Climate Risk Research Articles

Insurance and climate risks: Policy lessons from three bounding scenarios

Climate change poses complex risks without precedent that challenge established planning and risk management tools, including property insurance. The nature and timing of transitions in markets and institutions in response to growing climate risks will shape prospects for future socioeconomic well-being. As property insurance markets in the United States face higher levels of turmoil, policymakers are weighing various interventions to stabilize not only insurance but also housing and mortgage markets. We identify policy lessons based on the investigation of three bounding scenarios designed to address the question of how near-term (1 to 3 y) policy and regulatory choices surrounding insurance markets in Florida could influence medium-term (3 to 15 y) risk levels, disaster recovery, housing markets, and local economic outcomes. Since our policy choices today have a profound impact on future outcomes, careful consideration of the longer-term impacts of today’s policy choices is required to secure more effective and equitable adaptation decisions and pathways.

Climate change risk pricing in the European stock market

ABSTRACT Climate risk is the potential risk for societies or ecosystems from the impacts of climate change. Whether financial markets price climate risks is critical to ensuring that the necessary funding flows into environmentally sound projects and that stranded assets risk is adequately managed along a ‘green transition path’. In this paper, we assess climate risks for the European stock market. We show that measures of returns spread of green vs. brown investment reflect climate risk and assets’ exposition to systematic macro-financial risk factors, which should be filtered out to measure climate risks accurately. We show that climate risks are priced by focusing on aggregate, industry, and company-level data. We propose a market-based green rating procedure to evaluate non-transparent and non-disclosing companies for which ESG information is unavailable. We illustrate its implementation using a sample of over 800 non-transparent firms.

Exploring the Interface Between Analyses of the Sources of Vulnerability to COVID-19 and to Climate Change Risks

On February 1st of 2022, Lancet did itself proud by publishing a spectacular paper from the COVID-­‐19 National Preparedness Collaborators (NPC) (Bollyky et al., 2022). More than 100 authors have therein reconfirmed that analysis of COVID shines a light onto the character of societies around the world as they rise to meet the challenges of a significant external force. Moreover, their work contributes to another literature – the ensemble of parallel analyses of how humanity might respond to the existential risks born of climate change, and that is the point of this correspondence.

Substantial Increase in Sub–Daily Precipitation Extremes of Flooding Season Over China

AbstractUnderstanding sub‐daily precipitation extremes (SPEs) can provide scientific insights for taking effective measures to mitigate climate risks. Leveraging gauge observations at hourly precipitation in 2,312 meteorological stations and extreme sub‐daily precipitation indices (ESPIs), we investigate the changes of SPEs in flooding season of 1971–2022 in China. On country scale, the occurrences and intensity of SPEs have significantly increased and even accelerated since the 21st century, suggesting increases in 2010s by 15%–38% compared with that in 1970s. The SPE risks for 20‐year and 50‐year return‐period increased by 2–4 and 8–20 times in 2001–2022 compared with that in 1971–2000, respectively. Over 80% stations are found to have positive trends in all ESPIs. On regional scale, seven sub‐regions experienced significant increases in ESPIs with larger magnitudes in the East China. The enlarged 500‐hPa geopotential height, 700‐hPa pseudoequivalent potential temperature, 700‐hPa specific humidity, saturated vapor pressure and urbanization ratio may be bonded to more SPEs.

Extremes of Temperature and Precipitation Under CMIP6 Scenarios Projections Over Central Hokkaido, Japan

ABSTRACTClimate extreme events are intensifying globally, posing increasing risks across various sectors. Understanding climate extremes' spatiotemporal patterns and responses to climate change is crucial for effective management, especially on a regional scale. This study examines temperature and precipitation extremes, as well as compound dry‐hot events (CDHEs), in the Ishikari River basin (IRB) of Northeastern Japan, an area of significant socioeconomic importance. We focus on spatiotemporal analysis under multiple scenarios of temperature/precipitation extremes and CDHEs based on statistical downscaled datasets from the Coupled Model Intercomparison Project Phase 6. Results indicate that IRB underwent increased trends of extreme hot periods, extreme droughts, and heavy rainfalls during 1985–2014, which are significantly affected by the North Pacific Oscillation and Southern Oscillation Index. Future projections show that warming temperatures and less rainfall shift asymmetrical impacts on temperature and precipitation extremes, expecting increased warm spells and CDHEs but increased wet durations and less heavy rainfalls. Emission scenarios analysis suggests low‐emission scenarios (SSP1‐2.6) could mitigate their exacerbations, especially for CDHEs (decreased by 139%). Moreover, spatial‐pattern analysis reveals regional heterogeneity in temperature and precipitation extremes, with northern mountainous regions more susceptible to thermal extremes and southern plain regions (e.g., Sapporo city) experiencing prolonged drought and CDHEs. This study provides valuable insights into climate risk management and adaptation strategies.

