Climate Risk Research Articles

Sustainable practices and household resilience: an empirical analysis of behavior change in times of crises

Understanding sustainability behavior is essential in tackling the global challenge of climate change. The importance of studying sustainability practices and their dynamics grows in light of recent global crises such as the COVID-19 pandemic and the energy crisis following the Ukraine war. These events both challenge and shape individual sustainable practices, offering opportunities for fostering individual sustainable practices and enhancing societal resilience. An online survey was conducted in Germany (n = 571, May 2023) to investigate sustainable behavior dynamics (mobility, energy-saving, and shopping habits) and to identify segments reflecting behavioral shifts. We found relative stability in sustainable mobility choices compared to pre-crisis times, with a tendency towards reduction, as well as an overall increase in energy-saving and sustainable shopping habits. Factor analyses revealed that sustainable mobility behavior (SMB) and sustainable consumer practices (SCP) formed two separate domains. Cluster analyses further identified four segments within each domain, each exhibiting unique behavioral patterns compared to pre-crisis practices. Examining individual variables, adopting more sustainable mobility practices was associated with sociodemographic factors (income, education, and area of living), higher levels of environmental awareness, institutional trust, and increased risk perceptions. Sociodemographic variables had less influence on sustainable consumer practices. Here, higher levels of knowledge, climate change awareness, trust, and risk perceptions played a significant role. Our findings highlight the importance of separately considering behavioral domains in understanding crises-induced changes in sustainability practices. Moreover, it is important to consider specific individual factors and to develop tailored interventions and policies to promote sustainable practices during volatile times.

Decarbonisation of the Basque Country residential stock by a holistic enviro-economic assessment of renovation strategies under the life cycle thinking for climate risk mitigation

Decarbonisation of the Basque Country residential stock by a holistic enviro-economic assessment of renovation strategies under the life cycle thinking for climate risk mitigation

Nature-based solutions as urban adaptation to climate risk: Framework for economic evaluation as decision support tool

Integration of Nature-based solution (NBS) as adaptation in planning and policy remains a challenge due to lack of adequate information on economic feasibility. This is mainly due to non-availability of economic evaluation framework for informed decision. Present study tries to address this by examining the status of evaluation frameworks through a systematic review of peer-reviewed articles published between 2015 and 2023. Based on the synthesis of the evidence a five-step framework, exclusively for economic evaluation of NBS as urban adaptation has been developed. Using this a novel, holistic, just, equitable and inclusive cyclical decision tool has been proposed. The review confirmed the lack of economic assessment and a holistic evaluation framework. The evaluation framework has been backed by operational guidance by providing comprehensive recommendations on the methodologies, tools and techniques and indicators and metrics that can be used for execution of each step. The proposed cyclical decision tool facilitates equity and justice by having provisions for ensuring equal participation of each stakeholder in decision making. It specifically ensures incorporation of plurality of knowledge and in particular value of the ecosystem services (ESs) from NBS. The tool has applicability across the urban spatial scale in cities of developed and developing economies.

Climate Risk Disclosure, Green Innovation and Enterprise Value

Drawing upon the distinctive context of China, we have developed a comprehensive firm-level climate risk disclosure index that encompasses multiple dimensions and resonates with the prevailing realities. Our findings reveal that firms' climate risk disclosures significantly enhance their green innovation capabilities, particularly for those facing substantial financial constraints. Further analysis uncovers no notable differences in this effect across various patent categories, while also indicating a marked improvement in innovation quality. Moreover, our results suggest a positive correlation between higher levels of climate risk disclosure and increased enterprise value.

Climate Crisis on Energy Bills: Who Bears the Greater Burden of Extreme Weather Events?

The increasing frequency of extreme weather events driven by global climate change poses a critical threat to energy system vulnerability and household energy security. Using meteorological data from NOAA and Chinese weather stations (2012-2022), this study examines the impact of extreme climate risks on household energy poverty. Our findings reveal two significant transmission channels: infrastructure disruption and price fluctuation. Extreme weather events compromise energy infrastructure stability and cause supply interruptions, while temperature extremes trigger energy price volatility and increase household expenditure burdens. We further find that regions with weak infrastructure, areas prone to natural disasters, and low-income households are particularly vulnerable to these impacts. These findings suggest that climate change may exacerbate social inequality through energy poverty channels.

