Tag Archives: Climate Change

A report by the Federal Finance Administration anticipates lower net revenues for all levels of government. … demographic-related expenditure will increase from 17.2% of gross domestic product (GDP) to 19.8% of GDP by 2060. If no reforms are made, public debt would rise from the current 27% to 48% of GDP. The need for reform is particularly pronounced at federal (including social security) and cantonal level. While AHV expenditure in particular poses a challenge for the Confederation,...

The SNB has published its annual report. Some highlights from the summary: Climate risks and adjustments to climate policy can trigger or amplify market fluctuations and influence the attractiveness of investments. From an investment perspective, such risks are essentially no different from other financial risks. The SNB manages the risks to its investments by means of its diversification strategy. … A prerequisite for illiquid assets to be used as collateral in obtaining liquidity...

In the Quarterly Journal of Economics (137, 4), a group of authors estimates that the mean global increase in mortality risk due to climate change, accounting for adaptation benefits and costs, is valued at roughly 3.2% of global GDP in 2100 under a high-emissions scenario. Notably, today’s cold locations are projected to benefit, while today’s poor and hot locations have large projected damages. Finally, our central estimates indicate that the release of an additional ton of CO2 today...

Carbon flow, stock and budget according to the recent Geneva Report on Climate and Debt: Annual global CO2 emissions from fossil fuel and industry: 40 gigatonnes. Cumulative historical emissions since 1850: 2400 gigatonnes. They are responsible for a temperature rise of 1 degree Celsius. Remaining carbon budget given 1.5 degree Celsius temperature rise cap: 300 gigatonnes.

Goodreads rating: 4.39. The book offers a brief tour of the physics behind climate change and the role played by human activity; a skeptical discussion of climate models; some stronger, some weaker examples of distorted reports, by scientists and the media, regarding causal links between human activity, climate change, and extreme weather events, sea level change, or production (opponents claim that these examples are cherry-picked; Koonin retorts that scientific reports should be...

John Cochrane on the role of cheap clean energy which by itself will not reduce CO2 in the long run: The standard vision in policy discussions assumes infinite substitutability. As soon as the cost of clean energy is lower than the cost of carbon-emitting energy, everyone substitutes completely to the latter and the oil and coal stay in the ground. … But as long as the elasticity of substitution is finite … then the carbon comes out of the ground. As you use less and less, the...

John Cochrane on climate change and financial stability: Climate change and financial stability are pressing problems. They require coherent, intelligent, scientifically valid policy responses, and promptly. But climate financial regulation will not help the climate, will further politicize central banks, and will destroy their precious independence, while forcing financial companies to devise absurdly fictitious climate-risk assessments will ruin financial regulation. The next...

In the NBER working paper “Dissecting Green Returns,” Lubos Pastor, Robert Stambaugh, and Lucian Taylor argue that excess returns on green assets during recent years are unlikely to predict expected excess returns. At least that’s what theory suggests: … green assets have lower expected returns than brown, due to investors’ tastes for green assets, yet green assets can have higher realized returns while agents’ tastes shift unexpectedly in the green direction. … green tastes can...

FX Rates Overview: The US dollar is firmer in the European morning after starting out with a softer bias in Asia Pacific turnover. The dollar-bloc currencies, sterling, and the Swiss franc are heavy, but ranges are narrow, and consolidation seems to be the flavor of the day. Central and Eastern European currencies are faring best among emerging markets, but the JP Morgan Emerging Market Currency Index is little changed. Benchmark 10-year yields are also hovering...

These days, most mainstream news reports are being monopolized by the pandemic, the covid vaccine and all the new rules and lockdowns that are being enforced across the Western world, and this near-obsessive focus comes at the expense of a lot other important developments. The last story that managed to “dethrone” covid from the headlines was the US Presidential election, and even that reporting was largely through the prism of the pandemic. And yet, the earth hasn’t actually stopped...