Climate Finance

In lieu of the failure of legislatures to pass comprehensive carbon taxes, there is growing pressure on the financial system to address the risks of global warming.  One set of pressures is to account for the heightened physical risks due to extreme weather events and potential climate tipping points.  Another set of pressures are to find approaches to incentivize corporations to meet the goals set out in the Paris Treaty of 2015.  These approaches include (1) mandates or restrictions to only hold companies with decarbonization plans, (2) development of negative emissions technologies such as direct-air capture and (3) promotion of natural capital markets that can be used to offset carbon emissions.  Moreover, financial markets also provide crucial information on expectations and plans of economic agents regarding climate change.  This course will cover both models and empirical methodologies that are necessary to assess the role of the financial system in addressing global warming.