The state of the art and future of climate risk insurance modeling.

This study provides a comprehensive review of the literature on climate risk insurance modeling to identify lessons learned and knowledge gaps to be addressed by future research. These models are increasingly relevant due to the rising losses attributable to climate change. Insurance models estimate risk for different perils and simulate risk-related parameters for insurance schemes, such as premiums and deductibles. Most forward-looking models indicate that climate change and socioeconomic developments highly exacerbate future risk and increase insurance premiums. Various studies recommend charging risk-based premiums to incentivize adaptation efforts that limit this increase in climate risks. Other findings point toward introducing public-private insurance to cope with climate change and enhance risk spreading by introducing insurance purchase requirements or insurance products that cover multiple climate risks. Gaps that we identify in this literature include an underrepresentation of insurance assessments for developing countries and for hazards other than flooding. Additionally, we note a lack of research into insurance for non-agricultural commercial sectors. Furthermore, less than half of the studies take a forward-looking approach by incorporating climate change scenarios, and an even smaller percentage consider socioeconomic development scenarios. This limitation shows that current methods require additional development for assessing the effects of future climate risk on insurance. We recommend that future research develops such forward-looking models, considers using a more refined spatial scale, broadens geographical and hazard coverage, and includes the commercial sector.

IMPLEMENTATION OF CLIMATE-RELATED BUSINESS REPORTING

The International Standard on Climate-Related Disclosures IFRS- S2 is to require an entity to disclose risks and opportunities, that can reasonably be expected to affect the business cash flows, its availability of financing or the formation of the cost of capital in the short, medium and long term. The article examines the ways of information presented in the financial reports of organizations as a result of the prevention of climate change risks by business.

Observed Changes and Projected Risks of Hot–Dry/Hot–Wet Compound Events in China

Compound extreme events can cause serious impacts on both the natural environment and human beings. This work aimed to explore the changes in compound drought–heatwave and heatwave–extreme precipitation events (i.e., CDHEs and CHPEs) across China using daily-scale gauge-based meteorological observations, and to examine their future projections and potential risks using the Coupled Model Intercomparison Project (CMIP6) under the shared socioeconomic pathway (SSP) scenarios (i.e., SSP1-2.6, SSP2-4.5, and SSP5-8.5). The results show the following: (1) The frequencies of CDHEs and CHPEs across China showed a significant increasing trend from 1961 to 2020, with contrasting trends between the first half and second half of the period (i.e., a decrease from 1961 to 1990 and an increase from 1991 to 2020). Similar trends were observed for four intensity levels (i.e., mild, moderate, severe, and extreme) of CDHEs and CHPEs. (2) All the frequencies under three SSP scenarios will show increasing trends, especially under higher emission scenarios. Moreover, the projected intensities of CDHEs and CHPEs will gradually increase, especially for higher levels. (3) The exposure of the population (POP) and Gross Domestic Product (GDP) will be concentrated mainly in China’s coastal areas. The GDP exposures to the CDHEs and CHPEs will reach their highest values for SSP5-8.5, while the POP exposure will peak for SSP2-4.5 and SSP5-8.5, respectively. Our findings can offer scientific and technological support to actively mitigate future climate change risks.

Subchronic elevation in ambient temperature drives alterations to the sperm epigenome and accelerates early embryonic development in mice

Forecasted increases in the prevalence and severity of extreme weather events accompanying changes in climatic behavior pose potential risk to the reproductive capacity of humans and animals of ecological and agricultural significance. While several studies have revealed that heat stress induced by challenges such as testicular insulation can elicit a marked negative effect on the male reproductive system, and particularly the production of spermatozoa, less is known about the immediate impact on male reproductive function following subchronic whole-body exposure to elevated ambient temperature. To address this knowledge gap, we exposed unrestrained male mice to heat stress conditions that emulate a heat wave (daily cycle of 8 h at 35 °C followed by 16 h at 25 °C) for a period of 7 d. Neither the testes or epididymides of heat-exposed male mice exhibited evidence of gross histological change, and similarly, spermatozoa of exposed males retained their functionality and ability to support embryonic development. However, the embryos generated from heat-exposed spermatozoa experienced pronounced changes in gene expression linked to acceleration of early embryo development, aberrant blastocyst hatching, and increased fetal:placental weight ratio. Such changes were causally associated with an altered sperm small noncoding RNA (sncRNA) profile, such that these developmental phenotypes were recapitulated by microinjection of wild-type embryos sired by control spermatozoa with RNAs extracted from heat-exposed spermatozoa. Such data highlight that even relatively modest excursions in ambient temperature can affect male reproductive function and identify the sperm sncRNA profile as a particular point of vulnerability to this imposed environmental stress.

