Journal Browser
Recommend Papers
Open Access Review

Climate Economics and Finance: A Literature Review

by Hao Dong a,* orcid  and  Tao Li b
Lingnan College, Sun Yat-Sen University, Guangzhou, China
School of Social and Political Science, University of Melbourne, Melbourne, Australia
Author to whom correspondence should be addressed.
Received: 14 August 2023 / Accepted: 25 September 2023 / Published: 3 November 2023


"Climate Economics and Finance" has risen to prominence as a crucial field, encompassing three primary dimensions: Climate Economics, Climate Finance, and the Intersection of Climate Change and Financial Markets. The adverse externalities arising from climate change, exemplifying a classic instance of "market failure" within market economic frameworks, have garnered global attention. Subsequently, we delve into the literature across three dimensions: the interplay between climate change and macroeconomics, the nexus of climate change and financial markets, and economic or financial resilience. In conclusion, we outline various promising avenues for prospective research in the realm of climate economics and finance.

Copyright: © 2023 by Dong and Li. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.


National Natural Science Foundation of China (72301302) , China Postdoctoral Science Foundation (2022M723680) , Guangdong Basic and Applied Basic Research Foundation (2022A1515110551)

Share and Cite

ACS Style
Dong, H.; Li, T. Climate Economics and Finance: A Literature Review. Climate Economics and Finance, 2023, 1, 3.
AMA Style
Dong H, Li T. Climate Economics and Finance: A Literature Review. Climate Economics and Finance; 2023, 1(1):3.
Chicago/Turabian Style
Dong, Hao; Li, Tao 2023. "Climate Economics and Finance: A Literature Review" Climate Economics and Finance 1, no.1: 3.
APA style
Dong, H., & Li, T. (2023). Climate Economics and Finance: A Literature Review. Climate Economics and Finance, 1(1), 3.

