Beyond standard economic approaches: complex networks in climate finance

Francesca Larosa (), Nadia Ameli (), Jamie Rickman () and Sumit Kothari ()
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Francesca Larosa: Department of Economics, Ca' Foscari University of Venice Euro-Mediterranean Center on Climate Change
Nadia Ameli: University College of London
Jamie Rickman: University College of London
Sumit Kothari: University College of London

No 2021:19, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: The financial system is a key tool to enable the shift towards a climate-smart economy: by reallocating capital to low-carbon assets, it internalizes the climate externality. However, the financial sector operates as an ecosystem of evolving agents continuously shaping the outcomes they jointly generate. Hence, the consequences of global warming and the climate impacts are potentially amplified by the micro and meso dynamics of agents interacting with each other and with technologies and institutions in the space they operate. In this working paper, we present a concise but exhaustive review about complex networks models and methods applied to climate finance. We show where networks can overcome the limitations of standard economic models in both macroprudential regulation and capital allocation. We present the main challenges ahead and we discuss the importance of a renewed research-policy dialogue to advance the discipline.

Keywords: Complex networks; climate finance; complexity economics; energy transition; climate change (search for similar items in EconPapers)
JEL-codes: F21 F64 F65 O13 O16 P18 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2021
New Economics Papers: this item is included in nep-ene, nep-env, nep-hme and nep-net
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