Assessing systemic climate change risk by country. Reflections from the use of composite indicators

Denitsa Angelova, Andrea Bigano (), Francesco Bosello (), Shouro Dasgupta and Silvio Giove ()
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Andrea Bigano: Euro-Mediterranean Center on Climate Change (CMCC); RFF-CMCC European Institute on Economics and the Environment (EIEE)
Francesco Bosello: Euro-Mediterranean Center on Climate Change (CMCC); Department of Environmental Sciences, Informatics and Statistics, Ca' Foscari University of Venice
Silvio Giove: Department of Economics, Ca' Foscari University of Venice

No 2023: 28, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: This paper proposes a transparent and replicable methodology to rank countries according to climate change risk through a composite indicator approach. We show that adherence to the IPCC definition of risk easily leads to a dominance of the exposure component in risk determination. This, on its turn, produces a country risk ranking that can differ also substantively from that of other indicators used for similar purposes, especially by rating agencies. These last indicators are, in fact, closer to the concept of vulnerability to climate change, than risk. Our major conclusion is that by accounting for all the components of risk, the dichotomy "high-climate-change-risk developing countries" vs "low climate-change-risk developed countries" blurs substantively, while climate risk becomes relatively higher than commonly considered in the latter group.

Keywords: climate risk; physical climate risk; climate risk index; composite indicator (search for similar items in EconPapers)
JEL-codes: Q5 Q54 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2023
New Economics Papers: this item is included in nep-agr, nep-env, nep-eur and nep-rmg
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