Article Metrics

Article Access Statistics


  1. Acharya, V. V., Berner, R., Engle III, R. F., Jung, H., Stroebel, J., Zeng, X., and Zhao, Y. (2023). Climate Stress Testing. National Bureau of Economic Research, working paper, No. w31097. papers/w31097.
  2. Agénor, P. R., and Pereira da Silva, L. A. (2019). Global Banking, Financial Spillovers, and Macroprudential Policy Coordination. BIS Working Paper, 764.
  3. Baker, M., Bergstresser, D., Serafeim, G., and Wurgler, J. (2018). Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds. NBER Working Paper, w25194.
  4. Baldauf, M., Garlappi, L., and Yannelis, C. (2020). Does Climate Change Affect Real Estate Prices? Only If You Believe in It. Review of Financial Studies, 33(3), 1256-1295.
  5. Balland, A., Rigby, D., and Boschma, R. (2015). The Technological Resilience of U.S. Cities. Cambridge Journal of Regions, Economy and Society, 8(2), 167-184.
  6. Barbera, C., Guarini, E., and Steccolini, I. (2020). How Do Governments Cope with Austerity? The Roles of Accounting in Shaping Governmental Financial Resilience. Accounting Auditing & Accountability Journal, 33(3), 529-558.
  7. Barnett, M. (2023). Climate change and uncertainty: An asset pricing perspective. Management Science, forthcoming.
  8. Barnett, M., Brock, W., and Hansen, L. P. (2020). Pricing Uncertainty Induced by Climate Change. Review of Financial Studies, 33(3), 1024-1066.
  9. Bolton, P., and Kacperczyk, M. (2021a). Global Pricing of Carbon-Transition Risk. NBER Working Paper, w28510.
  10. Bolton, P., and Kacperczyk, M. (2021b). Do Investors Care about Carbon Risk?. Journal of Financial Economics, 142(2), 517-549.
  11. Bondonio, D., and Greenbaum, R. T. (2018). Natural Disasters and Relief Assistance: Empirical Evidence on the Resilience of U.S. Countries Using Dynamic Propensity Score Matching. Journal of Reginal Science, 58(2), 659-680.
  12. Boschma, P. (2015). Towards an Evolutionary Perspective on Regional Resilience. Regional Studies, 49(5), 733-751.
  13. Bouri, E., Rognone, L., Sokhanvar, A., and Wang, Z. (2023). From Climate Risk to the Returns and Volatility of Energy Assets and Green Bonds: A Predictability Analysis under Various Conditions. Technological Forecasting and Social Change, 194, 122682.
  14. Bristow, G., and Healy, A. (2017). Innovation and Regional Economic Resilience: An Exploratory Analysis. Annals of Regional Science, 60(5), 1-20.
  15. Cahen-Fourot, L., Campiglio, E., Dawkins, E., Godin, A., and Kemp-Benedict, E. (2020). Looking for the Inverted Pyramid: An Application Using Input-output Networks. Ecological Economics, 169, 106554.
  16. Campiglio, E., Daumas, L., Monnin, P., and von Jagow, A. (2023). Climate‐related Risks in Financial Assets. Journal of Economic Surveys, 37(3), 950-992.
  17. Carattini, S., Heutel, G., and Melkadze, G. (2021). Climate policy, financial frictions, and transition risk. National Bureau of Economic Research, working paper, No. w28525. w28525.
  18. Chabot, M., Bertrand, J. L., and Thorez, E. (2019). Resilience of United Kingdom Financial Institutions to Major Uncertainty: A Network Analysis Related to the Credit Default Swaps Market. Journal of Business Research, 101, 70-82.
  19. Chang, C. E., Nelson, W. A., and Doug Witte, H. (2012). Do Green Mutual Funds Perform Well?. Management Research Review, 35(8), 693-708. 10.1108/01409171211247695.
  20. Chen, X., and Yang, L. (2019). Temperature and Industrial Output: Firm-level Evidence from China. Journal of Environmental Economics and Management, 95, 257-274. DOI:
  21. Cheng, T., Zhao, Y., and Zhao, C. (2022). Exploring the Spatio-temporal Evolution of Economic Resilience in Chinese Cities During The COVID-19 Crisis. Sustainable Cities and Society, 84, 103997.
  22. Choquette-Levy, N., Wildemeersch, M., Oppenheimer, M., and Levin, S. A. (2021). Risk Transfer Policies and Climate-Induced Immobility among Smallholder Farmers. Nature Climate Change, 11(12), 1046-1054.
  23. Clark, R. L., and Mitchell, O. S. (2022). Americans' Financial Resilience during the Pandemic. Financial Planning Review, 5(2-3), e1140.
  24. Cottafava, D., Gastaldo, M., Quatraro, F., and Santhiá, C. (2022). Modeling Economic Losses and Greenhouse Gas Emissions Reduction During the COVID-19 Pandemic: Past, Present, and Future Scenarios for Italy. Economic Modelling, 110, 105807.
  25. Degryse, H., Goncharenko, R., Theunisz, C., and Vadasz, T. (2023). When Green Meets Green. Journal of Corporate Finance, 78, 102355.
