Hot off the Press
Divergence in Climate Change Communication: LLM-Based Evidence from the IPCC and the Press
Sebastian Galiani, Franco Mettola La Giglia & Raul Sosa
NBER Working Paper, May 2026
Abstract:
Public summaries of IPCC climate assessments lean toward the more severe end of the technical evidence. The pattern appears at two stages: the IPCC's lead authors and member governments produce the Summary for Policymakers (SPM) from the Technical Summary (TS), and newspapers then cover the SPM. We use LLMs to score about 114,000 matched claim pairs from all six Assessment Reports (1990 to 2023) and ten major US and UK outlets. Both stages systematically shift toward the more severe end of the source while staying inside the IPCC's accepted scientific ranges. The shift comes mainly from emphasizing higher-impact magnitudes within reported ranges, less from uncertainty compression, and almost none from selecting worst-case emissions scenarios. Left- and right-leaning outlets show similar patterns.
How Much Has Shale Gas Saved U.S. Consumers?
Lucas Davis
University of California Working Paper, May 2026
Abstract:
It may seem like a distant memory now, but as of the mid-2000s, U.S. natural gas production had been flat for a decade, and the U.S. was importing liquefied natural gas (LNG), with plans to import much more. Then shale gas happened. Advances in hydraulic fracturing and horizontal drilling caused U.S. natural gas production to increase significantly, and the U.S. went from being a net importer of natural gas to being the world's largest exporter. This paper calculates how much shale gas has saved U.S. natural gas consumers. Using price differences between the United States, Europe and Japan, we calculate that U.S. natural gas consumers have saved $3.1-$4.3 trillion between 2007 and 2025, equivalent to $164-$227 billion annually. Access to low-price U.S. natural gas has been particularly valuable during major supply shocks such as the war in Ukraine, and the benefits of shale gas have been experienced broadly across sectors and states.
Global Policy Spillovers: How Environmental Policies Propagate through Product Attributes
Koichiro Ito, James Sallee & Jonathan (Andrew) Smith
NBER Working Paper, May 2026
Abstract:
How should policymakers evaluate policy impacts when firms design products for global markets? Standard economic analyses typically focus on domestic outcomes, implicitly assuming that policies affect only the jurisdiction in which they are enacted. Yet multinational firms often harmonize product design across markets, creating the potential for policies implemented in one country to generate global spillovers through changes in product attributes. We call this phenomenon "attribute propagation" and develop a framework to measure and assess its quantitative importance. Applying this framework to an environmental policy affecting automobiles, we find that a fuel-economy subsidy in Japan led to significant improvements in the fuel economy of vehicles sold in the United States. We then develop a model of multinational automobile markets featuring cross-market cost complementarity as a key mechanism driving attribute propagation. Using the estimated model, we conduct counterfactual simulations to quantify environmental benefits accounting for the policy's global spillover effects. We find that global spillover effects are first-order -- a majority of the CO2 emissions reductions induced by the Japanese policy arise through its impact on the U.S. automobile market. These findings suggest that standard economic analyses that abstract from attribute propagation can substantially understate the full policy impact. More broadly, attribute propagation provides a new lens for evaluating environmental, safety, antitrust, and technology policies in a global economy.
The empirically inscrutable climate-economy relationship
Finbar Curtin & Matthew Burgess
University of Wyoming Working Paper, April 2026
Abstract:
Empirical models of the macro-level climate-economy relationship project climate change impacts ranging from trivial to catastrophic. This wide range suggests identification challenges. Here, we show that such models indeed face identification challenges that are axiomatic and irreducible. The climate-economy relationship has qualitatively important variation across space and time, due to complex regional heterogeneity and affluence-driven adaptation, among other factors. Empirical models must assume away some of this variation to preserve degrees of freedom. Influential observations caused by economic disasters and miracles, along with low signal-to-noise ratios, create additional challenges. We illustrate these challenges theoretically and then empirically by replicating and sensitivity testing prominent climate-econometric studies. The estimation challenges create economically meaningful sensitivities and fragilities. We recommend a cautious and uncertainty-emphasizing approach to applying climate econometrics to public and private decision-making. Importantly, however, our analysis does not dismiss the existence of a negative carbon externality nor economically beneficial efforts to reduce greenhouse gas emissions.
Before the burn: The economic benefits of fuel-reduction treatments in wildfire-prone forests
Frederik Strabo & Matthew Reimer
Economic Journal, forthcoming
Abstract:
A century of wildfire suppression policies has led to the build-up of combustible fuel loads in forests, increasing the size, severity, and costs of wildfires. This study explores whether fuel-reduction treatments reduce wildfire suppression costs. Focusing on wildfires igniting on U.S. Forest Service lands in the Pacific Northwest, we leverage exogenous variation in protections for the Northern Spotted Owl that unintentionally restrict fuel treatments. Conservative estimates indicate that five to six dollars are saved in suppression costs for every dollar spent on fuel treatments. Our results highlight the potential for reforming environmental protections to achieve economic savings and conservation benefits.
