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

The Earth is experiencing rapid global warming. Little doubt remains that humans, by burning fossil fuels, are one of the main forces of this process. Most scientific studies conclude that living conditions on Earth will be hugely transformed due to global warming. Despite accumulating knowledge about climate change and its potentially bad consequences, humanity is not taking strong enough action to stop or at least substantially slow down global warming. How can this complacency be rationalized?

The project CLIMATE_AFFECT investigates the attitudes of individuals worldwide regarding climate change as well as their knowledge about climatic processes. Moreover, direct and indirect adaptation strategies for climate change will be analyzed. Thereby, migration will be a main issue. Another topic to be addressed is the impact of climate change on companies and how insurances can help mitigate the adverse effects of climate change. The project’s findings can be used to inform policymakers and implement useful climate change policies.

Project Background

Global warming is generally referred to as the rapid increase in the Earth’s global mean surface temperature. This process has two immediate consequences. The first is rising sea levels caused by melting glaciers. The second effect is a changing climate on Earth. Climate change happens on a long time scale, yet its increasingly shaping short-term weather patterns already today. It is expected that global warming will lead to more extreme events such as very hot or cold periods. Also rain patterns very likely will continue to change. Similarly, different types of natural disasters such as droughts, floods or severe storms may intensify and/or occur more often as climate on Earth heats up.

Such major shifts in the prevailing climate will necessarily have an impact on the natural world. For example, entire landscapes and ecological systems will be forced to adapt to rising sea levels, some regions are even at severe risk of being swamped forever. Also, extreme weather events and natural disasters are posing a threat to existing ecological systems.

The probable changes in the Earth’s climate and the natural world will very likely have far-reaching consequences for humanity, too. Due to rising sea levels or desertification whole regions could become uninhabitable causing major migratory movements. Furthermore, infectious diseases might spread in the wake of global warming. By the same token, climate-induced natural disasters could have adverse effects on human health. According to recent forecasts, another negative outcome could be severe losses in food production. With increasing food scarcity, famines and malnutrition will be inevitable in many regions. There is a long list with negative effects of climate change. Against this background it is indispensable to adopt quick and impactful measures to mitigate global warming. Therefore, more effective and efficient climate policies are needed.

Project Goals

Climate policies can only be implemented successfully if voters are convinced by their necessity in general and its value in specific cases.

The project’s first objective is to assess the knowledge and attitudes of individuals as well as businesses regarding climate change. In the process, the determinants of individuals’ and businesses’ knowledge and attitudes shall also be analyzed.

Most likely, people affected by climate change will modify their behaviors. Hence, the second objective concerns the possible behavioral adjustments of companies as well as individuals. With respect to the latter group, the impact on domestic and international migration will be analyzed as well.

In addition to behavioral change, possibilities how to mitigate the negative consequences of climate change are increasingly being discussed. Therefore, the project’s third objective is to investigate the importance of insurances in coping with climatic risks.

The project outcomes will offer policymakers important and detailed information about voters’ attitudes regarding climate change, the determinants of those attitudes, and how those attitudes might be influenced. Furthermore, the results will help evaluate the impact of climate change on the economy. The impact of different climatic risks and expected behavioral adjustments are also crucial information for businesses.

Contact

Prof. Dr. Michael Berlemann,
Head of research

Phone:
+49 (0)40 6541-2860
E-Mail:
[email protected]

Dr. Silke Bumann,
Project coordinator and researcher

Phone:
+49 (0)40 6541-3347
E-Mail:
[email protected]

Address:
Helmut Schmidt University
Chair of Political Economy and Empirical Economics
Holstenhofweg 85
22043 Hamburg

Project Status

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.
  • Moreover, a literature survey entitled “What are the determinants of public support for climate policies? A review of the empirical literature” could show that citizens’ support for climate policies is rather a matter of climate change beliefs and party identification, and not primarily a question of other socio-demographic factors such as age or gender.

Researchers and Project Partners

The project involves researchers from Helmut Schmidt University Hamburg, Ifo Institute Munich as well as several external researchers.

Core research team members

Prof. Dr. Michael Berlemann (HSU): econometrics, migration

Dr. Silke Bumann (HSU): econometrics, geodata, attitudes and knowledge regarding climate change

Timur Eckmann, M.Sc. (HSU): geodata

Erik Haustein, M.Sc. (HSU): migration, geodata

Marina Eurich, M.Sc. (HSU): geodata, attitudes and knowledge regarding climate change

Dr. Christian Hott (HSU): economics of the insurance sector, theory, empirical economics

Dr. Robert Lehmann (Ifo): ifo Business Climate Index, applied econometrics

Nada Maamoun, M.Sc. (HSU): political economy, climate negotiations

Judith Regner, M.Sc. (HSU): geography, geodata

Prof. Dr. M. Steinhardt (FU Berlin): microeconometrics, migration

Xuyen Tran, M.Sc. (HSU): macroeconometrics, development economics

External research partners

Prof. M. Beine, Ph.D. (Luxemburg University)

Prof. M. Skidmore, Ph.D. (Twente University)

Prof. Dr. M. Kalkuhl (Potsdam University)

Prof. Dr. T. Kuhlenkasper (University of Applied Sciences Pforzheim)

Publications

Berlemann, M. & Eurich, M. (2021), Natural Hazard Risk and Life Satisfaction – Empirical evidence for hurricanes, Ecological Economics, 190, DOI: https://doi.org/10.1016/j.ecolecon.2021.107194.

Berlemann, M. & Eurich, M. (2020), Does drought risk depress expected well-being?, Applied Economics Letters, DOI: https://doi.org/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.

Bumann, S., What are the determinants of public support for climate policies? A review of the empirical literature, forthcoming in: Review of Economics.

News & Events

Currently, there are no announcements.

HSU

Letzte Änderung: 15. November 2021