We use a long history of global temperature and atmospheric carbon dioxide (CO2) concentration to estimate the conditional joint evolution of temperature and CO2 at a millennial frequency. We document three basic facts. First, the temperature–CO2 dynamics are non-linear, so that large...

Greenhouse gas policies confront the trade-off between the costs of reducing emissions and the benefits of avoided climate change. The risk of uncertain and potentially irreversible catastrophes is an important issue related to the latter, and one that has not yet been well incorporated into...

If it reaches 4° or more, global warming may cause severe economic damage with the consequence that a significant portion of the value of a diversified equity investment portfolio will be placed at risk. In the accompanying Part 1 we analysed this risk. We estimated that in a plausible worst...

Significant business risk derives from the likelihood that the policy and legal environment with respect to climate change will change quickly, imposing costs on greenhouse gas emitters and other businesses with large carbon footprints. Advice on how to manage this kind of risk is written...

Recent work uses mean-variance portfolio theory to identify optimal spatial conservation planning in the face of spatial variation in future benefits from uncertainty in climate change. Use of variance to measure risk may lead to inefficient portfolio allocation decisions when returns do not...

In response to the growing threat of climate change, the insurance industry has made significant investments in modelling and quantifying physical climate risks. However, the emerging risk of climate litigation has proven particularly difficult to model. In 2015 Mark Carney, then-Governor of the...

We build on the estimated sectoral effects of climate transition policies from the general equilibrium models of Jorgenson et al. (2018), Goulder and Hafstead (2018), and NGFS (2022a) to investigate U.S. banks’ exposures to transition risks. Our results show that while banks’ exposures are...