On Wednesday, November 2, Adele Morris presented a talk on climate risk and its implications for financial stability in a webinar hosted by the Toronto Centre. In her presentation, entitled “Climate-Related Risk: Disclosure and Financial Stability,” she began by stating that she looks at climate change as a market failure. “As an economist, I think about climate change as a market failure, so when I put gasoline in my car, the price I pay doesn’t reflect the damages to the environment that come from the use of that gasoline.”
There are three categories of risk that she discusses in her presentation:
- Damages from climate disruption and ocean acidification
- Litigation risk: Who’s going to sue whom for what?
- Transition: When and how will countries control greenhouse gases? What economic effects will it have?
In closing, Morris outlines three actions financial market regulators and central banks can take to mitigate climate-related risk:
- Emphasize value in developing policy sooner rather than later.
- Call for efficient, predictable, transparent policies to price carbon.
- Recommend approaches that avoid distorting trade and investment across jurisdictions.
Download the PowerPoint and watch the archived webcast to learn more.
[On the politics of climate impacts in the U.S.] The political alignment around climate impacts is almost the exact opposite of the political alignment around emissions control.
[On the geographic distribution of climate impacts in the U.S.] The damages to the Republican-electing congressional districts is almost double what it is for the Democratic-voting districts.
[On Brookings research on climate impacts and human health] When you look at the out years, all of these factors have an impact on what people care about, but the really dominant effect is mortality. Literally, there’ll be climate change killing people.