An increasing number of disaster relief programs rely on weather data to trigger automated payouts. However, several factors can meaningfully affect payouts, including the choice of data set, its spatial resolution, and the historical reference period used to determine abnormal conditions to be indemnified. We investigate these issues for a subsidized rainfall-based insurance program in the U.S. using data averaged over 0.25° × 0.25° grids to trigger payouts. We simulate the program using 5x finer spatial resolution precipitation estimates and evaluate differences in payouts from the current design. Our analysis across the highest enrolling state (Texas) from 2012 to 2023 reveals that payout determinations would differ in 13% of cases, with payout amounts ranging from 46 to 83% of those calculated using the original data. This potentially reduces payouts by tens of millions annually, assuming unchanged premiums. We then discuss likely factors contributing to payout differences, including intra-grid variation, reference periods used, and varying precipitation distributions. Finally, to address basis risk concerns, we propose ways to use these results to identify where mismatches may lurk, in turn informing strategic sampling campaigns or alternative designs that could enhance the value of insurance and protect producers from downside risks of poor weather conditions.

Climate change increasingly threatens human development, economic resilience and labour market stability. Using panel data from Chinese A-share listed firms (2007–2021), this study quantifies the employment impacts of extreme temperatures. A one-standard-deviation increase in exposure reduces employment by 0.07 per cent, equivalent to an average loss of 0.0054 workers per firm and 4.36 jobs across the sample. Extreme heat has a stronger effect than cold, with temperature bin analysis showing an average loss of 0.191 workers per firm and 15.565 jobs overall. Mechanism analyses indicate that extreme temperatures heighten operational risks and financial constraints, reducing labour demand. Internal and external buffers are identified: higher wages mitigate employment losses, government subsidies provide external support, while robot adoption and supply chain concentration show limited moderating effects. Heterogeneity analyses reveal greater vulnerabilities in underdeveloped, resource-dependent and climate-sensitive regions. Results emphasize the need for climate-adaptive policies to protect employment amid rising environmental risks.

This article analyzes the influence of hurricane strikes on the returns of sovereign bonds issued by Cuba, the Dominican Republic and Haiti between 1905 and 1930. The study uses a fixed effects regression model to isolate the impact of hurricane-induced destruction on bond returns, providing a deeper understanding of market reactions following natural disasters. The article shows that hurricanes during this period, which have the potential to cause significant damage, increase bond returns by an average of 0.9 percent in the same month. This suggests that investors demand a risk premium on sovereign bonds from hurricane-prone regions due to the direct impact and broader economic consequences of these disasters.

Environmental outcomes can be shaped by underlying politics. This study investigates whether pre-determined election timings affect these outcomes by combining electoral data with remote sensing data on crop burning, forest fires, slash-and-burn activity, and tree cover for 28 major states (covering approximately 3800 assembly constituencies) in India from 2008 to 2019. Analysing 71 elections during this period reveals evidence of the presence of electoral cycles in environmental outcomes, with non-election years experiencing higher levels of environmentally harmful activities compared to election years. These cycles are more pronounced when the incumbent’s party wins without a supermajority in state elections. The study further shows that specific factors, such as high-yield crop varieties, poverty levels, and Scheduled Tribe population proportions, also shape these environmental outcomes across the electoral cycle.

While a growing body of literature studies the effects of weather shocks on economic activity in low-income countries, relatively little is known about their impact on cross-border capital flows. This study investigates whether weather shocks, specifically deviations in precipitation and temperature from their long-term averages, trigger capital flight from Africa. Exploiting the variation in within-country exposure to weather shocks, we find that temperature shocks lead to increased capital outflows and trade misinvoicing. The long-run relationship between temperature and capital flight is conditional upon country-specific factors, such as reliance on oil exports, institutional frameworks and financial infrastructures. Our findings reveal a moderate role of state capacity in the relationship between weather shocks and capital flight, highlighting the need for further investigation into other potential mechanisms.

Climate change can have significant consequences on the world economy, a possibility explored in this paper. We simulate the world economy using data from 20 economies spanning from 1999 to 2023 in a Global Vector Autoregression (GVAR) framework. Our hypothesis posits that temperature anomaly shocks impact economies through financial markets, which then transmit the shock to production. We model financial markets using four key indicators: currency markets, stock markets, short-term credit markets, and long-term credit markets. Our findings reveal that temperature anomaly shocks: i) trigger a global recession, ii) induce fluctuations across all financial markets, iii) lead to depreciation of domestic currencies, declines in stock markets, and decreases in long-term interest rates, and iv) elicit a minor response in short-term interest rates. These results highlight the presence of spillover effects from temperature anomalies. We validated our findings using alternative configurations (time-varying and fixed bilateral trade), with the main conclusions remaining consistent. Our study suggests that financial markets, particularly the stock market, serve as transmission channels for the consequences of climate change.