  26. Dibley, A., Wetzer, T., and Hepburn, C. (2021). National COVID Debts: Climate Change Imperils Countries’ Ability to Repay. Nature, 592(7853), 184-187.
  27. Dietz, S., Brown, A., Dixon, C., and Gradwell, P. (2016). Climate Value at Risk of Global Assets. Nature Climate Change, 6(7), 676-679.
  28. Dong, M., Liu, W., Yang, Y., Xie, M., Yuan, H., and Ni, C. (2022). Load and Release of Gambogic Acid via Dual-target Ellipsoidal-Fe3O4@SiO2@mSiO2-C18@ Dopamine Hydrochloride-graphene Quantum Dots-folic Acid and Its Inhibition to VX2 Tumor Cells. Nanotechnology, 34(10), 105101.
  29. Drouet, L., Bosetti, V., Padoan, S. A., Aleluia Reis, L., Bertram, C., Dalla Longa, F., ... and Tavoni, M. (2021). Net Zero-emission Pathways Reduce the Physical and Economic Risks of Climate Change. Nature Climate Change, 11(12), 1070-1076.
  30. Du, Y., Wang, Q., and Zhou, J. (2023). How Does Digital Inclusive Finance Affect Economic Resilience: Evidence From 285 Cities in China. International Review of Financial Analysis, 102709.
  31. Dunz, N., Naqvi, A., and Monasterolo, L. (2021). Climate Sentiments, Transition Risk, and Financial Stability in a Stock-Flow Consistent Model. Journal of Financial Stability, 54, 100872.
  32. Ehlers, T., and Packer, F. (2017). Green Bond Finance and Certification. BIS Quarterly Review, September.
  33. Faccini, R., Matin, R., and Skiadopoulos, G. (2023). Dissecting Climate Risks: Are They Reflected in Stock Prices?. Journal of Banking & Finance, 106948.
  34. Gallagher, E. A., Billings, S. B., and Ricketts, L. R. (2023). Human Capital Investment After the Storm. Review of Financial Studies, 36(7), 2651-2684.
  35. Giglio, S., Kelly, B., and Stroebel, J. (2021). Climate Finance. Annual Review of Financial Economics, 13, 15-36.
  36. Gong, X., Fu, C., Huang, Q., and Lin, M. (2022). International Political Uncertainty and Climate Risk in the Stock Market. Journal of International Financial Markets, Institutions and Money, 81, 101683.
  37. Grijalvo, M., and García-Wang, C. (2023). Sustainable Business Model for Climate Finance. Key Drivers for ehe Commercial Banking Sector. Journal of Business Research, 155, 113446.
  38. Hauer, M. E., Evans, J. M., and Mishra, D. R. (2016). Millions Projected to be at Risk from Sea-level Rise in the Continental United States. Nature Climate Change, 6(7), 691-695.
  39. Hill, E., Wial, H., and Wolman, H. (2008). Exploring Regional Economic Resilience. Working Paper, Institute of Urban and Regional Development, University of California.
  40. Hong, H., Karolyi, G. A., and Scheinkman, J. A. (2020). Climate Finance. Review of Financial Studies, 33(3): 1011-1023.
  41. Hong, H., Li, F. W., and Xu, J. (2019). Climate Risks and Market Efficiency. Journal of Econometrics, 208(1), 265-281.
  42. Hsu, P. H., Li, K., and Tsou, C. Y. (2023). The Pollution Premium. Journal of Finance, 78(3), 1343-1392.
  43. Huang, Z., Dong, H., and Jia, S. (2022). Equilibrium Pricing for Carbon Emission in Response to the Target of Carbon Emission Peaking. Energy Economics, 112, 106160.
  44. Huynh, T. D., and Xia, Y. (2021). Climate Change News Risk and Corporate Bond Returns. Journal of Financial and Quantitative Analysis, 56(6), 1985-2009.
  45. Ilhan, E., Krueger, P., Sautner, Z., and Starks, L. T. (2023). Climate Risk Disclosure and Institutional Investors. Review of Financial Studies, 36(7), 2617-2650.
  46. Jia, R., Ma, X., and Xie, V. W. (2022). Expecting Floods: Firm Entry, Employment, and Aggregate Implications. NBER working paper, No. w30250.
  47. Jin, J., Han, L., Wu, L., and Zeng, H. (2020). The Hedging Effect of Green Bonds on Carbon Market Risk. International Review of Financial Analysis, 71, 101509.
  48. Kleimeier, S., Hoffmann, A. O., Broihanne, M. H., Plotkina, D., and Göritz, A. S. (2023). Determinants of Individuals’ Objective and Subjective Financial Fragility during the COVID-19 Pandemic. Journal of Banking & Finance, 153, 106881.
  49. Köberle, A. C., Vandyck, T., Guivarch, C., Macaluso, N., Bosetti, V., Gambhir, A., ... and Rogelj, J. (2022). Publisher Correction: The Cost of Mitigation Revisited. Nature Climate Change, 12(3), 298-298.
  50. Kocaarslan, B. (2021). How Does The Reserve Currency (U.S. Dollar) Affect The Diversification Capacity of Green Bond Investments?. Journal of Cleaner Production, 307, 127275. 10.1016/j.jclepro.2021.127275.
  51. Krusell, P., and Smith Jr, A. A. (2022). Climate Change Around the World. NBER working paper, No. w30338.
