Inaugural lecture Wouter Botzen on Economics of Climate Change

On 15 December Wouter Botzen gave his inaugural lecture for his professor chair in Economics of Climate Change and Natural Disasters.

12/20/2017 | 12:22 PM

The worldwide costs of natural disasters have been increasing during the last decades. Such disasters cause a wide range of impacts on the economy, in addition to casualties and other human suffering. Natural disaster risks are expected to further increase due to climate change. Moreover, climate change is expected to have broader economic consequences, for example, on agriculture, fisheries, energy use,  health, tourism, and industry.

During his inaugural lecture, Wouter Botzen discussed how methods for estimating the economic impacts of climate change can be improved by providing insights into local risks of climate change. Such insights are needed for the design of policies that prevent climate change, for example, through the pricing of carbon, and for policies that limit climate change impacts. 

He showed how economic cost-benefit analysis can identify economically desirable natural disaster risk management strategies, such as flood protection and building codes. Moreover, he discussed how behavioral economic studies can provide insights into how individuals prepare for natural disasters.
It is especially important to design policies that help people with better preparing for  the impacts of climate change and natural disasters, for example using financial incentives including lower insurance premium for people who take measures that limit damage. Even though it is often cost-effective to limit natural disaster risk in disaster-prone areas, equitable and economically efficient arrangements should be put in place that offer financial compensation in case future disasters occur.   

While these topics are often studied by different mono-disciplines, Wouter Botzen argues in favor of a more inter-disciplinary research approach as is applied in many projects of the Institute for Environmental Studies which, for instance, combine insights from economics, climate sciences, governance, and psychology.

More information: The full text of the lecture (in Dutch) can be downloaded here.