Learning from the aggregated optimum: Managing port wine inventory in the face of climate risks

Learning from the aggregated optimum: Managing port wine inventory in the face of climate risks

Climate-Smart Agricultural Finance (CSAF): A model for sustainable investments in agriculture

Climate-Smart Agricultural Finance (CSAF) integrates environmental risk assessments into agricultural lending models to promote sustainability and climate resilience. This paper explores the significance of CSAF in mitigating climate-related risks, improving farm productivity, and enhancing long-term economic stability for both farmers and investors. It outlines the mechanisms through which CSAF promotes sustainable agriculture, such as the use of green bonds, sustainability-linked loans, and carbon credit financing. Additionally, it analyzes the benefits of CSAF, including improved climate resilience, risk mitigation, and financial returns for investors. The paper concludes with recommendations for improving CSAF models, emphasizing financial inclusion, enhanced data collection, and public-private partnerships to promote wider adoption. CSAF offers a promising path toward building a more sustainable and resilient agricultural sector in the face of climate change.

Identification of climate change hotspots in the Mediterranean

The Mediterranean region has long been identified as a climate change hotspot. However, within the Mediterranean, there are smaller sub-areas that exhibit a higher risk of climate change and extremes. Previous research has often focused on indices based on mean climate values, yet extremes are typically more impactful on humans and ecosystems. This study aims to identify the most vulnerable sub-areas of the Mediterranean as climate change hotspots using two indices: the newly introduced Mediterranean Hotspot Index (MED-HOT) and the well-defined Regional Climate Change Index (RCCI). The MED-HOT focuses on extreme high maximum and minimum temperatures, rainfall, and drought, while RCCI assesses changes in mean climate conditions. By combining these indices, we provide an identification of Mediterranean hotspots, capturing both mean climate shifts and extremes. The spatiotemporal variation of both indices across the Mediterranean region is presented and the 20 subregions are categorized into distinct groups. The results reveal that the southeastern Mediterranean is at high risk according to both indices. Additionally, southern Italy is identified as high risk due to changes in mean climate (RCCI), while the northern part is at risk due to extreme events (MED-HOT). The Iberian Peninsula and Greece are also highlighted as vulnerable areas requiring extra attention.

Traditional Fish Hole Aquaculture System in Benin: Status, Challenges, and Research Prospects for Sustainable Development in Climate Change Mitigation

Fish holes called “whédos” are excavations performed near water bodies or in the flood plains of Beninese rivers in Africa for rearing fish. During floods, they are filled and naturally colonized by various fish that remain trapped during recessions. This literature review examines fishing, aquaculture, and fish reared in traditional holes in Benin. It reports on cartography, characterization, socioeconomic aspects, challenges, and status of improvement, and proposes prospects for improving this system. Peer reviews and gray literature were used to conduct the analysis. Our review highlights 19 papers reporting on 17 whédos aquaculture experiences based on the exclusion or inclusion criteria. These results indicate that many genera can be reared in whédos, suggesting that whédos offer the possibility of going beyond the production of Clarias and Tilapia in Africa. Furthermore, the exploitation of the whédos system is fairly profitable for fishermen and their households, at approximately US$ 1713 per household annually, used to finance agricultural activities, children’s education, schooling, mitigating farmers’ vulnerability to climate risks, and health care. However, in the past two decades, there has been a significant decline in the quantity of fish collected owing to the adverse effects of hydroclimatic changes, such as floods and prolonged droughts. Moreover, water eutrophication or pollution, the risk of climate change, and fishing methods have affected crop yield over the years. The implementation of Integrated Multi-Trophic Aquaculture or Integration Agriculture-Aquaculture in whédos systems can be an effective solution for improving profitability and sustainability. The knowledge gained from this review perspective should be helpful in directing future initiatives to grow and sustain this sector of the economy and to optimize its potential to provide food for future generations.