  52. Kuang, W. (2021). Are Clean Energy Assets a Safe Haven for International Equity Markets?. Journal of Cleaner Production, 302, 127006.
  53. Lamperti, F., Bosetti, V., Roventini, A., Tavoni, M., and Treibich, T. (2021). Three Green Financial Policies to Address Climate Risks. Journal of Financial Stability, 54, 100875.
  54. Lee, S., and Chen, G. (2022). Understanding Financial Resilience from a Resource-Based View: Evidence from US State Governments. Public Management Review, 24(12), 1980-2003. 10.1080/14719037.2021.1955951.
  55. Li, X., Ma, S. D., and Wu, M. (2023). What Makes Social Media Branding More Effective in Shaping Pre-visit Image: Information Quality or Source Credibility?. Tourism Management Perspectives, 46, 101084.
  56. Lu, R., and Yang, Z. (2023). Analysis on the Structure and Economic Resilience Capacity of China’s Regional Economic Network. Applied Economics, 1-19.
  57. Ma, S., and Kirilenko, A. P. (2020). Climate Change and Tourism in English-language Newspaper Publications. Journal of Travel Research, 59(2)m 352-366.
  58. Mandel, A., Tiggeloven, T., Lincke, D., Koks, E., Ward, P., and Hinkel, J. (2021). Risks on Global Financial Stability Induced by Climate Change: The Case of Flood Risks. Climatic Change, 166(1-2), 4.
  59. Martí-Ballester, C. P. (2019). Do European Renewable Energy Mutual Funds Foster the Transition to a Low-Carbon Economy?. Renewable Energy, 143, 1299-1309.
  60. Martin, R., and Sunley, P. (2015). On the Notion of Regional Economic Resilience: Conceptualization and Explanation. Journal of Economic Geography, 15(1), 1-42.
  61. Mendelsohn, R., Nordhaus, W. D., and Shaw, D. (1994). The Impact of Global Warming on Agriculture: A Ricardian Analysis. American Economic Review, 89(4), 753-771.
  62. Murfin, J., and Spiegel, M. (2020). Is The Risk of Sea Level Rise Capitalized in Residential Real Estate?. Review of Financial Studies, 33(3), 1217-1255.
  63. Naqvi, B., Mirza, N., Rizvi, S. K. A., Porada-Rochoń, M., and Itani, R. (2021). Is There A Green Fund Premium? Evidence from Twenty Seven Emerging Markets. Global Finance Journal, 50, 100656. 10.1016/j.gfj.2021.100656.
  64. Nguyen, D. D., Ongena, S., Qi, S., and Sila, V. (2022). Climate Change Risk and the Cost of Mortgage Credit. Review of Finance, 26(6), 1509-1549.
  65. Nguyen, Q., Diaz-Rainey, I., and Kuruppuarachchi, D. (2023). In Search of Climate Distress Risk. International Review of Financial Analysis, 85, 102444.
  66. Painter, M. (2020). An Inconvenient Cost: The Effects of Climate Change on Municipal Bonds. Journal of Financial Economics, 135(2), 468-482.
  67. Pankratz, N., Bauer, R., and Derwall, J. (2023). Climate Change, Firm Performance, and Investor Surprises. Management Science, forthcoming.
  68. Pástor, Ľ., Stambaugh, R. F., and Taylor, L. A. (2022). Dissecting Green Returns. Journal of Financial Economics, 146(2), 403-424.
  69. Raco, M., and Street, E. (2012). Resilience Planning, Economic Change and the Politics of Post-recession Development in London and Hong Kong. Urban Studies, 49(5), 1065-1087. 10.1177/0042098011415716.
  70. Reboredo, J. C. (2018). Green Bond and Financial Markets: Co-Movement, Diversification and Price Spillover Effects. Energy Economics, 74, 38-50.
  71. Reboredo, J. C., and Ugolini, A. (2022). Climate Transition Risk, Profitability and Stock Prices. International Review of Financial Analysis, 83, 102271.
  72. Roncoroni, A., Battiston, S., Escobar-Farfán, L. O., and Martinez-Jaramillo, S. (2021). Climate Risk and Financial Stability in the Network of Banks and Investment Funds. Journal of Financial Stability, 54, 100870.
  73. Saeed, T., Bouri, E., and Tran, D. K. (2020). Hedging Strategies of Green Assets Against Dirty Energy Assets. Energies, 13(12), 3141.
  74. Sautner, Z., Van Lent, L., Vilkov, G., and Zhang, R. (2023a). Firm‐level Climate Change Exposure. Journal of Finance, 78(3), 1449-1498.
  75. Sautner, Z., Van Lent, L., Vilkov, G., and Zhang, R. (2023b). Pricing Climate Change Exposure. Management Science, forthcoming.
  76. Schlenker, W., and Roberts, M. J. (2009). Nonlinear Temperature Effects Indicate Severe Damages to U.S. Crop Yields under Climate Change. Proceedings of the National Academy of Sciences, 106(37), 15594-15598.
  77. Schlenker, W., Hanemann, W. M., and Fisher, A. C. (2005). Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach. American Economic Review, 95(1), 395-406.
  78. Seltzer, L. H., Starks, L., and Zhu, Q. (2022). Climate Regulatory Risk and Corporate Bonds. NBER working paper, No. w29994.
