CLIMATE_AFFECT- Implications of Climate Change and Climate-induced Disasters for Individuals, Firms and the Insurance Sector
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.
The project results show that the effects of climate-induced natural disasters go beyond the direct damage. A stable negative effect of the catastrophe risk on life satisfaction was shown. Data from Vietnam showed persistent migration effects for both floods and droughts, but not for tropical storms. However, an increase in temporary migration within Vietnam was found for storms. It was also shown that German companies feel significantly affected by extreme weather events, although there are certainly regional and industry-specific differences. Based on a global panel data set, it was also empirically proven that the occurrence of different types of extreme weather events leads to increasing dissatisfaction with government environmental policies. Finally, it was shown that regional average temperatures in summer in Germany have the greatest potential for index insurance that increases welfare. For Southeast Asia, it was also shown that stricter regulation of the insurance sector has a significantly positive effect on demand for insurance against environmental risks.
Illustration of project results
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.
- Climate-related extreme weather events (EWEs) lead to higher acceptance of environmental policy.
- The risk of EWEs occurring alone is already welfare-reducing.
- German companies are increasingly affected by EWEs.
- EWEs cause both temporary and permanent internal migration.
- Insurance can help meet climate-related challenges. Innovative products but also institutional framework conditions play an important role here.
Berlemann, M., Eurich, M. (2021):
Natural Hazard Risk and Life Satisfaction – Empirical evidence for hurricanes. Ecological Economics 190: 107194.
Berlemann, M., Eurich, M. (2020)
Does Drought Risk Depress Expected Well-Being? Applied Economics Letters 29 (13): 1229-1233.
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.
Bumann, S. (2021):
What are the determinants of public support for climate policies? A review of the empirical literature. Review of Economics 72 (3).
Hott, C., Tran, T. X. (2020):
NatCats and Insurance in a Developing Economy - New Theoretical and Empirical Evidence. VfS Annual Conference 2020: Gender Economics: 224551.