Conference Agenda

Fixed-term retail energy contracts protect end users from market fluctuations but can create market distortions, implicitly subsidizing consumption when prices increase. Imperfect information, inattention, and adjustment costs can affect the targeting of these implicit subsidies and their impact on efficient energy use. Using high-frequency consumption and billing data from an Italian utility, we study the behavior of consumers being defaulted from fixed-price into variable-price contracts during a period of high prices. We find that electricity demand is rather inelastic. Consumers adapt their consumption to price shocks with persistent lag and show limited awareness of their contract status. Their reaction also includes, to a small extent, searching the market for better offers. Fixed pricing helps prevent bill defaults and installment payments. We show that fixed-price contracts could have distributional implications by favoring smaller households with lower energy consumption per occupant.

In 2004, Italy introduced a national program to address heat-related health risks through public awareness campaigns, heatwave warning systems, and hospital protocols. Leveraging administrative mortality data, temperature variations, and the plausibly exogenous timing of the policy's rollout, this paper shows that the program mitigated the mortality impact of extreme heat (days at or above 30 °C) by more than 57%. Exploring the mechanisms, we find that the staggered implementation of the heat wave warning systems contributed to reducing excess mortality on days exceeding 30 °C in treated provinces. We further show that enhancing access to information is essential to achieving these mitigating effects. Our findings underscore the critical role of public adaptation policies that leverage information disclosure on the health risks associated with heat stress.

This paper examines the impacts of climate extremes and variability on food security in Nigeria, focusing specifically on the aspect of households’ access to food. Employing high-resolution climate data and five waves of household-level surveys from 2010 to 2024, we analyse how temperature and precipitation extremes and climate anomalies affect food security indicators. In Nigeria, temperatures have exhibited a rapid increase over recent decades, accompanied by an overall negative trend and substantial variability in annual precipitation. Moderate and severe food insecurity have substantially increased during the study period, with moderate food insecurity being highly prevalent nationwide. By using three different measures of food security - the Household Dietary Diversity Score (HDDS), the Food Consumption Score (FCS), and the Food Insecurity Experience Scale (FIES) - different aspects of households’ access to sufficient and nutritious food are analysed. Employing linear regression models, we find that climate extremes significantly negatively affect food access in Nigeria, with pronounced effects on female-headed and rural households. This study contributes to an improved understanding of the interconnections between climate change and food insecurity, emphasising the importance of policies directed at enhancing the resilience of households and agricultural systems to the adverse impacts of climate change.

Environmental policies such as the European Union Emissions Trading System (EU ETS) raise concerns about their impact on employment and competitiveness. Yet, existing EU ETS studies focus on firm-level outcomes during the initial phases of the program. We construct a panel dataset of about 900 European provinces across 2008 to 2020 to assess the effects of a significant policy change in Phase 3 of the EU ETS. Specifically, we investigate how the changes in the allocation of free allowances affected local economies in terms of employment, gross value added (GVA) and productivity. By assembling a novel dataset and measuring the net change of paid emissions from Phase 2 to Phase 3 we construct a measure of exposure to the policy change at the NUTS-3 level. Using synthetic difference-in-differences, we find that being more exposed to the EU ETS is associated with a statistically significant contraction of employment and GVA in the more carbon-intensive industries. Our results are complemented by evidence on a sizeable reduction in carbon emissions and a mild impact in terms of regional disparities in the European Union.

Complex systems can undergo sudden, irreversible changes when critical thresholds—known as tipping points—are crossed. While statistical indicators can serve as early warning signals (EWS) of such transitions, their integration into decision-making frameworks remains limited. This paper develops a theoretical framework connecting early warning signals to optimal management of systems prone to tipping. We translate early warning indicators into the formal language of management science, introduce an analytically tractable approximation of tipping indicators, and derive practical insights about the optimal design and value of early warning systems. Our analysis reveals how the optimal design and value of these systems depend on both the magnitude of potential damages and decision-maker risk preferences, providing a foundation for incorporating early warning signals into management decisions.

