Sustainable Problems
Real Effects of Climate Policy: Financial Constraints and Spillovers
Söhnke Bartram, Kewei Hou & Sehoon Kim
Journal of Financial Economics, forthcoming
Abstract:
We document that localized policies aimed at mitigating climate risk can have unintended consequences due to regulatory arbitrage by firms. Using a difference-in-differences framework to study the impact of the California cap-and-trade program with U.S. plant-level data, we show that financially constrained firms shift emissions and output from California to other states where they have similar plants that are underutilized. By contrast, unconstrained firms do not make such adjustments. Overall, unconstrained firms do not reduce their total emissions, whereas constrained firms increase total emissions after the cap-and-trade rule, undermining the effectiveness of the policy.
The Macro Effects of Climate Policy Uncertainty
Stephie Fried, Kevin Michael Novan & William Peterman
Federal Reserve Working Paper, March 2021
Abstract:
Uncertainty surrounding if and when the U.S. government will implement a federal climate policy introduces risk into the decision to invest in capital used in conjunction with fossil fuels. To quantify the macroeconomic impacts of this climate policy risk, we develop a dynamic, general equilibrium model that incorporates beliefs about future climate policy. We find that climate policy risk reduces carbon emissions by causing the capital stock to shrink and become relatively cleaner. Our results reveal, however, that a carbon tax could achieve the same reduction in emissions at less than half the cost.
The mortality cost of carbon
Daniel Bressler
Nature Communications, July 2021
Abstract:
Many studies project that climate change can cause a significant number of excess deaths. Yet, in integrated assessment models (IAMs) that determine the social cost of carbon (SCC) and prescribe optimal climate policy, human mortality impacts are limited and not updated to the latest scientific understanding. This study extends the DICE-2016 IAM to explicitly include temperature-related mortality impacts by estimating a climate-mortality damage function. We introduce a metric, the mortality cost of carbon (MCC), that estimates the number of deaths caused by the emissions of one additional metric ton of CO2. In the baseline emissions scenario, the 2020 MCC is 2.26 × 10‒4 [low to high estimate −1.71× 10‒4 to 6.78 × 10‒4] excess deaths per metric ton of 2020 emissions. This implies that adding 4,434 metric tons of carbon dioxide in 2020 -- equivalent to the lifetime emissions of 3.5 average Americans -- causes one excess death globally in expectation between 2020-2100. Incorporating mortality costs increases the 2020 SCC from $37 to $258 [−$69 to $545] per metric ton in the baseline emissions scenario. Optimal climate policy changes from gradual emissions reductions starting in 2050 to full decarbonization by 2050 when mortality is considered.
The impact of climate change on the cost of bank loans
Siamak Javadi & Abdullah Al Masum
Journal of Corporate Finance, August 2021
Abstract:
We find robust empirical evidence that firms in locations with higher exposure to climate change pay significantly higher spreads on their bank loans. To alleviate the concerns related to using firms' headquarters in determining climate risk exposure, we exploit the economic link between a firm and its customers and find that the exposure of a firm's customers to climate risk also adversely affects that firm's cost of borrowing. In the cross-section, we find that the long-term loans of poorly rated firms drive the effect. Overall, our evidence suggests that lenders increasingly view climate change as a relevant risk factor.
Current surveys may underestimate climate change skepticism: Evidence from list experiments in Germany and the USA
Liam Beiser-McGrath & Thomas Bernauer
PLoS ONE, July 2021
Abstract:
Strong public support is a prerequisite for ambitious and thus costly climate change mitigation policy, and strong public concern over climate change is a prerequisite for policy support. Why, then, do most public opinion surveys indicate rather high levels of concern and rather strong policy support, while de facto mitigation efforts in most countries remain far from ambitious? One possibility is that survey measures for public concern fail to fully reveal the true attitudes of citizens due to social desirability bias. In this paper, we implemented list-experiments in representative surveys in Germany and the United States (N = 3620 and 3640 respectively) to assess such potential bias. We find evidence that people systematically misreport, that is, understate their disbelief in human caused climate change. This misreporting is particularly strong amongst politically relevant subgroups. Individuals in the top 20% of the income distribution in the United States and supporters of conservative parties in Germany exhibit significantly higher climate change skepticism according to the list experiment, relative to conventional measures. While this does not definitively mean that climate skepticism is a widespread phenomenon in these countries, it does suggest that future research should reconsider how climate change concern is measured, and what subgroups of the population are more susceptible to misreporting and why. Our findings imply that public support for ambitious climate policy may be weaker than existing survey research suggests.
Shifting Republican views on climate change through targeted advertising
Matthew Goldberg et al.
Nature Climate Change, July 2021, Pages 573–577
Abstract:
It is essential to increase public understanding of the existence, causes and harms of climate change. In the United States, Republicans are one important audience, as the bipartisan support needed for ambitious and durable climate policy is currently lacking. An important limitation of most climate change message testing is that it is usually based on controlled experiments, which may or may not be equally effective in the real world. Here we report the effects of a one-month advertising campaign field experiment (N = 1,600) that deployed videos about the reality and risks of climate change to people in two competitive congressional districts (Missouri-02 and Georgia-07). The videos were designed to appeal to Republicans and were targeted to this audience via online advertisements. The study finds that, within the targeted congressional districts, the campaign increased Republicans’ understanding of the existence, causes and harms of climate change by several percentage points.