Comprehensive insights into the risks of climatic factors on rice production and its value chain- A Review

Climate change is the most serious problem of the last two centuries. It is being observed as a silent threat to global food production, leading to food insecurity for the burgeoning population. Rice is an important food crop and has also been identified as sensitive and highly vulnerable to climate change. Global rice production is affected by climate change and will soon be seen as a food security threat. Climatic factors like temperature, rainfall, wind speed, relative humidity, and solar radiation significantly impact physiological, biochemical and morphological traits, eventually resulting in a decline in yield. The whole process is discussed in this review. Several previous studies focused more on the impact of climate change on the productivity and production of crops without paying any or less attention to the vulnerability of value chain actors to climate risks and climate-related losses in the value chain. The climate risk management by value chain approach establishes connections between input suppliers, farmers, processors, retailers and consumers, identifying risks and formulating adaptation and mitigation strategies at every stage across the value chain. The identified appropriate strategy from the review, including climate-resilient rice varieties, conservation agricultural practices, climate-smart cultivation and water management techniques, could reduce the impact of climate change and enhance food security.

The application of analytical hierarchy process to assess adaptation strategies for flood and landslides risks: A case study of a multi-risk area community

The increasing frequency of flood-related emergencies has heightened discussions on climate adaptation and risk management. Despite investments in infrastructure, early warning systems, urban planning improvements, and awareness initiatives, sustained attention and action are essential. The efficacy of preventive measures relies heavily on local community decisions and their cooperation with authorities, impacting the entire risk management cycle. This study investigates the factors influencing flood and landslide adaptation strategies and their perception by citizens in vulnerable areas, aiming to identify key variables that shape citizen behaviour for effective planning and management of adaptation actions. Focusing on Ischia Island, Italy, a multi-risk area, the study applied the Analytic Hierarchy Process (AHP) in focus groups to achieve three objectives: i) Highlight the critical role of citizen perceptions in forming adaptation strategies, emphasizing the need for cohesive efforts among policymakers, experts, and communities to enhance resilience. ii) Examine residents' views on flood and landslide risks to understand local concerns and vulnerabilities. iii) Use multi-criteria analysis to evaluate the importance of factors shaping adaptation strategies, providing a systematic framework for decision-making in disaster risk management. Findings reveal an optimism bias in respondents' perceptions of their home security despite recognizing the area's vulnerability and mistrust in authorities. Environmental and social factors are deemed most important, with environmental strategies focused on harm reduction and local environment enhancement, and social strategies emphasizing information dissemination and mortality reduction. This research offers valuable insights into community perceptions and factors influencing adaptation strategies for flood and landslide risks.

Indigenous People and the Meaning of the Construction of Disaster Information Literacy Based on Local Wisdom

Indonesia is one of the countries that faces numerous disasters, with the recent increase largely attributed to the worsening effects of climate change. This study aimed to map out the experiences and meanings of indigenous communities regarding disaster information literacy based on local wisdom in facing the threat of global climate change. This research uses an interpretive paradigm with a phenomenological approach. Data collection techniques comprised in-depth interviews, focused group discussions, and participatory observations. The results showed that the indigenous peoples have the capacity to maximise their cultural assets to reduce disaster risks. In disaster crisis situations, these indigenous communities use their local wisdom to strengthen their capacity to deal with various threats such as droughts and floods. Second, cultural aspects determine the preparedness of indigenous peoples to face various risks of climate change. Therefore, they build an understanding that one of the effective ways to mitigate disasters is to use culture-based local wisdom. They also perform traditional rituals as a form of prayer when the crisis intensifies.

Impact of climate change on the distribution of the invasive water hyacinth in Ethiopia

The introduction of exotic species poses one of the greatest threats to biodiversity globally. Water hyacinth is a dangerous invasive species that has harmed Ethiopia’s wetland ecology and economy. This research aims to evaluate the current distribution of water hyacinth and the impact of environmental variables on its spread, while also mapping future habitat suitability under climate change scenarios and assessing how these changes may influence the species' potential expansion. To estimate the risks of climate change to the species, a predictive model was developed from six modeling methodologies to investigate the climatic suitability of target species for the years 2050 and 2070 under two Representative Concentration Pathway (RCP) scenarios (RCP4.5 and RCP 8.5). Under the current climatic scenario, only 69.78% (789 503.8 km2) and 16.02% (181 262.8 km2) of the country is moderately and highly suitable for species dispersion and invasion respectively. The remaining 14.2% (160 620.9 km2) is unsuitable for the distribution and invasion of the species. In 2050, under the RCP4.5 and RCP 8.5, the ‘highly suitable’ range of water hyacinth is anticipated to expand by 16.35% and 15.39%, whereas the ‘moderately suitable’ area is predicted to increase by 70.81% and 71.52%, respectively. Under the RCP8.5 scenarios, compared to the current climatic conditions, in 2070 the ‘highly suitable’ region for the species is expected to increase by 11.48%. Its continuing growth would exacerbate the issue of ecological and economic crisis, cause significant economic and environmental harm and endanger the community’s way of life. In order to avert or reduce these effects, a thorough examination of water hyacinth along the two RCPs by water resource scientists and mamangers, that takes into account how climate change is affecting water hyacinth growing locations in Ethiopia, and provides a proper solution, is mandatory.

