Essays on the Impact of Climate Change and Related Policies

The strategy to limit adverse climate change impacts develops along two dimensions: mitigation, i.e., initiatives aimed at reducing future emissions of greenhouse gases, and adaptation, i.e., efforts aimed at reducing the vulnerability of human systems to climate change. Within this framework, this thesis investigates in different settings how climate change and mitigation policies interact with the choices of firms and consumers. In the first chapter, we study the effect of rising temperatures on the output of firms in the agricultural sector and the role of unexpected temperature shocks in driving their investments. Subsequently, we investigate how these investments help farms cope with changing climatic conditions. The second chapter investigates to what extent investors in the syndicated loan market price the transition risk, measured through firms’ environmental performance, as climate policies become increasingly stringent. In this way, we investigate the role of financial markets in providing financial incentives for firms to decarbonize and how they reallocate investments between firms with different environmental footprints. The third chapter concludes this thesis. It analyses the reduction of the carbon footprint of the food sector through the introduction of different demand management policies. Specifically, we look at the design of a policy mix that, by introducing carbon labelling and carbon taxation simultaneously, decreases the carbon content in food demand while limiting the welfare impact for consumers.