Repairing consumer goods instead of discarding them can significantly extend their life, decrease the demand for new purchases, reduce waste, and save resources. While Japan’s implementation of the Sound Material-Cycle Society led to a notable decrease in municipal waste, this progress has slowed since the 2010s. The country still relies heavily on primary resources and continues to produce large amounts of waste, a considerable portion of which is incinerated. This paper assesses the socio-economic and environmental effects of fiscal incentives for repairing energy-using goods in Japan using a dynamic general equilibrium model with material stock and flow consistency. Also, the paper studies diverse household responses to policy measures based on three low-carbon lifestyle types. The results reveal that incentives such as bonuses and VAT reductions on repair services, if properly financed through Extended Producer Responsibility (EPR) revenue, incentivise households to engage in repair activities. Despite their positive impact in minimizing waste and materials use, the policies' effectiveness is mitigated by substitution effects and rebound effects on CO2 emissions.

The aim of this paper is to analyze the domestic costs and international competitiveness effects of ambitious mitigation targets implemented by a club of abating countries facing groups of potential free riders. The club can adopt two alternative measures to even the playing field for its energy-intensive trade-exposed (EITE) sectors: a tax rebate to firms, and carbon border adjustment mechanisms (CBAMs). Different club configurations are considered. Initially they include the European Union only and then progressively expand to other member countries of the Organisation for Economic Cooperation and Development (OECD), China,

and India. We show that the club membership is much more influential than the use of border adjustments or rebates in determining the aggregated policy costs. However, both measures are effective at the sectoral level. We find that OECD countries’ firms would prefer protection by CBAMs, while China and India would

favor rebates. This depends on the size of the club when China and India join and on their role as sellers of emission reduction permits within the club. We also show that CBAMs and rebates can shift the policy burden to non-protected sectors with possible (though moderate) net efficiency losses.

Oceans provide essential benefits to people and the economy. These benefits are underpinned by the functioning of marine ecosystems and the presence of ocean-based or “blue” capital. However, blue capital is increasingly at risk as human activities and climate change drive the loss and degradation of marine biodiversity and coastal infrastructure. Despite these growing threats, the impacts of climate change on the oceans and their societal repercussions have been largely overlooked and are not included in influential indicators such as the social cost of carbon. To address this omission, we integrate the latest ocean science and economics into a climate-economy model, capturing the climate impacts on corals, mangroves, seaports, fisheries, and mariculture to estimate their welfare repercussions at a global scale. We estimate the social cost of carbon for the ocean (blue SCC) to be $62 [47-90, interquartile range] per ton of CO2 in 2020, representing one third of the current U.S. estimate, which excludes ocean-related impacts. Half of the blue SCC comes from damages to fisheries and mariculture, one third from corals, followed by damages to mangroves (17%) and maritime ports (3%). Most of the blue SCC comes from nonmarket use values (e.g., nutrition value of fisheries and mariculture) and non-use values (e.g., the existence value of corals); market values (e.g., revenues from port-based trade) are significant but quantitatively small. These findings underscore the critical need to account for ocean-based welfare in climate policy, providing valuable insights for greenhouse gas mitigation efforts and sustainable ocean management strategies.

This paper develops a dynamic behavioural model of the European Union Emissions Trading System (EU ETS) to analyse the impact of speculation and credibility shocks on permit prices and emissions. The model incorporates compliance firms and speculators, who follow distinct trading strategies – fundamentalist, noise trading, and trend-following. Calibrated to EU ETS data, we find that speculation has a non-monotonic effect on prices and emissions: at low levels, it slightly raises prices and reduces emissions, while at higher levels, it depresses prices, delays abatement, and amplifies volatility. Negative credibility shocks significantly affect prices and emissions, with their impact depending on the timing of the shock, and speculation prolonging their effects. Finally, we examine a reform to the Market Stability Reserve (MSR) in which the upper and lower thresholds are gradually reduced. Our results show that this reform accelerates emissions reductions and enhances the system’s resilience to speculation and credibility shocks.

Circular economy practices, employed by firms and aimed at reducing, reusing and recycling resources, have the potential to improve resource efficiency. How- ever, despite their clear objectives, these micro-level interventions may not neces- sarily result in economy-wide reductions in resource consumption and greenhouse gas emissions. This paper presents a novel analytical framework for examining the pathways through which firm-level circularity leads to macro-level reductions in re- source use, extraction, and disposal—conceptualized as a macro circular economy— and ultimately, climate mitigation. Drawing upon diverse strands of economic lit- erature and employing sequential reasoning, we identify the necessary conditions under which circular practices at the firm level generate tangible benefits at the ag- gregate level. Our findings reveal that these identified conditions correspond closely with principles of sufficiency. Subsequently, we examine policy instruments that can facilitate the achievement of a macro-circular economy.

