissions. This column asks whether companies with different carbon emissions have different stock returns. The total level of a company’s CO2 emissions and the year-by-year growth in emissions significantly affect its stock returns in most geographic areas of the world. The increasing cost of equity for companies with higher emissions can be a form of carbon pricing by investors seeking compensation for carbon-transition risk.

Alexander Dietrich, Gernot Müller, Raphael Schoenle, 22 March 2021

Climate change has emerged as a major challenge for central banks, although its extent and the immediate consequences are highly uncertain. This column uses a survey of over 10,000 US consumers to show that irrespective of when and how climate change actually plays out, what matters for monetary policy is how people expect it to play out. Central bankers ignore the expectations channel of climate change at their peril.

Ralph De Haas, Ralf Martin, Mirabelle Muûls, Helena Schweiger, 19 March 2021

Many countries are striving for net-zero carbon emissions by 2050, requiring massive investments over the next decades. But many companies, especially smaller ones, will not be able or willing to invest in cleaner technologies. This column explores how organisational constraints can hold back the green transition of firms in less-developed economies. The findings reveal how financial crises can slow down the decarbonisation of economic production and caution against excessive optimism about the potential green benefits of the current economic slowdown, which – like any recession – has led to temporary reductions in emissions.

Avinash Persaud, 17 March 2021

For the countries on the frontline in the war against climate change, there is a nasty nexus between climate change and debt. The cost of environmental damage, the loss of revenues from a natural disaster, and the high price of building back better all contribute to higher debt. This column proposes three ways to break this climate–debt nexus: (1) redistribute special drawing rights using a new classification of vulnerability; (2) incorporate natural disaster clauses into multilateral development banks’ lending arrangements; and (3) use the unused special drawing rights of the world’s strongest countries to recapitalise regional development banks to finance resilience in the vulnerable countries without adding to their debt.

José-Luis Cruz, Esteban Rossi-Hansberg, 02 March 2021

The effects of climate change are heterogenous across space. While some regions will be significantly negatively impacted, others may benefit from warmer temperatures. This column uses an integrated assessment model with rich spatial data that looks at interactions between regions to show how the effects of global warming on production and migration are large, worrying, and unequal. Policies such as carbon taxes are effective delaying tools, but prevention of global warming will require greater and more localised policies.

Avinash Persaud, 23 February 2021

The switch to renewable energies is necessary for humanity’s future, but it is currently too slow. For developing countries, the critical obstacle is the pricing, ownership, land-use and approval processes renewable projects have to go through. This column argues that to bring dividends for sunnier, developing countries, provide more projects for green investors, and for some redemption for the rest of humanity, countries should (1) streamline the approval process, (2) broaden the ownership of assets through mandated initial public offerings and small-investor allocations while supporting big foreign investors in the short-run, and (3) offer an attractive feed-in tariff that predictably ratchets down in favour of consumers once investors reach their return threshold.

Christian Bluth, 10 February 2021

The nature of globalisation is changing, with the US and China making increasing use of geoeconomic instruments in their big power competition. A new CEPR/RESPECT book discusses how, in its new trade strategy, the EU will have to react to this development as well as coming up with responses to the challenges posed to its trade policy by climate and demographic change, technological developments, a weakening of multilateral institutions, and an increased politicisation of trade policy. The answer must lie in a value-driven trade policy, efforts to restore the rules-based trading order, risk management, and the development of defensive geoeconomic capabilities.

Mattia Di Ubaldo, Steven McGuire, Vikrant Shirodkar, 03 January 2021

The adoption of environmentally friendly production methods matters to both firms and policymakers, as both are concerned with reducing the emissions of greenhouse gases and pollutants. This column studies the effect on emissions of environmental protection provisions in EU free trade agreements, as well as that of private ISO-14001 environmental certifications. Environmental protection provisions in EU trade agreements are associated with lower levels of sulphur dioxide and nitrogen oxide emissions, while ISO-14001 certifications are associated with lower levels of greenhouse gas emissions. For carbon dioxide, ISO-14001 certifications matter only for members of trade agreements with environmental protection provisions, suggesting the existence of complementarities between private and public environmental regulation.

Fabio Antoniou, Manthos Delis, Steven Ongena, Christos Tsoumas, 16 December 2020

Effective environmental policy should consider the behaviour of financiers of polluting firms. In 2013 the EU Emissions Trading System implemented a reform, which translated to higher compliance costs for producers. This column discusses that, in contrast with possible program intentions, loan spreads fell on average by 25% starting in 2013, and this dynamic partly undermined the expected reduction in CO2 emissions. It identifies a key role of permits storage in driving the fall in loan spreads for affected firms. 

