Lucas Chancel

Wealth inequality dynamics influence economic and social outcomes and stability. While climate change and climate policies affect both physical capital and financial assets, their impacts on aggregate wealth and its distribution remain underexplored. Preliminary calculations suggest that climate change and climate investments could have substantial effects on wealth inequality, although the direction of these changes remains uncertain. This Perspective builds on numerical insights, outlines a conceptual framework and proposes a research agenda aimed at advancing the understanding of global wealth inequality under climate change, highlighting the need for interdisciplinary collaboration on the issue.

In this paper, we discuss the potential impacts of climate change and related policies on wealth inequality. To that end, we provide an extensive overview of the existing literature, which documents substantial impacts of climate risks on single asset types. We then present a case study to illustrate the potential magnitude of effects of climate policies on aggregate wealth and its distribution. We explore the impacts of climate-related investments, demonstrating that future climate investments could substantially shape the distribution of wealth between the private and the public. Similarly, we show that if the wealthiest global 1% were to uptake climate-related investments, their share of global wealth could significantly increase by 2050. These preliminary findings call for further research to better understand the intersection of climate change and wealth inequality.

We combine national income accounts, wealth aggregates, tax tabulations, rich lists, and surveys on income, consumption, and wealth in a consistent framework to present long run homogeneous series of income and wealth inequality in India. Our estimates suggest that inequality declined post-independence till the early 1980s, after which it began rising and has skyrocketed since the early 2000s. Trends of top income and wealth shares track each other over the entire period of our study. Between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration. By 2022-23, top 1% income and wealth shares (22.6% and 40.1%) are at their highest historical levels and India’s top 1% income share is among the very highest in the world. In line with earlier work, we find suggestive evidence that the Indian income tax system might be regressive when viewed from the lens of net wealth. We emphasize that the quality of economic data in India is notably poor and has seen a decline recently. It is therefore likely that our results represent a lower bound to actual inequality levels. We call for improved access to official data and greater transparency to enhance the study of inequality and enable evidence-based public debates.

The triple climate inequality crisis, or in contributions, impacts and capacity to act within and between countries, is a central issue in addressing climate change. This Comment advocates for progressive wealth taxation as a viable solution to the finance gap.