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Program content

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This program introduces participants to cutting-edge research on the topic and familiarizes them with the relevant methods to analyze (econometric analysis, dynamic modelling). The objective of the course is to equip the participants with the background and tools that are needed to contribute to this dynamic field in terms of research and policy design and evaluation.

The main questions we cover are the following. How is the social cost of carbon calculated for regulatory purposes ? How can uncertainty and inequalities be integrated in climate policy ? What role does trade play in adaptation to climate change ? What are the drivers of deforestation and how can policies reconcile effective carbon sequestration and distributive effects ? What are the effects of climate change on migration ? By what means can individuals and groups insure against the risks of climate change and natural disasters, and how do public adaptation investments interact with private incentives ?

Structure

  • Economic Damages of Climate Change - Maximilian Auffhammer
  • Risk, Inequality, and Climate Policy - Marc Fleurbaey and Stéphane Zuber
  • Measuring the Effects of Climate Change, Carbon Pricing, and Natural Disasters in the Presence of Spillovers - Hélène Ollivier
  • Climate Change and Long-term Forest Policies - François Libois
  • The Effects of Climate Change on Migration - Katrin Millock
  • Risk, Insurance, and Adaptation to Natural Disasters - Matthew Gordon

Workshop : present your paper

Participants will have the opportunity to submit a paper to be presented within this program. Selected papers will be presented in front of participants and faculty in slots reserved for such presentations.

Economic Damages of Climate Change - Maximilian Auffhammer

Overview

This course starts by briefly reviewing existing evidence from the 6th Assessment Report. The course also aims at teaching participants how to use weather and climate data. The main focus will be on the estimation of the social cost of carbon and damage functions. Participants will acquire an understanding of the different econometric methods that are used to assess climate change damages, their assumptions and the open questions in the field.

Structure

  • Lecture 1
    - Scientific Background on Climate Change
    - Tutorial on available weather and climate data and how to get them into a usable format.
  • Lecture 2
    - Overview of Social Cost of Carbon.
    - Introduction to Damage Functions.
  • Lecture 3
    - Introduction to Damage Function Estimation
    - Cross Sectional
    - Time Series
    - Panels
  • Lecture 4
    - Heterogeneous Panels and Simulation.
    - Overview of the Moving Frontier
    - Open Questions in the field and research opportunities with a focus on Europe and the Globe

Selected key references

  • Auffhammer, M. (2018). Quantifying economic damages from climate change. Journal of Economic Perspectives, 32(4), 33-52.
  • Carleton, T., Greenstone, M. (2022). A guide to updating the US Government’s social cost of carbon. Review of Environmental Economics and Policy, 16(2), 196-218.
  • Carleton, T., Jina, A., Delgado, M., Greenstone, M., Houser, T., Hsiang, S., Hultgren, A., Kopp, R.E., McCusker, K.E., Nath, I., Rising, J. (2022). Valuing the global mortality consequences of climate change accounting for adaptation costs and benefits. The Quarterly Journal of Economics, 137(4), 2037-2105.
  • IPCC, 2022 : Summary for Policymakers [H.-O.Pörtner, D.C.Roberts, E.S.Poloczanska, K.Mintenbeck, M.Tignor, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem (eds.)]. In : Climate Change 2022 : Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O.Pörtner, D.C.Roberts, M.Tignor, E.S.Poloczanska, K.Mintenbeck, A.Alegría, M.Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 3–33, doi:10.1017/9781009325844.001.
  • Auffhammer M., Hsiang S.M., Schlenker W., Sobel A. (2013). Using weather data and climate model output in economic analyses of climate change. Review of Environmental Economics and Policy, 7(2), 181-198.

Risk, Inequality, and Climate Policy - Marc Fleurbaey and Stéphane Zuber

Overview
Climate change triggers a “perfect moral storm,” (Gardiner) in the sense that it is very hard to evaluate climate policy due to its long-term horizon, the multiple impacts of climate change on populations, the deep uncertainty, and the inequalities across and within generations that will be affected. It is important to have a good tool to assess climate policy in all its aspects.

We will first present issues related to the intertemporal aspects of the climate policies, including the question of discounting. We will then discuss how alternative approaches (Epstein-Zin preferences, robust preferences, etc.) can deal with the management of catastrophic risk. We will present issues of inter- and intra-generational equity and how we can wrap up inequalities, risk, time, and population. Applications using numerical models will be discussed.

