Transition to a greener economy: Climate change risks and resilience in a state-space framework

Soumya Bhadury, Bhanu Pratap and Dhirendra Gajbhiye

Journal of Asian Economics, 2025, vol. 98, issue C

Abstract: Transitioning to a low-carbon economy is a long and challenging process requiring a well-planned policy mix to achieve net-zero emissions. This paper proposes a country-agnostic, empirical framework to analyse a country’s preparedness for mitigating climate change risks. Utilizing a dynamic factor model (DFM), we create composite indices to measure climate change 'exposure' and 'resilience' by integrating diverse datasets on renewable and non-renewable production, energy consumption, structural and economic factors. Further, we employ a flexible ‘predator-prey’ species interaction model to capture the dynamic interaction between exposure and resilience. We apply our proposed framework in the context of India, a large developing economy. Our analysis indicates that, while India’s climate change exposure has declined relative to the world, its resilience towards climate change has significantly diminished over time. We also find that an increase in resilience leads to a direct decline in future exposure to climate change. Our framework underscores the need for policies that foster climate change resilience such as expanding renewable energy production, ensuring accessible finance for the renewables sector, developing climate financing infrastructure and increasing investment in research and development for a smoother transition.

Keywords: Climate change; exposure; resilience; predator-prey model; dynamic factor model (search for similar items in EconPapers)
JEL-codes: C32 C38 Q43 Q54 Q58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1049007825000521
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:98:y:2025:i:c:s1049007825000521

DOI: 10.1016/j.asieco.2025.101928

Access Statistics for this article

Journal of Asian Economics is currently edited by C. Wiemer

More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().