CLIMATE_AFFECT- Implications of Climate Change and Climate-induced Disasters for Individuals, Firms and the Insurance Sector

Start of Project 11/2018
End of Project 10/2021

In order to achieve the necessary decarbonisation of society and the economy, the attitude and motivation of the population and companies is crucial. Therefore, CLIMATE_AFFECT studies the attitudes and knowledge of individuals and companies regarding climate change and the factors by which they are determined. Reactions with regard to decisions to migrate within and across national boundaries are investigated. Finally, the role of climate insurance for mitigating these effects is analysed. 

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Update on the project´s process

Current project stage

On the basis of various datasets for different countries the project empirically assessed the consequences of climate-induced natural disasters for individuals, companies and the insurance sector.

Central results

The project results highlight that climate-induced natural disasters have important implications for individuals, firms and the insurance sector that go beyond the direct damages caused by these disasters.
• The potential threat of natural disasters (hurricanes and droughts) has a significantly negative effect on the subjective well-being of U.S. citizens living in regions prone to natural disasters. 
• In the case of Vietnam, it was found that certain types of natural disasters can lead to substantial internal migratory movements. Persistent migration is caused by floods and droughts but not by tropical forms. Tropical storms only induce temporary migration.
• A business survey carried out among German firms revealed that companies feel concerned about extreme weather events. Though the degree of concern varies across regions and sectors. 
• Concerning the insurance sector, the project uncovered that regional average temperatures are most suited to implement an index insurance that is welfare increasing. 
• Regarding insurance demand, it could be shown that stricter market regulation can enhance demand for insurance against climate risks in South East Asia.

Results of the project

The figure is taken from the paper "Natural Hazard Risk and Life Satisfaction - Empirical Evidence for Hurricanes" (Berlemann & Eurich 2020) and shows the mean value of the hurricane risk indicator over the period 2010-2018 for the U.S. at the zip code level. We construct the hurricane risk indicator on the basis of past hurricane events which come from the International Best Track Archive for Climate Stewardship (IBTrACS) dataset.


Berlemann, M. & Eurich, M. (2020), Natural Hazard Risk and Life Satisfaction. Empirical Evidence for U.S. Hurricanes, Working Paper, Helmut-Schmidt-University Hamburg.                                         

Berlemann, M. & Eurich, M. (2020), Does Drought Risk Depress Expected Well-Being?, Applied Economics Letters, DOI: 10.1080/13504851.2021.1922582.    

Berlemann, M. & Lehmann, R. (2020), Extremwettersensibilität deutscher Unternehmen Ergebnisse einer Unternehmensbefragung, ifo Schnelldienst,73(8), 45-55.     
Berlemann, M. & Tran, T.X. (2020), Climate-Related Hazards and Internal Migration. Empirical Evidence for Rural Vietnam, Economics of Disasters and Climate Change, 4, 385-409.

Hott, C. & Tran, T. X. (2020), NatCats and Insurance in a Developing Economy - New Theoretical and Empirical Evidence, VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224551, Verein für Socialpolitik / German Economic Association.