We asked a sample of French and German homeowners to estimate the change in the rental value of their homes under a series of well specified, but hypothetical, conditions that include participation in a positive energy district (PED), various levels of disruption in the electricity supply, and attributes of energy efficient dwellings, like ventilation and air filtration systems, and apps that optimize appliance use or space heating or cooling. Our respondents were for the most willing and able to engage in such valuation exercises. The value of a PED connection captured into the rental value (some € 420/year) falls between the WTP for the homeowner to participate in a PED as a “customer” (€ 100-200/year) and the WTA to serve as a supplier in one (€ 500/year). We use the responses to our rental value questions to compute the Value of Lost Load (VOLL) and to trace out an electricity supply function based on rooftop PVs.

How can widespread consensus on the threats of climate change be achieved in the general public? This study investigates the effects of the 2020 hurricane season in the United States on self-reported climate change attitudes and behaviors. Using high-quality survey data, hurricane activity is related to respondents’ perceptions of climate change. It is observed that during periods of hurricane exposure, people worry more about climate change. The effect intensifies with magnitude of the tropical storm and length of the entire hurricane season. In addition, an ideology interaction is observed, showing a stronger effect of hurricane exposure for Conservatives than for Liberals. These findings confirm previous results on the positive impact of hurricanes on belief in and worry about climate change while extending it to conservative parts of the population for which such a reaction is rather unconventional. The positive impact on generally climate change skeptical individuals may usefully inform strategies to increase widespread support and consensus for climate change action.

Climate change is already having a measurable impact on labour forces across the globe, with far reaching implications for economic growth, in addition to worker health, firm profitability, poverty and inequality, and food security, to name but a few. This study quantifies the impacts of heat stress on the UK labour force, focusing on labour supply, labour productivity, the health of workers, and the extent to which and how adaptation and adaptive capacity is reducing the negative impacts of extreme heat. We collected data in 2024 during the UK summer, just after a period of anomalous heat, surveying over 2,000 people in the UK labour force, when their recollection of the heat episode was fresh in their memories. Using microeconometric analysis and controlling for a rich set of demographic, occupational, and adaptation covariates, our results clearly show that workers do perceive their health to be harmed by heat stress, and workers and employers rely on a wide range of adaptation measures that are at least partially effective. A 1°C increase in temperature anomaly from the long-term average increases the probability of a worker reducing their hours by 9.9% and effort by 9.5%. However, the effect on workers who received advanced alerts of heat episodes was 6.2% and 6.7% respectively, suggesting that adaptation is only partially effective. In the case of worker health, advanced

warning reduces the probability of workers reporting adverse health effects due to heat episodes by approximately 5 percentage-points.

The extent to which changes in labour force outcomes can be attributed to historic climate change is currently unknown. Here, we combine robust estimates of the impact of climatic stressors on labour supply, labour productivity, and a combined metric of the two - effective labour, with novel historic climate forcing data to quantify the effect of historic climate change on labour. We do this at the global and regional level, taking explicit account of heterogeneity of working conditions. Globally, effective labour in outdoor working conditions was 1.8 percentage points lower in 1901-2019 than it would have been without climate change. The attributable declines have increased over time, rising to 3.6 percentage points between 2001 and 2019. The highest declines have been in the relatively lower-income regions of Western Africa, South-Eastern Asia, and Middle Africa, where climate change has increased workforce inequalities. We also estimate the economic effects through impacts on GDP and find up to a 12% GDP loss for some regions. Our findings can help improve the design of better labour protections, improve worker health, enhance productivity and economic growth, and inform better climate adaptation and resilience.

The paper investigates the major climate-related risks for households in the EU by quantifying the relationship between a set of selected climate-hazards metrics, households’ income by source, and sector-specific expenditures, capturing both the climate induced cost of impacts and adaptation measures. The paper analyses the distribution of climate change costs by type (income source- and good/service expenditure-related) across regions (NUTS1 level) and socioeconomic characteristics of households (poor, medium income and rich households). In addition, the implications of climate change costs on income distribution and risk of poverty are investigated. Strong vulnerability of EU households emerges especially in the Southern EU.