Selected key references

  • Bommier A., Zuber S. (2008). Can preferences for catastrophe avoidance reconcile social discounting with intergenerational equity. Social Choice and Welfare 31, 415-434.
  • Budolfson M., Dennig F., Errickson F., Feindt S., Ferranna M., Fleurbaey M., Klenert D., Kornek U., Kuruc K., Méjean A., Peng W., Scovronick N., Spears D., Wagner F., Zuber S. (2021). Climate action with revenue recycling has benefits for poverty, inequality, and wellbeing. Nature Climate Change 11, 1111-1116.
  • Budolfson M., Dennig F., Fleurbaey M., Siebert A., Socolow R. (2017). The comparative importance for optimal climate policy of discounting, inequality and catastrophes. Climatic Change 145, 481-494.
  • Fillon, R., Guivarch, C., Taconet, N. (2023). Optimal climate policy under tipping risk and temporal risk aversion. Journal of Environmental Economics and Management 121, 102850.
  • Fleurbaey M., Zuber S. (2015). Discounting, risk, inequality : A general approach. Journal of Public Economics 128, 34-49.
  • Méjean A., Pottier A., Fleurbaey M., Zuber S. (2023). Opposite ethical views converge under the threat of catastrophic climate change. Ecological Economics 212, 107887.
  • Scovronick N., Budolfson M., Dennig F., Fleurbaey M., Siebert A., Socolow R., Spears D., Wagner F. (2017). Impacts of population growth and population ethics on optimal mitigation effort. PNAS 114(36), 12338-12343.
  • Traeger C.P. (2023). ACE — Analytic Climate Economy. American Economic Journal : Economic Policy 15, 372-406.

Measuring the Effects of Climate Change, Carbon Pricing, and Natural Disasters in the Presence of Spillovers - Hélène Ollivier

Overview
This course will cover the latest research on how to estimate the effects of climate change (namely, temperature and rainfall shocks), the effects of carbon pricing, and the effects of natural disasters when there are spillovers across countries, sectors or firms. We will focus on ex post analysis and study model-based estimation strategies that account for these spillovers. We will consider models built on international trade and industrial organization workhorse models and derive new implications for our understanding of the effects of climate change, carbon pricing, and natural disasters.

Structure

  • The Economic Costs of Climate Change in a Connected World
  • The Effects of Carbon Pricing on Manufacturing Firms
  • The Effects of Natural Disasters

Selected key references

  • Barrows, G., Calel, R., Jégard, M., Ollivier, H. (2023). Equilibrium Effects of Environmental Regulation, CESifo WP 10438.
  • Chen, Q., Chen, Z., Liu, Z., Suarez Serrato, J.-C., Xu, D. (2021). Regulating Conglomerates in China : Evidence from an Energy Conservation Program, NBER WP 29066.
  • Bento, A., Miller, N. S., Mookerjee, M., Severnini, E.R. (2023). A Unifying Approach to Measuring Climate Change Impacts and Adaptation, NBER WP 27247.
  • Burke, M., Hsiang, S.M., Miguel ,E.(2015). Global non-linear effect of temperature on economic production, Nature, 15725.
  • Feng, A., Haishi, L., Wang, Y. (2023). We Are All in the Same Boat : Cross-Border Spillovers of Climate Shocks through International Trade and Supply Chain, CESifo WP 10402.
  • Nath, I. (2020). The Food Problem and the Aggregate Productivity Consequences of Climate Change, NBER WP 27297.
  • Carvalho, V.M., Nirei, M., Saito, Y.U., Tahbaz-Salehi A. (2021). Supply Chain Disruptions : Evidence from the Great East Japan Earthquake, Quarterly Journal of Economics 136 (2), 1255-1321.

Climate Change and Long-term Forest Policies - François Libois

Overview
Forest ecosystems play a critical role in long-term carbon sequestration but they are also very important in the short-run for human livelihoods. Deforestation and forest degradation, while eventually producing short-term benefits for some economic agents, have short-term and long-term distributional consequences in terms of welfare, by accelerating climate change and by hampering the livelihoods of forest dependent people. This module will discuss drivers of forest change, whether institutional, economic or related to public policies, as well as some of their consequences. Given the nature and diversity of forests, the course will emphasize changes that most probably have medium to long-term effects and separate as much as possible discussions about the quantity of forests and their quality.