Who Bears Flood Risk? Evidence from Mortgage Markets in Florida
Parinitha Sastry
Review of Financial Studies, forthcoming
Abstract:
Government-provided flood insurance contracts have strict coverage limits, leaving some households underinsured against flood risk. This paper exploits these strict coverage limits as well as staggered flood map updates to show that mortgage lenders screen for uninsurable flood risk by requiring lower loan-to-value ratios at origination. This credit rationing leads delinquency rates to equalize inside and outside of flood zones, and shifts the composition of mortgage borrowers in flood zones toward richer and higher credit quality individuals. I conclude that lenders reduce credit supply when they retain residual uninsured exposures to flood risk, which has distributional consequences for flood zones.
The Response of Mortgage Supply to Expected Flood Insurance Lapses
Zhongchen Hu
Review of Financial Studies, forthcoming
Abstract:
Flooding is among the costliest natural disasters in many countries. To protect collateral, many mortgage borrowers in the United States are legally required to maintain flood insurance. However, lax enforcement leads to frequent policy lapses. This paper shows that lenders provide credit contingent on borrowers' insurance incentives. Exploiting exogenous premium rises ($266 annually) that disincentivize insurance take-up, I find mortgage denial rates dramatically increase by 0.49-0.81 pp. By comparison, lowering income by $266 has an effect of only 0.01 pp. Mortgage applicants' composition remains unchanged, refuting demand-side explanations. Evidence suggests lenders internalize ex-post monitoring costs into ex-ante credit restrictions.
Extreme temperatures, physical activity, and adaptation
Robert Harris
Journal of Public Economics, May 2026
Abstract:
Humans undertake physical activity daily, yet we know little about how climate change might affect this fundamental aspect of life. Using 24 billion person-minute observations from a sample of Fitbit users in the United States, this paper estimates behavioral and performance responses to extreme temperatures. I find significant reductions in activity on hot and cold days, though intraday and interday substitution mitigates this effect. Regions with hotter climates are less sensitive to extreme heat, evincing adaptation. Physical activity projections incorporating this heterogeneity and allowing places to adapt to their future climate imply large welfare gains, unlike projections that ignore adaptation.
Who Bears Climate Risk? Differential Impacts on Public and Private Firms
Sonakshi Agrawal, Lisa Yao Liu & Shivaram Rajgopal
Columbia University Working Paper, March 2026
Abstract:
Climate disclosure regulations in the U.S. focus on publicly traded companies, premised on the assumption that these firms face material climate risks. We test this assumption by comparing how public and private firms respond to climate disasters. Using establishment-level data covering 8.9 million private and 13,513 public parent firms matched to seven decades of federal disaster declarations, we find a striking divergence. Public firms show no significant operating performance effects: sales growth at establishments in disaster-affected counties is statistically indistinguishable from unaffected counties. In contrast, private firms experience significant and persistent sales declines of 0.7% on average, with effects concentrated among geographically concentrated firms and in capital-intensive industries. Government disaster assistance attenuates but does not eliminate these effects. We trace the public-private differential to geographic diversification: the median public firm operates across 46 states, while 94% of private firms operate in a single county. Our findings suggest a mismatch between disclosure policy and climate vulnerability: regulations target firms that have adapted to climate risk while excluding those most affected.
Double Taxation Treaties with the United States and Environmental Quality in Emerging Economies
Alberto Chong & Erica Louis Mtenga
Environmental and Resource Economics, April 2026
Abstract:
We focus on the role of double taxation treaties on environmental quality, to our knowledge the first empirical study to do so. Tax treaties are primarily implemented to remove double taxation, which helps promote international trade and investment. However, they are also aimed to address tax evasion and avoidance, which tends to have the opposite effect. As a result, the environmental impact is unclear. Specifically, we exploit the variation in the effective dates of the United States tax treaties with emerging countries between 1990 to 2014 by applying difference-in-differences methods. We find that tax treaties significantly help reduce carbon dioxide emissions in emerging markets. This appears to be driven by the reduction in investments in pollution-intensive industries after tax treaty enactments.
The effects of a constructed closure of the Bering Strait on AMOC tipping behavior
Jelle Soons & Henk Dijkstra
Science Advances, April 2026
Abstract:
The Atlantic Meridional Overturning Circulation (AMOC) is a major tipping element in the present-day climate and could potentially collapse under sufficient freshwater or CO2 forcing. While the effect of the Bering Strait on AMOC stability has been well studied, it is unknown whether a constructed closure of this Strait can prevent an AMOC collapse under climate change. Here, we show in an Earth system Model of Intermediate Complexity that an artificial closure of the Strait can extend the safe carbon budget of the AMOC, provided that the AMOC is strong enough at the closure time. Specifically, an equilibrium AMOC under a sufficiently low additional freshwater flux has an increased safe carbon budget given a timely closure of the Strait, while for higher freshwater fluxes (and corresponding weaker AMOC), a closure reduces this budget. This indicates that constructing this closure could be a feasible climate intervention strategy to prevent an AMOC collapse.