As global temperatures rise and extreme weather events intensify, local power distribution systems face significant reliability challenges. Using a novel dataset of daily municipal-level unplanned outages, we show that temperature extremes substantially increase outage incidence, beyond the known effects of hurricanes and storms. This vulnerability primarily arises from technical failures, such as equipment faults and overloads, rather than environmental factors like high winds or lightning. Large deviations from moderate temperatures sharply elevate the risk of technical outages, with overload-related outages increasing from below 2% at mild temperatures to nearly 35% at temperatures exceeding 39 °C. Moreover, heat-induced outages increase with greater air conditioning adoption, exacerbating grid stress precisely when cooling is most needed. These findings reveal an overlooked climate risk for developing regions, where rising temperatures and growing reliance on air conditioning may strain distribution networks. Our results underscore the urgency of targeted policy interventions and infrastructure investments to enhance grid resilience amid intensifying heatwaves.

The existing literature on the macroeconomic impacts of climate change has established links between climatic shifts and economic growth. However, impact projections vary considerably across studies and are difficult to validate in hindsight, as the counterfactual growth path is unknown. This paper addresses this issue by leveraging the IMF's semi-annual World Economic Outlook forecasts from 1990-2022 as a baseline counterfactual. We first validate that these forecasts do not systematically capture climate impacts by demonstrating that the identifying variation for regression models in the literature stems from growth variation not predicted by the IMF. We then produce GDP nowcasts for different damage functions by adding climate impacts to IMF forecasts for recent years and validate these nowcasts against actual observed growth rates. We find that most damage functions modestly improve IMF growth forecasts, reducing forecast errors by 0.1-0.2 percentage points on average. However, the most severe damage functions predict substantial economic contractions in high-income countries between 2014-2019 that are inconsistent with observed growth patterns. Our methodology provides a novel validation approach for climate damage functions that complements existing methods and suggests that the most extreme damage estimates may overstate near-term climate impacts.

The residential sector stands out as the main sector where energy consumption directly hinges on individual household decisions which are said to be wildly influenced by climate conditions, particularly temperature. This study focuses on aggregated electricity demand as the sum of these parts: given the occurrence of an increase in the use of cooling devices to adapt to the hotter weather, especially by residential users, what is explored is the effect of temperature on electricity demand. The analysis investigates the existence of a specific shape of the daily load curve suspected to verify as a lagged response to daily temperatures: persistence. While the link between temperature and electricity consumption is broadly established, this analysis focuses on hourly electricity load data in Italy from 2015 to 2020, incorporating distributed lag structures to capture the delayed impact of temperatures. Specifically, the econometric analysis firstly confirms the extant literature by finding evidence of a U-shaped relationship, with temperatures associated with the cooling state having a stronger impact on aggregate electricity demand. But more notably, a persistence effect is identified, wherein electricity consumption remains prolonged for several hours after the occurrence of (high)

temperatures. Not only a contemporaneous effect is found to be significant - with decreasing magnitude the more a lag is far in time - but the cumulative effect of past temperature is supported to be stronger than the pooled effect, the current temperature effect on the current electricity demand. This result supports how much an external stimuli received in the past, even more the sum of all of them, may influence the current aggregated load trend; in that, it carries significant implications for energy policy and grid stability. Recognizing and accounting for lagged electricity demand responses in energy planning can improve power system balance through demand-side management and can also guide investments in energy-efficient cooling solutions. Indeed, even though this study is not intended at uncovering the reasons underlying this particular load shape, the analysis suggests that to the increasing ownership of air conditioning units cannot be attributable the persistence effect, rather to their intensive use. Indeed, while electricity demand is found to be sensitive to moderate temperature changes with high air conditioning penetration, at extreme heat levels a low marginal increase in demand due to ownership is experienced.

Reducing dietary emissions is critical for climate mitigation. Replacing beef with alternative proteins can align diets with sustainability goals, ensure nutritional adequacy, and yield health co-benefits. However, as food choices are intertwined with identity, cultural traditions, and social norms, understanding their influence on beef consumption is essential. Using survey data from six European countries, we investigate drivers of beef consumption and identify barriers and enablers to its reduction. Our analysis reveals a significant gap between perceived social norms and actual beef consumption levels, indicating the potential for reductions through correcting norm misperceptions. The findings highlight the need for food demand policies sensitive to institutional and cultural contexts to maximize their effectiveness in promoting sustainable diets.

