Physical Climate Risks and Economic Complexity

Climate change already manifests via physical risks – damages from floods, storms, wildfires, droughts, heatwaves, and sea level rise. These risks pose a fundamental threat to economies globally. Conventional economic analysis of physical climate risks focuses on estimating direct and indirect damages to businesses and households, on eliciting whether physical risks capitalize in current markets and investment decisions, and on cost-benefit analysis of adaptation options. Computational economic agent-based modeling complements it by capturing complex feedbacks, inherent climate and behavioral uncertainties, and adaptive expectations of economic agents. In this talk I focus on the role of individual decisions (of households, firms) and of social institutions (e.g. markets, social norms) in shaping patterns of physical climate risks. Through a series of modeling examples ranging from stylized to empirically grounded assessments, I illustrate how these individual choices scale up to create (potentially systemic) risks. The examples feature cascading regional indirect damages, the emergence of "stranded" housing assets in sensitive areas, and the shifting landscape of business relocation in the face of increasing physical climate risks.

The seminar series is organized by the Section Economics of Wageningen University (consisting of the groups Agricultural Economics and Rural Policy, Development Economics, Urban Economics, Environmental Economics and Natural Resources, and Economic and Environmental History).

The seminar is aiming to foster the exchange on recent topics in the field of economics. We consider contributions from all fields of economic research and invite speakers from Wageningen, the Netherlands and abroad.

The seminar is organized as a weekly lunch seminar taking place on campus. Meetings are between 12:00 and 13:00 hours. Lunch is served. 

All staff and students are welcome!