Stock price effects of climate activism: Evidence from the first Global Climate Strike
Stefano Ramelli, Elisa Ossola & Michela Rancan
Journal of Corporate Finance, August 2021
Abstract:
The first Global Climate Strike on March 15, 2019, represented a historical turning point in climate activism. We investigate the cross-section of stock price reactions to this event for a large sample of European firms. The strike's unanticipated success caused a decrease in the stock prices of carbon-intensive firms. The effect appears to be driven by the increased public attention to climate activism. Furthermore, after the first Global Climate Strike financial analysts downgraded their longer-term earnings forecasts on carbon-intensive firms.
The greenhouse gas emissions of indoor cannabis production in the United States
Hailey Summers, Evan Sproul & Jason Quinn
Nature Sustainability, July 2021, Pages 644-650
Abstract:
The legalization of cannabis has caused a substantial increase in commercial production, yet the magnitude of the industry’s environmental impact has not been fully quantified. A considerable amount of legal cannabis is cultivated indoors primarily for quality control and security. In this study we analysed the energy and materials required to grow cannabis indoors and quantified the corresponding greenhouse gas (GHG) emissions using life cycle assessment methodology for a cradle-to-gate system boundary. The analysis was performed across the United States, accounting for geographic variations in meteorological and electrical grid emissions data. The resulting life cycle GHG emissions range, based on location, from 2,283 to 5,184 kg CO2-equivalent per kg of dried flower. The life cycle GHG emissions are largely attributed to electricity production and natural gas consumption from indoor environmental controls, high-intensity grow lights and the supply of carbon dioxide for accelerated plant growth. The discussion focuses on the technological solutions and policy adaptation that can improve the environmental impact of commercial indoor cannabis production.
Asymmetry in the climate–carbon cycle response to positive and negative CO2 emissions
Kirsten Zickfeld et al.
Nature Climate Change, July 2021, Pages 613–617
Abstract:
Negative CO2 emissions are a key mitigation measure in emission scenarios consistent with temperature limits adopted by the Paris Agreement. It is commonly assumed that the climate–carbon cycle response to a negative CO2 emission is equal in magnitude and opposite in sign to the response to an equivalent positive CO2 emission. Here we test the hypothesis that this response is symmetric by forcing an Earth system model with positive and negative CO2 emission pulses of varying magnitude and applied from different climate states. Results indicate that a CO2 emission into the atmosphere is more effective at raising atmospheric CO2 than an equivalent CO2 removal is at lowering it, with the asymmetry increasing with the magnitude of the emission/removal. The findings of this study imply that offsetting positive CO2 emissions with negative emissions of the same magnitude could result in a different climate outcome than avoiding the CO2 emissions.
Quasi-Stationary Intense Rainstorms Spread Across Europe Under Climate Change
Abdullah Kahraman et al.
Geophysical Research Letters, 16 July 2021
Abstract:
Under climate change, increases in precipitation extremes are expected due to higher atmospheric moisture. However, the total precipitation in an event also depends on the condensation rate, precipitation efficiency, and duration. Here, a new approach following an “ingredients-based methodology” from severe weather forecasting identifies important aspects of the heavy precipitation response to climate change, relevant from an impacts perspective and hitherto largely neglected. Using 2.2 km climate simulations, we show that a future increase in precipitation extremes across Europe occurs, not only because of higher moisture and updraft velocities, but also due to slower storm movement, increasing local duration. Environments with extreme precipitation potential are 7× more frequent than today by 2100, while the figure for quasi-stationary ones is 11× (14× for land). We find that a future reduction in storm speeds, possibly through Arctic Amplification, could enhance event accumulations and flood risk beyond expectations from studies focusing on precipitation rates.
Amazonia as a carbon source linked to deforestation and climate change
Luciana Gatti et al.
Nature, 15 July 2021, Pages 388–393
Abstract:
Amazonia hosts the Earth’s largest tropical forests and has been shown to be an important carbon sink over recent decades. This carbon sink seems to be in decline, however, as a result of factors such as deforestation and climate change. Here we investigate Amazonia’s carbon budget and the main drivers responsible for its change into a carbon source. We performed 590 aircraft vertical profiling measurements of lower-tropospheric concentrations of carbon dioxide and carbon monoxide at four sites in Amazonia from 2010 to 2018. We find that total carbon emissions are greater in eastern Amazonia than in the western part, mostly as a result of spatial differences in carbon-monoxide-derived fire emissions. Southeastern Amazonia, in particular, acts as a net carbon source (total carbon flux minus fire emissions) to the atmosphere. Over the past 40 years, eastern Amazonia has been subjected to more deforestation, warming and moisture stress than the western part, especially during the dry season, with the southeast experiencing the strongest trends. We explore the effect of climate change and deforestation trends on carbon emissions at our study sites, and find that the intensification of the dry season and an increase in deforestation seem to promote ecosystem stress, increase in fire occurrence, and higher carbon emissions in the eastern Amazon. This is in line with recent studies that indicate an increase in tree mortality and a reduction in photosynthesis as a result of climatic changes across Amazonia.