The use of renewable energy sources, the energy crisis and the increased frequency and intensity of high heat events are changing the conditions under which European households consume energy services for their thermal comfort. Leveraging high-frequency residential electricity consumption data of over 10,000 households of one municipality in Northern Italy, between 2021 and 2022, we show that Photovoltaic (PV) adoption reduces electricity extraction from the grid, during high price and temperature events, enhancing energy security and affordability. Based on our estimated demand functions, we measure significant differences in the price-induced consumer surplus loss for households with and without PV, which amount to 133 and 300 euros, respectively, highlighting substantial private benefits from PV adoption during price fluctuations. Also, we evaluate the social benefits of PV adoption by using the global estimates of the Social Cost of Carbon (SCC) to monetize the value of avoided negative externalities due to GHGs emissions. The adoption of PV by an average household in Brescia spares up to 544 Kg of CO2 in a year, leading to a reduction of environmental damages for a value of 166 - 266 €/year.

Growing climate change impacts call for increasing efforts to adapt and reduce adverse consequences on society. However, adaptation is often costly for both governments and private citizens and it can itself drive additional impacts. A key example is the high energy-intensiveness of appliances for indoor air temperature regulation. In this paper, we empirically evaluate the temperature regulation effect of street green space (SGS) and its relevance for residential electricity demand. We exploit a monthly panel of household metered electricity demand data from n=129,524 households located in 2,181 municipalities distributed across Italy in the 2020-2022 period. Based on the empirical analysis, we find that SGS is an important regulating factor in the temperature-energy demand relation. Specifically, we find that SGS density has a strongly significant non-linear effect on the the impact of temperature of household electricity demand, with the strongest impact being a consumption reduction effect under hot temperatures. Such responses are heterogeneous, as they depend on the heat exposure level and the degree of urbanisation. We estimate that a policy aimed at increasing SGS to a minimum level of municipality-level mean GVI of 25 - a value currently at around the 75th percentile of the distribution in the municipalities covered by our analysis - would strongly contribute to counterbalancing the climate-change induced increase in residential electricity consumption. Such policy would reduce by more than two thirds the growth in the summer-months residential electricity consumption driven by climate change (under RCP 8.5 climate conditions around 2050), compared to the absence of such policy. Our results provide for the first time a range of empirical estimates for the role of SGS in the temperature-energy demand relation. Such evidence can be relevant both in relation the potential of energy demand reductions in supporting climate change mitigation efforts, and in the quest for sustainable, nature-based solutions for adaptation to climate impacts such as heat exposure.

We investigate why farmers actively avoid climate change information and how it affects the effectiveness of information campaigns. We administered a preregistered experiment on a sample of European farmers and foresters from Italy, Belgium, Lithuania, and Finland. We collected two samples: one where respondents could skip climate change information and another composed of a control group and a treatment group where respondents are shown climate change information. Around 34% of farmers and forest owners actively avoid the information in the first sample. Distrust in scientists and low pro-environmental attitudes correlate positively with information avoidance. The information nudge increases respondents' willingness to implement environmentally sustainable practices in the second sample. Using machine learning, we find that those with a similar profile to the information seekers of the first sample drive the effect of the nudge. Our results suggest that the null effects of information nudges found in the literature might be explained by information avoidance, creating hidden heterogeneity.

We stress-test sovereign debt sustainability under climate change. We link a coupled climate-economy model with stochastic debt sustainability analysis optimization to project debt trajectories for the century. We combine narrative scenarios of socioeconomic and climate pathways with calibrated aleatory scenario trees of financial, economic, and fiscal variables to account for future growth under damages from climate change. We test representative countries from different continents under climate impact functions spanning the full spectrum of impacts estimated from the climate economics literature. We find significant effects, especially under high-impact scenarios. We also test whether adaptation or fiscal consolidation can help avert a climate-debt crisis. Public financing of reactive adaptation can have a positive impact on debt sustainability, justifying its cost. Maintaining constant public spending with sustainable debt levels appears not feasible under climate impacts.