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on Resource Economics |
| By: | Konrad Adler (University of St.Gallen & SFI); Oliver Rehbein (WU Vienna & VGSF); Matthias Reiner (WU Vienna & VGSF); Jing Zeng (University of Bonn & CEPR) |
| Abstract: | We propose measuring firms’ exposure to climate risk via the market. We build a theoretical foundation and construct empirical market-based greenness measures based on abnormal stock returns around UN climate conferences. Our measures cover around 36, 000 international firms, tenfold the existing measures. Market-based greenness is associated with lower present and future carbon emissions, and provides explanatory power distinct from existing climate risk measures. Market-based green firms are more likely to file green patents, have lower stock price volatility, and are financially more robust. At the country level, market-based greenness correlates with lower emission intensity and larger shares of renewable energy. |
| Keywords: | Climate change, greenness, green firms, climate risk |
| JEL: | G14 G32 G38 Q54 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:421 |
| By: | Peter Boswijk (University of Amsterdam); Cees Diks (University of Amsterdam); Simon Trimborn (University of Amsterdam); Matteo Valle (University of Amsterdam) |
| Abstract: | The aim of this paper is to determine from market expectations how firms are affected by risks arising from environmental regulation. We use a text-based measure of environmental regulatory stringency derived from U.S. EPA legal documents and industry-level relevance scores to capture time-varying regulatory stringency exposure. We find that environmental regulatory stringency carries a positive and statistically significant return compensation, especially for firms with high cash holdings. For firms with low cash holdings, the effect is highly volatile, showing investors are uncertain about a firm's future when faced with stricter regulation. Firms’ environmental profiles further matter, as high-emission firms' returns are negatively affected when regulatory stringency increases. Because regulatory text is released infrequently, challenging real-time risk analysis, we utilise our studies insights to derive a high-frequency, market-expectation capturing Environmental Regulatory Risk Index (ERRI). We show that ERRI captures shifts in investors’ expectations of environmental regulatory stringency and how ERRI reacts during environmental policy and political developments. |
| Date: | 2026–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260044 |
| By: | Prest, Brian C. (Resources for the Future) |
| Abstract: | The social cost of carbon (SCC) is an estimate, in dollars, of the economic damages to society caused by an incremental ton of carbon dioxide (CO2) emissions. In 2023, EPA (US EPA 2023) produced updated, peer-reviewed SCC estimates, with a central value of $190 per metric ton of CO2 (in 2020 US dollars) for emissions occurring in 2020. EPA’s updated estimates also include estimates for other years beyond 2020 and other greenhouse gases of methane (CH4) and nitrous oxide (N2O), which are shown in Appendix Table A1. These estimates represent the most scientifically advanced, comprehensively documented, and peer reviewed set of SCC values available, and states are increasingly adopting EPA’s estimates to inform policy.As of early 2026, at least 15 US states had applied the social cost of greenhouse gases in one or more policy contexts. This report is intended for officials and analysts in states that are considering adopting the SCC as a policymaking and monitoring tool, refining how they already use it, or updating their preferred values in light of recent and ongoing scientific advances in methods and estimates. Section 2 provides background on the concept of the SCC and summarizes how US states have been using it. Section 3 provides a high-level summary of how the SCC is calculated, with particular attention to the four-module framework that underlies the SCC estimates from RFF and EPA. Finally, Section 4 summarizes considerations for jurisdictions designing their own guidance while providing detailed instructions on how states might apply it for their own policymaking purposes. |
| Date: | 2026–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-26-11 |