Excessive car ownership in cities has led to issues including congestion, air pollution and resource consumption. This paper investigates the impact of rail transit openings on automobile purchases in China based on detailed car sales data during 2013–2015 and using two-way fixed effects panel models. Our study reveals an average decrease of 2.27 per cent in car sales due to rail transit openings. Further analyses of cars with different fuel economy reveal stronger effects on fuel-efficient cars, indicating larger substitution elasticity between public transportation and driving for people with less income. Results also show the negative impact of rail transit openings is larger in cities with more developed economies, higher public revenue, larger population, bigger area and fewer buses. The decline in car sales translates into savings of 7.9 billion liters of gasoline and a reduction of about 20.3 million tons in life-cycle carbon emissions.

Climate change can lead to increased pest migration and more frequent outbreaks by altering pest life cycles and habitats. Farmers facing increased temperatures or rainfall resort to more pesticides, emphasizing the need for adaptive pest management. This article evaluates the economic benefits of farmer networks for pest management by applying an economic model of social learning to a pilot network in Iowa. Our results show significant variation in the network’s effectiveness. We find that networks are particularly valuable for farmers facing high pest infestation risks, offering over $300 per acre in value against the impacts of extreme heat.1

Wine is the most differentiated of all farm products, with much of the differentiation based on the location of production. In this paper, we estimate the effects of climate and vintage weather on California's varietal wine quality and prices. Our analysis is based on a sample of premium wines rated by Wine Spectator magazine between 1994 and 2022 and a comparable sample of secondary market auction prices from K&L Wine Merchants, each matched to spatially detailed weather data from PRISM. We find that extreme temperatures, particularly extremely hot temperatures, caused prices to decline. Absent additional adaptation, climate change will harm wine quality and disrupt quality signals from geographical indications in California's premier wine regions.

The social organisation of productive and reproductive labour leaves women disproportionately vulnerable to climatic changes and extreme weather events. In the Indian context, this could further reduce women’s labour force participation rates from levels that are already relatively low. Employment opportunities for women in the clean energy sector have been noted to create transformative changes in their lives only with policies such as government intervention to provide accessible public services. Towards this end, I propose a gendered and green job guarantee programme directed towards education, health, public transport (or universal basic services), climate mitigation, and climate adaptation activities.

The intersections between gendered livelihoods and the climate crisis, as well as the gendered and environmental implications of the existing rural employment guarantee in India, are reviewed. Gender-disaggregated employment creation through the proposed job guarantee programme and the budgetary implications are estimated, along with suggestions for potential sources of financing. The programme is estimated to result in the creation of 36 million guaranteed jobs, which accounts for 6% of the workforce as of 2023. Of these jobs, women’s employment opportunities constitute 11.6 million. The number of guaranteed jobs created for women accounts for 4% of the rural female workforce and 11.6% of the urban female workforce. Thus, a gendered and green job guarantee programme in India could be an effective form of government intervention to address the interlinked issues of women’s work and climate action in India.

Technical progress is considered a key element in the fight against climate change. It may take the form of technological breakthroughs, that is, shocks that induce significant leaps in the stock of knowledge. We use an endogenous growth framework with directed technical change to analyze the climate impact of such shocks. Two production subsectors coexist: one subsector is fossil-based, using a non-renewable resource, and yields carbon emissions; the other subsector uses a clean, renewable resource. At a given date, the economy benefits from an exogenous technology shock. We fully characterize the general equilibrium and analyze how the shock modifies the economy’s trajectory. The overall effect on carbon emissions basically depends on the substitutability between the production subsectors, the initial state of the economy, and the nature and size of the shock. We notably show that green technology shocks induce higher short-term carbon emissions when the two subsectors are gross complements, but also in numerous cases when they are gross substitutes.

We estimate the effect of temperature on the economic activity of Mexico utilizing 42 years of quarterly panel data of economic growth at the state level. Our findings elicit a concave relationship between economic growth and temperature that is maximized at around 20°C. Temperatures below or above this level are associated with lower growth rates. Temperature affects aggregate economic activity mainly through the effect it has on the growth of the primary and secondary sectors. In addition, the estimated sensitivity of economic growth to temperature has not decreased within our sample period which indicates that adaptation to climate change has been limited. When combining our panel estimates with temperature projections by the year 2100, our results suggest that quarterly economic growth might be reduced by 0.4 percentage points, on average, under an intermediate scenario of climate change with reductions as large as 1.0 percentage point during the spring and summer quarters.

This study examines the impact of temperature on human well-being using approximately 80 million geo-tagged tweets from Argentina spanning 2017–2022. Employing text mining techniques, we derive two quantitative estimators: sentiments and a social media aggression index. The Hedonometer Index measures overall sentiment, distinguishing positive and negative ones, while social media aggressive behavior is assessed through profanity frequency. Non-linear fixed effects panel regressions reveal a notable negative causal association between extreme heat and the overall sentiment index, with a weaker relationship found for extreme cold. Our results highlight that, while heat strongly influences negative sentiments, it has no significant effect on positive ones. Consequently, the overall impact of extremely high temperatures on sentiment is predominantly driven by heightened negative feelings in hot conditions. Moreover, our profanity index exhibits a similar pattern to that observed for negative sentiments.

