Advancing Research on Financial Stability and Climate-Related Financial Risk
An editorial in the journal Science discusses the financial threats posed by climate change and how researchers at Harvard University, RFF, and beyond plan to help quantify those risks.
“These risks are complex and not well understood. Scientists are relatively confident in climate projections over horizons relevant to monetary and fiscal policy-makers, but less clear is how the economy may respond to physical risks from the changing climate and transitional risks such as policy shocks, technological change, and shifting investment sentiment or consumer behavior. For example, what are the channels whereby wildfires, floods, and hurricanes could adversely affect home prices and bank balance sheets? To what extent do climate policy vicissitudes pose risks to investment, employment, and economic growth? Could a climate-related shock be the next unanticipated event to trigger a recession? If so, how might it play out, what should we be monitoring, and what can policy-makers do?”
Authors
Jim Stock
Director of the Salata Institute for Climate and Sustainability at Harvard University
