The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time...

The social cost of carbon - or marginal damage caused by an additional ton of carbon dioxide emissions - has been estimated by a U.S. government working group at $21/tCO2 in 2010. That calculation, however, omits many of the biggest risks associated with climate change, and downplays the impact...

A simple model is used to illustrate the effects of a reduction in (marginal) abatement cost in a two country setting. It can be shown that a the country experiencing a cost reduction can actually be worse off. This holds true for a variety of quantity and price based emission policies. The most...

Companies are increasingly concerned with current and future climate change risks that have the potential to generate a substantial change in their business operations, revenue and/or expenditure. Therefore, the paper focusses on the companies' perspective and aims to create a higher awareness...

Climate change is a phenomenon beset with major uncertainties and researchers should include them in Integrated Assessment Models. However, including further dimensions in IAM models comes at a cost. In particular, it makes most of these models suffer from the curse of dimensionality. In this...

Climate change related risks impact and challenge the private sector in many different ways. This also applies to risk drivers like a companies' reputation and a changing consumer behavior. Since significant risk drivers for companies differ just as much as companies themselves, a sector...

Climate change poses several risks to the value of financial assets and financial stability. The study conducted in this paper focuses on the German banking sector and estimates its exposure to climate risks arising from a transition to a carbon-neutral economy. Our analysis identifies the...

We study the comprehension, mapping, and reporting of climate-related risks among firms listed on the NasdaqOMX stock exchange in Stockholm. Our study contains two parts: i) a study on the firms' external communication through their annual reports, sustainability reports and webpages, and ii) a...

We document that climate uncertainty negatively affects corporate investment. The effect is more pronounced for firms with higher capital intensity, higher operating inflexibility, and less redeployable capital. Our results are robust to using an instrumental variable approach and to using...

There is a lot we know about climate change, but there is also a lot we don't know. Even if we knew how much CO2 will be emitted over the coming decades, we wouldn't know how much temperatures will rise as a result. And even if we could predict the extent of warming that will occur, we can say...