The aim of this paper is to analyse the role of climate change on state fragility in sub-Saharan Africa (SSA). To do this, we estimate a country-time fixed effects panel data model using the two-way fixed effects estimator over the period 1995 to 2020 for 45 SSA countries. Our results show that climate change increases fragility in SSA; specifically, rising temperatures and decreasing rainfall increase the social, economic, political and security fragility of SSA countries. The study also reveals that gross domestic product, population growth, migrant remittances, foreign direct investment, natural resources, inflation and agricultural price volatility are mechanisms through which climate change exacerbates state fragility. Based on these results, we recommend climate change adaptation measures such as increasing water storage to cope with periods of extreme drought, growing climate-smart crops, and the introduction of environmental public policies.

This research examines whether high temperatures and exposure to childhood rainfall and heat shocks are a cognitive drag on children in Uganda. First, it asks whether students perform worse on a test on hotter days. Second, it examines whether previous longer-term exposure to high temperatures and unusual rainfall influences current test scores and educational outcomes. The analysis shows that high temperatures on test dates harm test performance, especially for girls and children younger than ten, implying additional temperature control considerations for particular demographics. The analysis of childhood climate shocks, which employs within-parish distributions of rainfall and heat, shows that children who experience rain or heat above the $80^{th}$ percentile of the parish distribution from birth until age 4 have worse learning outcomes in math, English, or local language literacy.

We analyse the effect of natural catastrophes on insurance demand in a developing economy and the role of insurance regulation in this relationship. The analysis is based on a theoretical model and a panel regression using data for Vietnam. What makes Vietnam especially interesting is the fact that it is strongly affected by natural catastrophes and experienced a change in insurance regulation in recent years. The theoretical results indicate that a loss experience likely has a less positive effect on demand in developing economies than in developed economies. A higher insurance penetration and a tighter insurance regulation, however, can make the impact of a loss event more positive. These findings are mirrored by our empirical analysis: overall natural catastrophes decrease insurance demand of affected households in Vietnam. The enhancement of regulation was not only accompanied by increased insurance demand but it also reverses the effect of natural catastrophes on demand.

Voluntary carbon markets present firms and individuals with the opportunity to offset all or part of their carbon footprints. We report on a controlled laboratory experiment to understand the behavioral motivations driving the purchase of carbon offsets, in addition to investigating the effect of the introduction of voluntary carbon markets on emission-causing activities. We find a stable demand for offsets when the price is sufficiently low. Behavior is, however, heterogeneous. Individuals with a high (low) personal-responsibility index increase their offset purchases as their own damage (total damages) increases, but do not condition their offsetting behavior on the total damages (own damage) generated. We also show that, when individuals trade in competitive markets, the availability of offsets does not affect the total damages generated. Introduction of carbon offsets increases individuals’ earnings by eliminating some of the damages ex-post, but does not increase economic efficiency.

We elicited incentivized measures of risk and time preferences from a sample of undergraduate students in Athens, Greece, in waves that preceded and overlapped with the COVID-19 pandemic. We exploited the timing of several events that occurred in the course of the pandemic (e.g., first occurrence of cases and deaths, curfew, relaxation of curfew etc.) and estimated structural parameters for various theories of risk and time preferences comparing these with pre-pandemic estimates. We find no effect between the different waves or other key events of the pandemic, despite the fact that we have about 1000 responses across all waves. Overall, our subjects exhibit intertemporal stability of risk and time preferences despite the significant effect of the COVID-19 pandemic on public health and the global economy.

We report laboratory evidence on the voluntary provision of threshold public goods when the exact location of the threshold is not known. Our experimental treatments explicitly compare two prominent technologies, summation, and weakest link. Uncertainty in threshold location is particularly detrimental to threshold attainment under weakest link, where low contributions by one subject cannot be compensated by others. In contrast, threshold uncertainty does not affect contributions under summation. We demonstrate that non-binding pledges improve the chances of threshold attainment under both technologies, particularly under weakest link.

This paper examines an endogenous growth model that allows us to consider the dynamics and sustainability of debt, pollution, and growth. Debt evolves according to the financing adaptation and mitigation efforts and to the damages caused by pollution. Three types of features are important for our analysis: the technology through the negative effect of pollution on TFP; the fiscal policy; the initial level of pollution and debt with respect to capital. Indeed, if the initial level of pollution is too high, the economy is relegated to an endogenous tipping zone where pollution perpetually increases relatively to capital. If the effect of pollution on TFP is too strong, the economy cannot converge to a stable and sustainable long-run balanced growth path. If the income tax rates are high enough, we can converge to a stable balanced growth path with low pollution and high debt relative to capital. This sustainable equilibrium can even be characterized by higher growth and welfare. This last result underlines the role that tax policy can play in reconciling debt and environmental sustainability.