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

Author

Listed:
  • Denitsa Angelova

    (Institute for Sustainable Resources, Bartlett School of Environment Energy & Resources, University College London)

  • 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)

  • Shouro Dasgupta

    (Euro-Mediterranean Center on Climate Change (CMCC))

  • Silvio Giove

    (Department of Economics, Ca' Foscari University of Venice)

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.

Suggested Citation

  • Denitsa Angelova & Andrea Bigano & Francesco Bosello & Shouro Dasgupta & Silvio Giove, 2023. "Assessing systemic climate change risk by country. Reflections from the use of composite indicators," Working Papers 2023: 28, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2023:28
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    References listed on IDEAS

    as
    1. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    2. Stanley Kaplan & B. John Garrick, 1981. "On The Quantitative Definition of Risk," Risk Analysis, John Wiley & Sons, vol. 1(1), pages 11-27, March.
    3. Francesco Bosello & Ramiro Parrado, 2020. "Macro-economic assessment of climate change impacts: methods and findings," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 97(01), pages 45-61.
    4. Angela Connelly & Jeremy Carter & John Handley & Stephen Hincks, 2018. "Enhancing the Practical Utility of Risk Assessments in Climate Change Adaptation," Sustainability, MDPI, vol. 10(5), pages 1-12, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    climate risk; physical climate risk; climate risk index; composite indicator;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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