Climate Risks and Happiness: Evidence from the European Union

Abeeb Olaniran (), Talita Greyling (), Rangan Gupta () and Christian Pierdzioch ()
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Abeeb Olaniran: Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa
Talita Greyling: Centre for Well-being, Artificial Intelligence and Social Impact (C.WAIS) and School of Economics, University of Johannesburg, Johannesburg, South Africa
Rangan Gupta: Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa
Christian Pierdzioch: Department of Economics, Helmut Schmidt University, Hamburg, Germany

No 202621, Working Papers from University of Pretoria, Department of Economics

Abstract: The European Union (EU) is one of the largest contributors to global greenhouse gas (GHG) emissions and is committed to being the first economic bloc to achieve a net-zero emissions balance. We examine the attendant implications of the shortfall of these emissions through climate-related risks on national well-being and happiness of selected countries that contribute the largest of the EU GHG emissions. We find strong evidence of a persistent diminishing effect of climate shocks on happiness, with physical-related shocks causing more havoc than transition-related shocks. Exploring the non-linear dynamics of these relationships, we find asymmetric effects of positive versus negative climate-related shocks, with positive shocks worse than negative in some countries, but inverted in others across both risk measures. Our findings offer valuable insights for governments and policymakers seeking to promote a socially just transition to a sustainable economy by highlighting the role of climate-related insurance as a key component of climate mitigation and adaptation strategies.

Keywords: Climate risks; National well-being; National happiness; European Union (search for similar items in EconPapers)
JEL-codes: I31 O52 Q54 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2026-08
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:202621

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