Economics of Climate Change

Climate change is one of the greatest challenges society is currently facing, caused by the daily activities of billions of people and millions of firms. It affects people, animals, vegetation and ocean life in various ways (some positive, but mostly negative) and with large variation in the geographical distribution of the impacts.

The Environmental Economics and Natural Resources Group (ENR) studies climate change impacts, strategies for individuals and society to cope with these impacts (adaptation), and policies and behavioural adjustments that can reduce emissions and store carbon (mitigation and sequestration). Empirical analysis of the economic impacts of natural disasters allows us to gain insights into the effects of climate-induced disasters. We use applied partial and general equilibrium models to study the impacts on the agricultural sector and on water availability, and we analyse adaptation strategies. Using dynamic optimization techniques we analyse optimal investment in adaptation measures (e.g. dikes) and the potential of forests as a carbon sink. ENR also has a strong record in the analysis of international climate agreements (STACO model).

Projects

Key publications

  • Indrajaya, Y., E. van der Werf, H.P. Weikard, F. Mohren, and E.C. van Ierland, 2016. The Potential of REDD+ for Carbon Sequestration in Tropical Forests: Supply Curves for Carbon Storage for Kalimantan, Indonesia. Forest Policy and Economics

  • Zhu, X., M. Moriondo, E.C. van Ierland, G. Trombi, and M. Bindi, 2016. A model-based assessment of adaptation options for Chianti wine production in Tuscany (Italy) under climate change. Regional Environmental Change 16:85-96
  • Weikard, H.P. and R. Dellink, 2014. Sticks and Carrots for the design of international climate agreements with renegotiations. Annals of Operations Research 220(1):49-68