Climate and Environmental Economics

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This page is about the intersection of economics and machine learning in the context of climate change mitigation. For an overview of the field of economics, please see the Wikipedia page on this topic.

Production processes, trade and consumption of goods and services are major drivers of global greenhouse gas emissions contributing to anthropogenic climate change. At the same time, climate change affects economic activity locally and globally. A subfield of economics focusses on optimal mitigation and adaption policies and the economic assessment of climate change impacts. Key challenges in quantifying the economic effects of climate change and in designing and analyzing policy instruments are the availability of data and the application of quantitative tools to inform policymaking. ML offers new approaches to generate data and can help to evaluate the effectiveness of implemented policies.

Machine Learning Application Areas

Integrated Assessment Models (IAMs)

IAMs combine economic models, climate models and policy information into one modelling framework. they are used to simulate interactions between different input variables and to compare different policy alternatives.

Carbon pricing

Pricing greenhouse gas emissions internalizes the external costs of these emissions to society, which are not otherwise reflected in the market price of goods and services. Carbon price can be implemented through a carbon tax or a cap-and-trade policy.

Background Readings

Stern Review on the Economics of Climate Change: 700-page report released by economist Nicholas Stern for the Government of the United Kingdom on 30 October 2006.

Markets and Pricing

• Market Strategies for Climate Change (2004): examines current market responses, focusing on the drivers (threats and opportunities) and the actions being taken by companies to address climate change. Available here.
• The Critical Role of Markets in Climate Change Adaptation (2018): this paper summarizes and synthesizes the role of markets in facilitating climate change adaptation. It explains how market signals encourage adaptation through land markets. Available here.
• Market-based strategies. (2019): An overview prepared by the Center for Climate and Energy Solutions about market-based approaches, like a carbon tax or cap-and-trade program, that can help reduce emissions at the lowest possible cost. Available here.

Conferences, Journals, and Professional Organizations

Major journals

Environmental and Resource Economics (ERE): Official journal of the European Association of Environmental and Resource Economists. Publishes application of economic theory and methods to environmental issues and problems across a range of spatial and temporal scales up to the global dimension.

Climate policy: International journal publishing high quality research into climate-change policy, including adaptation, negotiations and impact.

Major societies and organisations

Association of Environmental and Resource Economists (AERE): Promotes change of ideas, research and graduate training in environmental and resource economics. Scientific organisation with over 1,000 members from more than thirty nations, coming from academic institutions, the public sector, and private industry.

European Association of Environmental and Resource Economists (EAERE): International scientific association that encourages collaboration between scholars, researchers, policy makers and students in environmental, climate and resource economics in European countries.

Climate strategies: International, not-for-profit research network that aims to improve climate policy through meaningful interactions between decision-makers and climate policy researchers across Europe and internationally.

International Emissions Trading Association (IETA): Non-profit business organisation promoting the use of emissions trading.