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Decision makers often shy away from investment in climate resilience because of its lack of political appeal.  But such investments, including investing in our planet’s natural resources – or “natural capital” – in particular, are cost effective and can be hugely beneficial for whole sectors of society. They are crucial to reducing the negative impact of climate change, unlocking development potential and protecting our environment. What can policymakers, including central banks and regulators, do to encourage the flow of finance to our cities, our forests and our oceans to reduce the risks from climate change? What can we all do to make sure our COVID economic recovery packages include both the policies and investments for climate change mitigation and adaptation?

Panellists:

Előd Takáts, Bank for International Settlements (BIS).
Torsten Thiele, Visiting Fellow at LSE IGA.
Oliver Walker, Principal, Natural Resources, Vivid Economics.
Swenja Surminski, Head of Adaptation Research at the Grantham Research Institute on Climate Change and the Environment, LSE.

Karina Rodriguez-Villafuerte is the Maryam Forum Student Leader of the Climate and the Oceans Co-Lab. Karina is a second-year Master of Public Administration student at LSE.

This session is part of the LSE Conference on “One Year On: Lessons Learnt and ‘New Normals’ in a Post-COVID World “hosted under the LSE Maryam Forum. Further information can be found here: https://www.lse.ac.uk/iga/events/2020-virtual/MAF/Charting

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European Center of Sustainable Development in collaboration with Canadian Institute of Technology will organize the 9th ICSD 2021 International Conference on Sustainable Development, with particular focus on Environmental, Economic and Socio-Cultural Sustainability.

The Conference theme : "Creating a unified foundation for the Sustainable Development: research, practice and education".

Papers will be published in Open Access EJSD Journal (Web of Science) and Proceedings.
For further information, please see the call for papers at https://ecsdev.org/publications

The 9th ICSD 2021 will be an excellent opportunity to share your ideas and research findings relevant to the Sustainability Science, through the European network of academics.

Andrew Oswald, Adam Nowakowski, 28 September 2020

Do our citizens care much about climate change? This column provides evidence that the answer is no. Using data on 70,000 randomly sampled people from the European Social Survey and the Eurobarometer, it shows that people exhibit low levels of worry about climate change, especially in cooler countries, and do not even believe that collective action would work. Climate change is viewed as less important than parochial issues such as inflation, health and social security, unemployment, and the economic situation. It appears our unborn great grandchildren may simply be left to their fate unless we can urgently find innovative ways to change people’s feelings about climate change.

Franziska Funke, David Klenert, 17 August 2020

COVID-19 and climate change share a marked similarity: the worst damage is only averted when society commits to decisive and early action in the face of a seemingly abstract threat. There are good reasons to believe climate change will be even harder to defeat, even though – or precisely because – there is more time to confront it. This column argues that the current pandemic is an exceptional opportunity to understand where the real challenges lie for progression on climate action – in garnering political will and public support. It provides key policy suggestions for the next wave of climate action. 

Alexandre Garel, Arthur Petit-Romec, 21 July 2020

The COVID-19 pandemic has brought uncertainty over the future of climate actions. This column studies the cross-section of stock returns during the COVID-19 shock to capture investors’ views and expectations about environmental issues. Firms with responsible strategies on environmental and climate issues are found to have had better stock returns between 20 February and 20 March 2020. Hence, the COVID-19 shock did not distract investors’ attention away from environmental issues but rather led investors to reward environmental responsibility to a larger extent.

Walker Hanlon, Casper Worm Hansen, Jake Kantor, 15 July 2020

Temperature can affect human health and mortality. Historical evidence on the changing relationship between temperature and mortality may be useful in today’s world as we consider adaptive strategies to face global warming. This column uses detailed weekly mortality data from London for 1866–1965 to examine how the temperature-mortality relationship changed as the city developed. In 1866–1914, high-temperature events increase mortality for several weeks, but much of the effect of high temperatures on mortality has disappeared after WWI. The change is linked to the significant reduction in infant digestive disease around 1900.

Jennifer Castle, David Hendry, 04 June 2020

The UK’s 2008 Climate Change Act has led to a 34% fall in CO2 emissions by 2019, while real GDP per capita had risen by more than 10% following the crash into the ‘Great Recession’. Can the UK achieve its recent net-zero emissions target by 2050 while still growing? This column describes some speculative routes to such a decarbonised future.

Rikard Forslid, 03 April 2020

The transport sector is a significant greenhouse-gas emitter. Because international trade in goods requires transportation, it is regarded with some suspicion by the environmentally concerned. However, trade and transportation may actually decrease emissions if production is ‘dirtier’ than transportation. This column uses a new ‘dirtiness index’ to capture how environmentally harmful a firm is and demonstrates how transportation can reduce global emissions if the production of transport services is cleaner than the production it substitutes. The cleaner transportation is relative to other production sectors, the higher the likelihood that transportation could lower emissions.

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