REMARC UniPi

The assessment of the socio-economic and financial impacts of climate change represents a main source of uncertainty for decision-makers in policy and finance. Traditional climate economics and financial risk models are not properly equipped to consider the characteristics of climate risks and financial complexity, and the opportunities from climate-alignment, being constrained by equilibrium conditions and linearity of impacts, as well as by representative agents and intertemporal optimization. This contributes to delay the introduction of bold climate-aligned policies. Given the tight space of opportunities left to achieve the climate targets, there is an urgent need for a new wave of macroeconomic models able to embrace uncertainty and complexity deriving not only from climate change and policy impacts on socio-economic systems, but also from the individual and systems’ reaction to the shocks. In this regard, approaches rooted on evolutionary economics and complexity science could provide complementary insights to traditional climate economics and financial models. The special issue “Understanding uncertainty of climate policies and implications for economics and finance: an evolutionary economics approach” published on Ecological Economics and edited by Irene Monasterolo (Vienna University of Economics and Business (WU)), Andrea Roventini (Sant’Anna School of Advanced Studies) and Tim J. Foxon (Univ. of Sussex), contributes to fill in this knowledge gap. It collects nine papers applying evolutionary and complex systems approaches, agent-based and network models to climate change economics, presented at the Special Session of the Research Area “Environment-Economics Interactions” of the European Association of Evolutionary Political Economy (EAEPE)’s conference 2016. By introducing conceptual and methodological innovations in climate economics and finance, and enforcing cross-fertilization across research domains, the nine articles analyse the conditions for effective climate policies, social behaviours and financial instruments to align countries to the global climate targets, compared to the costs of inaction. This information is crucial to support decision-makers in the choice for measures and instruments able to foster a just transition to a sustainable and inclusive low-carbon economy in both high and low-income countries, while avoiding trade-offs on financial stability and inequality.

The nine research article and the editorial article are accessible here:

https://www.sciencedirect.com/journal/ecological-economics/special-issue/1027R5D872M

For more information, please contact Dr. Irene Monasterolo, Institute for Ecological Economics, Vienna Univ. of Economics and Business (WU): irene.monasterolo@wu.ac.at