Towards a Greener Future: Sustainable Banking Practices in Bangladeshs Commercial Banks

Green Banking is nowadays the most crucial issues in the financial arena. Globally the financial institutions are trying to accord to conserve the environment. The central bank of Bangladesh also formed some policy regulations for the banks and financial institutions to gain feasible development. The prime objectives of such article toward present the current status of sustainable banking practices of commercial banks in Bangladesh. A questionnaire survey method was used to collect required data about green banking awareness, online banking, greener future, natural environment, ethical and energy efficiency, training for consumer awareness, communication transaction, solar& biogas, green deposits and accounts, sustainability of banking, minimizing greenhouse effects, reducing carbon footprint from banking activities, pollution checkup camps, mitigate the risk of climate change, focuses on saving paper, debit & credit cards practices on 300 employees of different commercial banks. Also secondary data was collected from various articles to learn throughout the green banking implementation. From this research it has been figured out that there is designed green banking practices of merchant banks in Bangladesh. In order to improve the degree of satisfaction, motivation of clients various programs are offered by the commercial banks. This report is not sufficient for developing any conclusion but still the report may be useful for designing any further study to evaluate the green banking facilities provided by the financial institutions in Bangladesh.

Electric Vehicle Import/Export Flows in Maritime Ports: Are Local Stakeholders Monitoring their Arrival?

Within the global climate change risk mitigation frame, automotive OEMs are progressively replacing ICE-powered cars with electric vehicles in their model ranges. This strategic move is deeply impacting every level of their supply chains, including maritime ports. To shed some light, in the absence of relevant academic literature, on how closely local stakeholders are monitoring this evolution, multiple port authorities’ and logistic service providers’ institutional websites, as well as auto industry-related web sources, have been browsed (Q4 2023), looking for comments on the arrival of electric vehicles in North American and European auto ports. Study shows that contexts differ from one region to another, even from one port/one stakeholder group to another, leading to various attitudes ranging from spontaneous early movers to hyper-cautious followers.

Roadmap for implementing climate adaptation innovations in railway

AbstractThe railway is often perceived as an industry where new technology is not utilised to its full potential. However, the future of the railway and its ability to respond to future transportation demands lies in its ability to implement emerging technology. The aim of this research was to propose a system-level innovation roadmap for implementing innovations that can support climate adaptation of railway infrastructure. To achieve the aim of the research, barriers, and enablers for implementing innovations have been explored, identified, and analysed. Two interview studies and a workshop have been conducted. In total, 58 experts from a population with knowledge in railway have been interviewed. The innovation is a decision support system (DSS) enhancing knowledge regarding effects of climate change on railway infrastructure and suggesting climate adaptation measures. The barriers and enablers concerning the implementation of the innovation are related to technology, business models, procurement, infrastructure, regulations, policy, and culture, values, and behaviour. Procurement processes and business models are vital enablers for the introduction of new solutions for a more climate-change-resilient infrastructure. Tendering documentation must include a broader scope of climate-change risk management indicators. A conclusion is that climate adaptation action has a multi-dimension aspect which require various stakeholders to be engaged. This work proposed a holistic system-level innovation roadmap for implementing DSS for climate adaptation of railway infrastructure.

Changing climate risks for high-value tree fruit production across the United States

Abstract Climate change poses growing risks to global agriculture including perennial tree fruit such as apples that hold important nutritional, cultural, and economic value. This study quantifies historical trends in climate metrics affecting apple growth, production, and quality, which remain understudied. Utilizing the high-resolution gridMET dataset, we analyzed trends (1979-2022) in several key metrics across the U.S. – cold degree days, chill portions, last day of spring frost, growing degree days (GDD), extreme heat days (daily maximum temperature >34°C), and warm nights (daily minimum temperatures >15°C). We found significant trends across large parts of the U.S. in all metrics, with the spatial patterns consistent with pronounced warming across the western states in summer and winter. Yakima County, WA, Kent County, MI, Wayne County, NY—leading apple-producers—showed significant decreasing trends in cold degree days and increasing trends in GDD and warm fall nights. Yakima county, with over 48,870 acres of apple orchards, showed significant changes in five of the six metrics - earlier last day of spring frost, fewer cold degree days, increasing GDD over the overall growth period, and more extreme heat days and warm nights. These trends could negatively affect apple production by reducing the dormancy period, altering bloom timing, increasing sunburn risk, and diminishing apple appearance and quality. Large parts of the U.S. experience detrimental trends in multiple metrics simultaneously that indicate the potential for compounding negative impacts on the production and quality of apples and other tree fruit, emphasizing the need for developing and adopting adaptation strategies.

