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Financial Crises and Climate Change.
João Tovar Jalles1,2,3,4
1Instituto Superior de Economia e Gestão (ISEG), Universidade de Lisboa, Rua do Quelhas 6, 1200-781 Lisboa, Portugal.
Comparative Economic Studies
|June 26, 2023
Summary
Financial crises worsen climate change resilience, especially in developing nations. While global resilience is increasing, economic downturns heighten climate vulnerability.
Area of Science:
- Environmental Science
- Economics
- Climate Change Research
Background:
- Climate change presents significant global challenges.
- Existing research extensively covers the economic impacts of climate change.
- Limited studies explore the reciprocal relationship between financial crises and climate change.
Purpose of the Study:
- To empirically investigate the impact of financial crises on climate change vulnerability and resilience.
- To analyze how economic downturns influence a nation's capacity to withstand climate shocks.
Main Methods:
- Utilized the local projection method for empirical analysis.
- Employed a dataset spanning 178 countries from 1995 to 2019.
- Examined climate change vulnerability and resilience indices.
Main Results:
- Global resilience to climate change shocks has shown an increasing trend.
- Advanced economies exhibit the lowest vulnerability to climate change.
- Financial crises, particularly systematic banking crises, cause a short-term decline in climate resilience.
- This negative impact is more severe in developing economies.
Conclusions:
- Financial crises can temporarily undermine a country's resilience to climate change.
- Developing economies are disproportionately affected by the interplay of financial instability and climate vulnerability.
- Economic downturns exacerbate climate change risks, increasing vulnerability.
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