Structure

  • Detecting drivers of deforestation and forest degradation
  • Interactions with livelihoods and climate change policies

Selected key references

  • Berman, N., Couttenier, M., Leblois, A., Soubeyran, A. (2023). Crop prices and deforestation in the tropics. Journal of Environmental Economics and Management, 199, 102819.
  • Libois, F., Baland, J-M, Delbart, N., Pattanayak, S. (2022). Community Forest Management : The story behind a success story in Nepal, PSE Working Papers hal-03597659, HAL.
  • Williams, M. (2002), Deforesting the Earth, Chicago University press.
  • Alix-Garcia, J., McIntosh, C., Sims, K., Welch, J. (2013). The Ecological Footprint of Poverty Alleviation : Evidence from Mexico’s Oportunidades Program. The Review of Economics and Statistics 95 (2), 417-435.
  • Harding, T., Herzberg, J., Kuralbayeva, K. (2021). Commodity prices and robust environmental regulation : Evidence from deforestation in Brazil, Journal of Environmental Economics and Management, 108(C), 102452.

The Effects of Climate Change on Migration - Katrin Millock

Overview
This module aims at understanding mobility responses to climate change and migration as a means of adaptation to climate change.

The module will focus on the main empirical methods that are used to identify the effects of climate change on migration. The spectrum of models covered will include the random utility model and its empirical counterpart (the gravity model), and general equilibrium models. We will also discuss predictions of future migration flows linked to climate change and to what extent such predictions are reliable. Participants will learn about recent approaches to better model the mechanisms underlying this specific form of adaptation, and the relation of migration to other adaptation strategies. The module thus intends to give participants an understanding of the methods currently used to predict future climate-related migration, and the remaining challenges in identifying mobility responses to climate change.

Structure

  • Identifying climate migrants : going from macro flows to micro-economic evidence
  • Migration as climate change adaptation : modelling the underlying mechanisms and in situ adaptation choices

Selected key references

  • Beine, M., Bertoli, S., Fernandez-Huertas Moraga, J. (2015). A Practitioners’ Guide to Gravity Models of International Migration, The World Economy 1, 15.
  • Burzynski, M., Docquier, F., Duster, C., de Melo, J. (2022). Climate change, inequality and human migration. Journal of the European Economic Association 20(3), 1145-1197.
  • Cattaneo, C., Beine, M., Fröhlich, C., Kniveton, D., Martinez-Zarzoso, I., Mastrorillo, M., Millock, K., Piguet, E, Schraven, B. (2019). Human migration in the era of climate change. Review of Environmental Economics and Policy 13(2), 189-206.
  • Dallmann, I., Millock, K. (2017). Climate variability and inter-state migration in India. CESifo Economic Studies 63(4) : 560-594.
  • Desmet, K., Rossi-Hansberg, E. (2015). On the Spatial Economic Impact of Global Warming. Journal of Urban Economics 88 (C), 16–37.
  • Mahajan, P., Yang, D. (2020). Taken by the storm : Hurricanes, migrant networks, and U.S. immigration. American Economic Journal : Applied Economics 12(2), 250-277.
  • Missirian, A., Schlenker, W. (2017). Asylum applications respond to temperature fluctuations. Science 358, 1610-1614.

Risk, Insurance, and Adaptation to Natural Disasters - Matthew Gordon

Overview
This module will study how individuals and groups can insure against the risks of climate change and natural disasters through informal networks, migration, and technological adaptation. We will also study adaptation frictions – why moral hazard and adverse selection inhibit the ability to manage climate and disaster risks. In particular we will look at how public adaptation investments interact with private incentives. The module will cover recent studies of these topics using a variety of methodologies including structural models and reduced form causal inference.

Structure

  • Risk, Insurance, and Natural Disasters
  • Climate Damages and Adaptation

Selected key references

  • Wagner, K. (2022). Adaptation and Adverse Selection in Markets for Natural Disaster Insurance. American Economic Journal : Economic Policy 14(3), 380-421.
  • Meghir, C. et al. (2022). Migration and Informal Insurance : Evidence from a randomized controlled trial and a structural model. Review of Economics Studies 89(1), 452-480.
  • Deryugina, T., Kawano, S., Levitt, S. (2018). The Economic Impact of Hurricane Katrina on Its Victims : Evidence from Individual Tax Returns - AEJ : Applied 2018.
  • Carleton, T. et al. (2022). Valuing the Global Mortality Consequences of Climate Change Accounting for Adaptation Costs and Benefits. Quarterly Journal of Economics 137(4), 2037-2105.
  • Barreca, A., Clay, K., Deschênes, O., Greenstone, M., Shapiro, J. (2016). Adapting to Climate Change : The Remarkable Decline in the US Temperature-Mortality Relationship over the Twentieth Century. Journal of Political Economy 124(1), 105-159.

Contents - Climate Change