Leveraging Spatial Analysis Techniques for Developing a Climate Resilient and Localized Urban Greening Plan for Pasig City

Abstract. A recent study has been conducted to evaluate the current state of green spaces in Pasig City, Philippines, and to propose a Climate Resilient and Localized Urban Greening Plan (CRLUGP) to address urban greening that is essential for creating sustainable cities, especially in the face of climate change and urban population growth. The study utilized Geographic Information Systems (GIS), Remote Sensing (RS), and Machine Learning (ML) to map green spaces, analyze climate risks, and identify necessary corrective measures. The findings revealed that Pasig City currently only has 70.18 hectares of green space, which is significantly below the World Health Organization's recommended minimum of nine (9) square meters of green space per capita. Projections indicate that by 2032, the city will need 925.72 hectares of green space to meet the needs of its growing population. Additionally, the study identified a connection between low canopy cover and increased urban heat island effects, with the top 10 barangays showing a canopy cover of only 27.64%, well below the recommended 40%. Moreover, areas with limited green spaces were found to be at a higher risk of flooding, highlighting the importance of more vegetation for managing stormwater and mitigating climate-related risks. The study recommends a strategic approach to urban greening, leveraging spatial analysis for continuous monitoring and evaluation. By integrating spatial technologies and data-driven decision-making, Pasig City aims to establish a more sustainable and resilient urban environment for its residents.

Econometrics of Climate Change Research

The econometrics of climate change explores the intricate interplay between economic activity and climate dynamics, offering empirical insights into the causes, impacts, and mitigation of global climate change. This research applies advanced econometric techniques to quantify the economic consequences of environmental changes and evaluate the effectiveness of climate policies. By leveraging panel data models, time-series analysis, and causal inference methods, this study investigates critical topics such as the economic costs of extreme weather events, the efficacy of carbon pricing mechanisms, and the role of renewable energy adoption in mitigating climate risks. Additionally, this research incorporates machine learning techniques to enhance predictive accuracy in modeling future climate-economic interactions. Through rigorous empirical analysis, the study provides actionable recommendations for policymakers to design sustainable strategies that balance economic growth with climate resilience. The findings contribute to a deeper understanding of the socioeconomic dimensions of climate change, emphasizing the importance of evidence-based decision-making in addressing one of humanity’s most pressing challenges.

Carbon Trading in Developing Economies: Challenges, Opportunities, and Best Practices

Globally, carbon trading, a market-driven approach to cut greenhouse gas emissions, has become increasingly popular. Developing economies are increasingly looking at carbon trading as a strategy to balance economic progress with environmental sustainability, even though wealthier nations have historically been the main players in carbon markets. This assessment looks at the main obstacles, chances, and recommended procedures related to carbon trading in developing nations. The obstacles encompass feeble regulatory structures, insufficient knowledge, unstable markets, and giving precedence to commercial expansion above ecological issues. On the other hand, carbon trading offers chances for technological transfer, international financial access, climate risk mitigation, and sustainable development. These regions' best practices for carbon markets place a premium on robust regulatory frameworks, capacity building, equitable pricing systems, and public-private partnerships. By addressing the challenges and embracing these best practices, developing economies can leverage carbon trading to meet their development goals while contributing to global climate action.

Better Resolved Orography Improves Precipitation Simulation Over the Tibetan Plateau in High‐Resolution Models

AbstractRegarded as the Asian Water Tower, the Tibetan Plateau (TP) collects atmospheric precipitation from a vast area of land and feeds into major rivers that sustain the livelihood of billions of people in East, South and Central Asia. It is critical to reasonably simulate the hydrological cycle over the TP in order to assess future climate risks to agriculture, water resources and ecosystem services. To address the chronic wet biases over the TP in state‐of‐the‐art climate models, we have compared 12 high‐resolution (HR) climate models (25–50 km) to their corresponding low‐resolution versions (100–200 km) with respect to the 1979–2014 climatology. It is found that the HR models consistently reduce about half of the wet biases over the TP, mainly from better resolved orography. The wet biases are reduced by 41% over the northern and western TP, mainly contributed by decreased frequency of light precipitation (0.1–10 mm day−1), which is attributed to reduced evaporation because of weakened surface wind by raised orography. The most significant reduction of biases (53%) rising from decreased frequency of mid‐heavy precipitation (10–50 mm day−1), appears over the southern and eastern TP, on the leeside of elevated orography where steeper orography enhances rain shadow effect by stronger downward motion along the sharper slope, while partly compensated by air column convergence due to vertical stretching of the downward flow for potential vorticity conservation. This study highlights the importance of surface processes and resolving complex orography in simulating precipitation and large‐scale hydrology around the TP which potentially benefits the future hydrological projection.