The Unsustainable State: Greenhouse Gas Emissions, Inequality, and Human Well-Being in the United States, 1913 to 2017
Orla Kelly, Ryan Thombs & Andrew Jorgenson
Socius: Sociological Research for a Dynamic World, June 2021
Abstract:
A central premise of development strategies is that nations use natural resources, such as fossil fuels, to raise population living standards and enhance well-being. However, research shows that the relationship among human well-being, resource use, and the associated emissions is complex and context specific. To better understand if natural resource use plays a historic role in generating human well-being in the United States, the authors conduct a time-series analysis of greenhouse gas emissions and average life expectancy from 1913 to 2017. The results show that increases in greenhouse gas emissions per capita have an instantaneous, negative effect on life expectancy. The authors also find evidence that income inequality has a long-run negative effect on life expectancy. Additional analyses provide mixed results regarding whether and how the effects of emissions on life expectancy are conditional on income inequality. These findings contradict the assumption that reductions in emissions necessitate trade-offs in human well-being in high-income contexts.
Does hot and dry equal more wildfire? Contrasting short- and long-term climate effects on fire in the Sierra Nevada, CA
Maureen Kennedy et al.
Ecosphere, July 2021
Abstract:
Climate and wildfire are closely linked. Climate regulates wildfire directly over short timescales through its effect on fuel aridity and indirectly over long timescales through vegetation productivity and the structure and abundance of fuels. Prediction of future wildfire regimes in a changing climate often uses empirical studies that presume current relationships between short-term climate variables and wildfire activity will be stationary in the future. This is problematic because landscape-scale wildfire dynamics exhibit non-stationarity, with both positive and negative feedback loops that operate at different temporal and spatial scales. This requires that such feedbacks are accommodated in a model framework from which wildfire dynamics are emergent rather than pre-specified. We use a new model, RHESSys-WMFire, that integrates ecohydrology with fire spread and effects to simulate a 60-yr time series of vegetation, fuel development, and wildfire in a 6572-ha watershed in the Southern Sierra Nevada, USA, with a factorial design of increased temperature and severe drought. All climate scenarios had an initial pulse of elevated area burned associated with high temperature, low precipitation, and high fine fuel loading. There were positive correlations between annual area burned and mean annual maximum temperature and negative correlations with annual precipitation, consistent with understood direct effects of climate on wildfire in this system. Decreased vegetation productivity and increased fine fuel decomposition were predicted with increased temperature, resulting in long-term reduced fine fuels and area burned relative to baseline. Repeated extreme drought increased area burned relative to baseline and over the long-term had substantially reduced overstory biomass. Overstory biomass was resilient to repeat wildfire under baseline climate. The model system predicts that the short-term direct effects of climate on wildfire can differ from long-term indirect effects such that the simple maxim hotter/drier equals more wildfire can be both true and false, depending on scale.
Infant health outcomes in mega-fire affected communities
Benjamin Jones & Shana McDermott
Applied Economics Letters, forthcoming
Abstract:
We undertake a nationwide US study to estimate how mega-fires (defined as wildfires >100,000 acres in size) affect short-term infant health outcomes in communities located within the flame zone. This is the first study to look exclusively at mega-fires, which have unique characteristics compared to smaller wildfire events and are becoming more frequent in the US. We find that pregnant mothers in affected counties experience 0.8 percentage point greater instances of low birth weight and 1.2 percentage point greater instances of prematurity. The low birth weight finding is equivalent to what would be expected if a mother smoked approximately 6.2 cigarettes per day during pregnancy. Importantly, impacts are potentially non-linearly increasing in mega-fire size. Improved benefit-cost analyses are needed to account for mega-fire indirect impacts when making wildfire control and suppression decisions.
Exploiting radiative cooling for uninterrupted 24-hour water harvesting from the atmosphere
Iwan Haechler et al.
Science Advances, June 2021
Abstract:
Atmospheric water vapor is ubiquitous and represents a promising alternative to address global clean water scarcity. Sustainably harvesting this resource requires energy neutrality, continuous production, and facility of use. However, fully passive and uninterrupted 24-hour atmospheric water harvesting remains a challenge. Here, we demonstrate a rationally designed system that synergistically combines radiative shielding and cooling — dissipating the latent heat of condensation radiatively to outer space — with a fully passive superhydrophobic condensate harvester, working with a coalescence-induced water removal mechanism. A rationally designed shield, accounting for the atmospheric radiative heat, facilitates daytime atmospheric water harvesting under solar irradiation at realistic levels of relative humidity. The remarkable cooling power enhancement enables dew mass fluxes up to 50 g m−2 hour−1, close to the ultimate capabilities of such systems. Our results demonstrate that the yield of related technologies can be at least doubled, while cooling and collection remain passive, thereby substantially advancing the state of the art.