Long-span multi-layer spillovers between moments of advanced equity markets: The role of climate risks

In this paper, we examine the potential spillovers between returns, volatility, skewness and kurtosis of developed stock markets under the lenses of rare disaster events, proxied by climate risks. The aforementioned moments based on model-implied distributions of stock returns are derived from the quantile autoregressive distributed lag mixed-frequency data sampling (QADL-MIDAS) method, using a long span of data. The empirical findings are as follows: firstly, spillovers are significant within- and across stock markets for each of the four moments. Secondly, based on a nonparametric causality-in-quantiles approach, changes in temperature anomalies, have the predictive power to shape the entire conditional distribution of various metrics of spillover involving single- and multiple-layers of returns and risks layers. In sum, we show that the multi-layer approach offers a comprehensive and nuanced view of how stock market-related information is transmitted across the stock markets of advanced economies, carrying implications for investors and policymakers.

Assessing Drought Risk and the Influence of Climate Projections in Sri Lanka for Sustainable Drought Mitigation via Geospatial Techniques

Sri Lanka is highly vulnerable to climatic change, making drought risk assessment an essential tool for the development of effective mitigation strategies. This study addresses existing gaps by employing geospatial techniques to evaluate drought risk in Sri Lanka and focusing on future trends in temperature and precipitation. The observed meteorological data, projected climate variables, and environmental factors were analyzed using the standardized precipitation evapotranspiration index (SPEI). Key findings show that the northwestern and southern regions of Sri Lanka are particularly susceptible to increased drought hazards, while the southwestern region, characterized by the highest density of built-up areas, is also more vulnerable. A combination of hazard and vulnerability data reveals that the northwestern, upper–central, and southern regions exhibit relatively high drought risk. The spatial distributions of the predicted meteorological variables align closely with current patterns, and significant increasing trends were observed under the SSP 2.6 and SSP 8.5 scenarios. Precipitation and temperature correlate with drought, indicating an elevated risk of future drought events. This study provides a comprehensive understanding of the interplay between climate change and drought risk in Sri Lanka, offering valuable insights for policymakers and resource managers to develop sustainable drought mitigation plans.

Climate and Environment Risks and Opportunities in the Banking Industry: The Role of Risk Management

ABSTRACTBanks are called to address risks and opportunities posed by climate change to their business model. A clear understanding of this ‘new’ type of risks is necessary to adequately incorporate them in the bank strategic decision process and to translate them in specific investment and lending policies and targets. In this paper, focusing on a sample of 102 European listed banks during the period 2008–2021, we provide fresh empirical evidence of the crucial role of the risk management function in increasing bank's awareness of risks and opportunities associated with climate change and fostering the implementation of a sound environmental strategy. We confirm this relationship in a quasi‐natural experiment setting built around the adoption of the 2015 Paris Agreement. We also provide evidence of the relevance of environmental‐oriented governance mechanisms in fostering the adoption of a climate and environmental strategy and in strengthening the role of the risk management. Taken together, these results fill a gap in the academic literature and advance the knowledge of the conditions that allow for the achievement of green goals by the banking system, thus providing clear management and policy implications.

Farmers’ adaptation to climate change in Pakistan: Can their climate risk management strategies lead to sustainable agriculture?