Temperature and Precipitation Extremes Over Borneo Island: An Integrated Climate Risk Assessment

ABSTRACTGlobal warming has significantly increased the frequency and intensity of extreme events, which have catastrophic consequences for ecosystems and humans. Despite efforts to assess the impact of climate change on the potential risk of Borneo, most research has focused on partial regions, considering short timescales and a limited number of temperature and precipitation extremes indices to quantify the expected climate risks. This study employed a new method of climate risk assessment of Borneo based on the combined changes in various climate parameters. It estimated 23 climate indices at all grid points covering Borneo for three overlapping sub‐periods (1951–1980, 1961–1990, 1991–2020). The modified Mann‐Kendall test was employed to identify grid points exhibiting significant increasing or decreasing trends of each index for each sub‐period. Finally, significant trends of 23 indices were integrated to estimate the potential climate risk indicator (RI) based on the combined changes in various climate parameters for each grid point and sub‐period. Temperature indices showed a clear warming trend across Borneo Island, particularly in the eastern regions, with absolute temperature indices showing an increase of 0.5°C–2.5°C in 1991–2020 compared to the reference period (1951–1980). However, extreme cold temperatures have become less prevalent over the study period. There is a shift from light consecutive rainfall days towards more heavy and short‐duration rainfall events. Therefore, there are indications of intensifying rainfall events over the island's southern half, counterbalanced by drying trends in the northern regions, especially Brunei. The spatial distribution of RI revealed an overall 184% increase in climate risk on the island in recent years (1991–2020) compared to the reference period. The highest rise in RI was in the central east of the island, mostly due to significant increases in rainfall and temperature indices. The findings can inform adaptation initiatives to manage escalating heat and flood risks while guiding additional research to explain further the complex climatic changes occurring in this ecologically and socially vital region.

Data-driven complementary indices and metrics for assessing national progress on climate risk and adaptation

Climate change is a complex, multidimensional issue requiring decision-making and governance supported by extensive data from social and natural systems. Large cross-country datasets are available, and various methods are used to transform this data into information relevant for policy and decision-making. Summary indices provide insights into adaptation, mitigation, vulnerability, and risk, helping track countries’ climate-related ambitions and progress. However, many existing methods for constructing indices do not fully exploit the multivariate structures within the data, leading to potential redundancies and overlaps. We develop a set of complementary, non-overlapping indices using Principal Component Analysis to capture distinct dimensions of societal and climate interactions. These data-driven indices account for underlying data structures, ensuring each provides unique and independent insights. Our analysis includes harmonized country-level datasets, metrics relevant to loss and damage, public perceptions of climate change, and projections of economic damages. The application of these indices is illustrated with dissonance metrics that assess the alignment between a country’s adaptation capacities, societal concerns, and risks. The proposed approach for index construction can be valuable across various policy contexts and for informing climate-related strategies. An online tool is provided to visualize and access the results presented in this paper.

Climate Change May Increase the Impact of Coastal Flooding on Carbon Storage in China’s Coastal Terrestrial Ecosystems

Climate warming exacerbates the deterioration of soil and degradation of vegetation caused by coastal flooding, impairing ecosystem climate-regulating functions. This will elevate the risk of carbon storage (CS) loss, further intensifying climate change. To delve deeper into this aspect, we aimed to integrate future land use/land cover changes and global mean sea-level rise to assess the impact of coastal floods on terrestrial CS under the effects of climate change. We compared the 10-year (RP10) and 100-year (RP100) return-period floods in 2020 with projected scenarios for 2050 under SSP1-26, SSP2-45, SSP3-70, and SSP5-85. The study findings indicate that CS loss caused by coastal flooding in China’s coastal zones was 198.71 Tg (RP10) and 263.46 Tg (RP100) in 2020. In 2050, under the SSP1-26, SSP2-45, and SSP3-70 scenarios, the CS loss is projected to increase sequentially, underscoring the importance of implementing globally coordinated strategies for mitigating climate change to effectively manage coastal flooding. The value of CS loss is expected to increase in 2050, with an anticipated rise of 97–525% (RP10) and 91–498% (RP100). This highlights the essential need to include coastal flood-induced CS changes in carbon emission management and coastal climate risk assessments.