Climate Econometrics

Principal Investigators: David Hendry and Felix Pretis

Atmospheric levels of carbon dioxide (CO2) have been rising to heights that are unprecedented over the last 800,000 years. The recent increases from anthropogenic emissions are inducing rapid climate change, which in turn raises global temperatures and sea levels, affecting socio-economic development in uncertain ways.

The Climate Econometrics project develops new econometric methods and applies these to climate-economic problems. We focus on disentangling complex relationships between human actions and climate responses and their associated economic effects, often masked by stochastic trends and breaks that are usually unexpected. We aim to improve our understanding of the impact of humanity on climate and vice versa, and bring together researchers in the field of Climate Econometrics through an international network.

The research builds on econometric time-series and spatial methods using novel modelling approaches combining insights from theory with empirical evidence to discover new results. We embed theory models in far larger information sets, allowing new features, dynamics, breaks and non-linearities to be discovered, while retaining established theory. Applications range from probabilistic projections of future sea-level rise, the economic impacts of climate change, estimating hurricane damages, modelling the key determinants of CO2 emissions, to detecting volcanic eruptions in temperature reconstructions to improve measurements. 

Funded by: Robertson Foundation, British Academy

Timeframe: October 2015 - October 2018

Project website