Environmental economics: designing policies and tools to address the risks of climate change

In the video interview below, Thomas Sterner, Professor of Environmental Economics at the University of Gothenburg in Sweden, explores the risks associated with climate change and the uncertainty surrounding their quantification. He goes on to discuss the most efficient tools to mitigate those risks from the perspective of policymakers, corporates and the (re)insurance industry.

The environmental externalities of economic growth have attracted a lot of attention over the last two decades. They top the agendas of governments and the business world alike, as both policymakers and private-sector companies are accountable in the fight against climate change. Corporates, and not least insurers and reinsurers, are facing increasing scrutiny in this regard.


What are the most efficient macroeconomic policies to mitigate the risks associated with climate change?


Can we oblige corporates to fight climate change? How could this be done, given that governments seem incapable of agreeing on and implementing a consistent strategy? What kind of obligations could legitimately be required?


Although (re)insurers have long recognized the importance of addressing extreme events and climate risk[1], and more fundamentally the key role the industry should play in the fight against climate change, there are still some key issues to address.


How can we optimally share climate risks without encouraging people and companies to just be free riders and postpone prevention strategies? What risk transfer instruments could be developed to increase (re)insurance market involvement in climate risk mitigation? More fundamentally, are the risks associated with climate change insurable?


Thomas Sterner shares his views on these topical questions and highlights the issues and controversies they raise.




[1] The Kyoto Statement of the Geneva Association was issued 9 years ago


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