Conference Agenda

Will productivity growth be unaffected by future climate change as most assessments of the Social Cost of Carbon assume? This article examines the impact of weather variations on a key driver of productivity development: inventive activity. Using a global panel of geo-located patents and sub-national weather indicators, we find that extreme daily rainfall reduces inventive activity whereas temperature changes have heterogeneous effects. Higher temperatures reduce patent-filing in low-income regions but cause increases in high-income regions. Under future climate change, these results imply strong and unequal impacts on a crucial determinant of long-term technological and economic development.

Countries need to reduce emissions to limit the extent of climate change and technologies can help significantly in achieving that goal. Because of market failures leading to under-investment in research and development for climate-related technologies, much of the literature examining the drivers of green innovation focuses on the role of climate regulation in addressing that failure and boosting innovation. However, firms have become increasingly aware of the effect of climate on their operations, for example through disruptions to supply chains or access to raw materials, and through changing consumer preferences. Consequently, there are a number of examples of firms innovating their business models in the absence of regulation, or above and beyond the level of existing regulation. This paper asks whether we can empirically detect a systematic effect of climate change on innovation in climate-related technologies beyond the effect of policies. To answer this question, I construct a dataset of climate change exposure and vulnerability, as well as patent filings and policies in renewable energy industries in 36 countries from 1995-2017. While confirming that climate regulations are an important driver of innovation in high-income economies, I also find a significant additional relationship between climate vulnerability and patent filings in middle-income economies. The results suggest that for middle-income economies the level of vulnerability drives patent filings much more than policies, and that these filings represent not only adoption of foreign technologies but also new local innovation.

Changing consumption patterns from growing middle-classes with consequent rising energy use and emissions in low- and middle-income countries (LMICs) present key challenges for the energy transition and climate change mitigation. Carbon taxes are an effective instrument to counter these developments, yet their introduction is hindered by concerns around low public acceptability. However, evidence on carbon tax acceptance in LMICs is missing. We provide unique evidence from three conjoint experiments with 2,800 middle-class respondents in Ghana, Peru and the Philippines with real payments of different carbon tax revenues. We show that overall the majority in all three countries supports even high taxes of USD-PPP 75/tCO2 per year, irrespective of specific policy design features. Such support for a very high tax rate is especially high if revenues are recycled to environmental purposes. Moreover, revenue recycling to the poorest receives high support among important subgroups. These insights are crucial to achieve an effective, acceptable and just carbon tax policy design.

This study introduces the Climate Growth-at-Risk (Climate GaR) framework, a novel empirical approach designed to assess the impacts of climate-related shocks on the lower tail of the GDP growth distribution. While recent literature on the macroeconomic effects of climate change predominantly focuses on the average trajectory of GDP growth, the potential for significant downturns triggered by climate change has not been adequately addressed. Climate GaR seeks to bridge this gap by quantifying the downside risks to GDP that stem from climate change. Employing panel quantile local projections, our methodology allows us to examine the dynamic effects of weather shocks across various regions of the output distribution over different time horizons. Utilizing a comprehensive global panel dataset encompassing 167 countries from 1960 to 2019, we find suggestive evidence that climate shocks weigh negatively on the left tail of real activity outcomes, especially in the medium term. In analyzing the impacts of climate shocks on GaR across different countries, our study reveals some heterogeneity in the responses between wealthier and poorer nations, as well as between countries with low and high agricultural intensity. In doing so, our study provides novel insights into how climate change poses asymmetric risks to the economy, emphasizing the need for policy frameworks to address and mitigate these heightened vulnerabilities.