Farming communities in many developing nations are facing the impacts of climate change, characterized by greater variability and frequency of extreme weather events, which threaten their livelihoods and the agricultural sector as a whole. Agricultural sustainability is at risk when farmers engage in off-farm activities to protect their economic future and combat climate change. This study aimed to identify the determinants of off-farm management activities adoption and highlight the issues faced by farmers after their adoption in agriculture. The data were collected data through a questionnaire survey from 360 farm households in Pakistan. The study utilized a stepwise probit regression to analyse the adoption of land use and migration-based diversification as risk management strategies. The results indicated that marital status, household size, risk perception of rains, floods, drought, and extreme weather were the factors determining the adoption of land use and migration-based diversification as risk management strategies. However, livestock showed a negative association with the adoption of these strategies. Moreover, the study identified crop failure as the primary reason to adopt off-farm strategies, followed by rising production costs. The results showed that farmers were managing climate change risks at the cost of farmland, labour loss, and increased production costs. The study is unique in its focus on the unanticipated negative effects of this adaptation. The findings emphasize the need for investment in climate-smart agriculture and financial assistance for farmers. Building a sustainable agricultural system needs more than just adaptation: long-term practices and financial protections to stabilize farmers' incomes and help rural areas develop.

The impact of climate risk on bank profitability through liquidity creation channel: empirical evidence from G7 countries

AbstractThis study investigates the impact of climate change-induced risk on bank profitability in the G7 countries from 2001 to 2022. Using dynamic panel GMM estimation to analyse banking industry data with climate risk factors, we find that climate risk has a negative effect on bank profitability. The study also demonstrates that bank liquidity creation plays a key role in transmitting the adverse impact of climate risk on bank profitability. Additionally, the results of the study are robust and withstand different measures of bank liquidity creation. Furthermore, our empirical findings indicate that the influence of climate risk factors is consistent, even for banks primarily focussed on the insurance business. These findings suggest that policymakers may need to implement climate risk management policies to mitigate the detrimental effects of climate change on the banking sector.

Influence of ESG on corporate debt default risk: An analysis of the dual risk scenarios

In the context of sustainable development and high-quality corporate growth, this study examines the impact of Environmental, Social, and Governance (ESG) performance on corporate debt default risk among Chinese A-share listed corporates. It explores the mechanisms by which ESG performance influences debt risk, including diversification of funding sources, optimized capital utilization, and improved market supply–demand dynamics. The mitigating effect of ESG on debt risk is more pronounced in state-owned enterprises, large corporations, and corporations with robust internal controls, especially under conditions of low marketization and adverse macroeconomic circumstances. Moreover, in light of the global emphasis on climate risks, this study assesses their significant influence on debt default risk, particularly through the environmental aspect of ESG. Innovatively, this study incorporates dual climate risk scenarios to comprehensively analyze the interaction between ESG performance and debt default risk. Findings indicate that ESG performance significantly lowers debt risk in corporates facing higher internal climate challenges, while the effects on external supply chain climate risks are less evident. These insights contribute to the theoretical understanding of ESG and financial risk management and provide practical strategies for corporates pursuing sustainability in an unstable climatic environment.

Droughts of the early 19th century (1790–1830) in the northeastern Iberian Peninsula: integration of historical and instrumental data for high-resolution reconstructions of extreme events

Abstract. Drought represents a prevalent climate risk in the Mediterranean region. In the context of climate change, an increase in both frequency and intensity is anticipated over the next century. In order to effectively manage future scenarios where global warming overlays natural climate variability, a thorough analysis of the nature of droughts prior to the industrial age is crucial. This approach incorporates an extended temporal scale into the study of severe droughts, enabling the identification of low-frequency drought events that occurred before the instrumental period. The objective of this study is to examine the occurrence and magnitude of extreme droughts lasting over a year in the Spanish Mediterranean basin during the early 19th century (1790–1830). To achieve this objective, the research integrates the use of instrumental observations and information derived from historical documentary sources with daily to monthly resolutions (e.g., rogation ceremonies). The findings reveal that drought episodes were more frequent and severe during the early 19th century compared to the late 19th century. Moreover, drought episodes of similar severity were rare throughout the 20th century. Only in the current context of climate change, over the last 2 decades, has a pattern of high drought severity been identified that resembles the severity found during the early 19th century (especially between 1812 and 1825). This study underscores the presence of high variability in drought patterns over the last few centuries, justifying the need for intensified research on drought episodes with high temporal resolution for extended periods.