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on Resource Economics |
| By: | Akay, Alpaslan (University of Gothenburg); Bargain, Olivier (University of Bordeaux); Lomidze, Beka (Bordeaux University); Martinsson, Peter (Technical University of Denmark) |
| Abstract: | We study the medium-run effects of a major climate shock on insurance demand and subjective well-being. Exploiting quasi-random exposure to storm Gudrun (Sweden, 2005) and conditioning on satellite-based forest and terrain characteristics, we treat realized damages as conditionally exogenous. Three years after the event, affected forest owners exhibit a persistent increase in insurance take-up alongside significant welfare losses. These losses are economically meaningful and consistent with important non-pecuniary and psychological costs, including landscape damage and heightened insecurity. Insurance provides only limited welfare buffering, operating partly as reassurance rather than full compensation. Overall, the results highlight the limits of climate insurance as a stand-alone adaptation tool. |
| Keywords: | natural disasters, insurance take-up, subjective well-being, Gudrun |
| JEL: | G22 Q54 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18553 |
| By: | Augusto Ospital (LMU Munich) |
| Abstract: | In the past two decades, about half of the new homes in the United States were built in areas at risk of natural hazards. Why is residential development exposed to such risk? I argue that regulated property-insurance pricing and land-use regulations contribute to this pattern. I study this mechanism in the metropolitan area of San Diego, California, where insurance rules compress the premium gradient with respect to wildfire risk and safer locations are highly regulated and built out. Using detailed spatial data on zoning, wildfire risk, housing, commuting, and premiums, I estimate a quantitative urban model of household location choice, housing supply, and insurance supply. The estimates imply that wildfire premiums are 10.5% below actuarially fair pricing, that the average amenity cost of current wildfire risk is equivalent to 3.5% of income, and that the total present-value welfare cost of current wildfire risk, including property damages, is $17.5 billion. This aggregate cost masks substantial incidence heterogeneity, as owners of safe land benefit from equilibrium scarcity effects. Counterfactuals show that housing supply and insurance pricing interact in determining incidence. In the benchmark specification, targeted housing reforms leave the aggregate effect of cost-based insurance nearly unchanged while attenuating its burden on workers: relative to baseline, workers' wildfire costs rise by 2.3% under insurance reform alone, but fall by 0.9% under the joint reform. |
| Keywords: | climate; environment; natural disasters; wildfires; spatial; urban; land-use regulation; zoning; |
| JEL: | O18 Q54 Q56 R23 R31 R52 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:571 |
| By: | William Brock; Anastasios Xepapadeas |
| Abstract: | Global commons, such as the climate system and large-scale biodiverse ecosystems, generate benefits with public good characteristics that are not reflected in market prices, leading to inefficient resource use. While Pigouvian taxes provide a benchmark solution by aligning private and social incentives, their implementation is often constrained by political, institutional, and informational limitations. This paper examines whether financial instruments can serve as effective alternatives to conventional fiscal tools in managing global commons. Specifically, it shows that appropriately designed instruments-such as green bonds, sustainability-linked bonds, and resilience bonds-can attain the environmental outcomes achieved by optimal taxation. The proposed mechanism mobilizes external funding to compensate local agents for conservation, linking financial returns to ecosystem service flows and thus internalizing global externalities. Under certain conditions, these instruments decentralize the socially optimal environmental outcome without relying on taxation. The analysis provides a conceptual foundation for using financial mechanisms as policy tools in environmental management and climate policy |
| Keywords: | Ecosystem management, Climate change, Pigouvian taxes, Green-Sustainability-Resilience bonds, Asset pricing |
| JEL: | G12 Q20 Q54 Q58 |
| Date: | 2026–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:aue:wpaper:2612 |
| By: | Marguerite Obolensky; Marco Tabellini; Charles A. Taylor |
| Abstract: | This paper examines the concept of "climate matching'' in migration-the idea that migrants seek out destinations with familiar climates-and studies its implications for the geography of economic activity in the United States. We document that temperature distance between origin and destination predicts the distribution of migrants across U.S. counties, for both internal and international migration in the historical (1850-1940) and modern (1970-2019) periods. These patterns cannot be explained by the spatial correlation of climate or the persistence of ethnic networks, and instead reflect two mechanisms: the transferability of climate-specific skills and climate as an amenity. We then study the economic consequences of climate mismatch during 1880-1920, a period of rapid growth and structural transformation. Using an instrumental variable strategy that interacts origin-country inflow shocks with the timing of county railroad access, we find that mismatch reduced agricultural productivity and accelerated the exit from farming. However, manufacturing output did not rise. Instead, manufacturing productivity declined and population growth was lower in counties with higher climate mismatch. These effects left a lasting imprint: a 1°C increase in 1880--1920 mismatch is associated with 2.5% lower per capita income in 1940. |
| Keywords: | Migration, climate, climate matching, economic geography |
| JEL: | J15 J61 N31 N32 Q54 R11 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26031 |