  79. Semieniuk, G., Campiglio, E., Mercure, J. F., Volz, U., and Edwards, N. R. (2021). Low‐carbon Transition Risks for Finance. Wiley Interdisciplinary Reviews: Climate Change, 12(1), e678.
  80. Semieniuk, G., Holden, P. B., Mercure, J. F., Salas, P., Pollitt, H., Jobson, K., ... and Viñuales, J. E. (2022). Stranded Fossil-Fuel Assets Translate to Major Losses for Investors in Advanced Economies. Nature Climate Change, 12(6), 532-538.
  81. Sognnaes, I., Gambhir, A., van de Ven, D. J., Nikas, A., Anger-Kraavi, A., Bui, H., ... and Peters, G. P. (2021). A Multi-model Analysis of Long-term Emissions and Warming Implications of Current Mitigation Efforts. Nature Climate Change, 11(12), 1055-1062.
  82. Stern, N. (2008). The Economics of Climate Change. American Economic Review, 98(2), 1-37.
  83. Stern, N., Stiglitz, J., and Taylor, C. (2022). The Economics of Immense Risk, Urgent Action and Radical Change: Towards New Approaches to the Economics of Climate Change. Journal of Economic Methodology, 29(3), 181-216.
  84. Stevenson. C., Costa, S., Wakefield, J. R. H., Kellezi, B., and Stack, R. J. (2020). Family Identification Facilitates Coping with Financial Stress: A Social Identity Approach to Family Financial Resilience. Journal of Economic Psychology, 78, 102271.
  85. Stroebel, J., and Wurgler, J. (2021). What do You Think About Climate Finance?. Journal of Financial Economics, 142(2), 487-498.
  86. Tang, C., Liu, X., and Zhou, D. (2022). Financial Market Resilience and Financial Development: A Global Perspective. Journal of International Financial Markets, Institutions and Money, 80, 101650.
  87. Triggs, A., Kacaribu, F., and Wang, J. (2019). Risks, Resilience, and Reforms: Indonesia's Financial System in 2019. Bulletin of Indonesian Economic Studies, 55(1), 1-27.
  88. Trippl, M., Fastenrath, S., and Isaksen, A. (2023). Rethinking Regional Economic Resilience: Preconditions and Processes Shaping Transformative Resilience. European Urban and Regional Studies, 09697764231172326.
  89. van Benthem, A. A., Crooks, E., Giglio, S., Schwob, E., and Stroebel, J. (2022). The Effect of Climate Risks on the Interactions Between Financial Markets and Energy Companies. Nature Energy, 7(8), 690-697.
  90. Venturini, A. (2022). Climate Change, Risk Factors and Stock Returns: A Review of the Literature. International Review of Financial Analysis, 79, 101934.
  91. Vermeulen, R., Schets, E., Lohuis, M., Kölbl, B., Jansen, D. J., and Heeringa, W. (2021). The Heat is on: A Framework for Measuring Financial Stress under Disruptive Energy Transition Scenarios. Ecological Economics, 190, 107205.
  92. Walmsley, T., Rose, A., John, R., Wei, D., Hlávka, J. P., Machado, J., and Byrd, K. (2023). Macroeconomic consequences of the COVID-19 pandemic. Economic Modelling, 120, 106147.
  93. Wang, H., and Ge, Q. (2023). Spatial Association Network of Economic Resilience and its Influencing Factors: Evidence from 31 Chinese Provinces. Humanities and Social Sciences Communications, 10(1), 1-14.
  94. Wang, J., Chen, P., Wang, J., Guo, X., and Wang, X. (2023). Monetary Policy, Investor Sentiment, and the Asymmetric Jump Risk of Chinese Stock Market. IEEE Transactions on Computational Social Systems, forthcoming.
  95. Wang, Z., Dong, H., and Huang, Z. (2023). Carbon Spot Prices in Equilibrium Frameworks Associated with Climate Change. Journal of Industrial and Management Optimization, 19(2), 961-983. 10.3934/jimo.2021214.
  96. Weber, G., Cabras, I., Peredo, A. M., Yanguas-Parra, P., and Prime, K. (2023). Exploring Resilience in Public Services within Marginalised Communities During COVID-19: The Case of Coal Mining Regions in Colombia. Journal of Cleaner Production, 137880.
  97. Yan, X., Liu, W., Wen, S., Wang, L., Zhu, L., Wang, J., ... and Wang, J. (2023). Effect of Sulfamethazine on the Horizontal Transfer of Plasmid-Mediated Antibiotic Resistance Genes and Its Mechanism of Action. Journal of Environmental Sciences, 127, 399-409.
  98. Yousaf, I., Suleman, M. T., and Demirer, R. (2022). Green Investments: A Luxury Good or A Financial Necessity?. Energy Economics, 105, 105745.
  99. Yu, Z., Li, Y., and Dai, L. (2023). Digital Finance and Regional Economic Resilience: Theoretical Framework and Empirical Test. Finance Research Letters, 55, 103920.
  100. Zerbib, O. D. (2019). The Effect of Pro-Environmental Preferences on Bond Prices: Evidence from Green Bonds. Journal of Banking & Finance, 98, 39-60.
  101. Zhang, P., Deschênes, O., Meng, K., and Zhang, J. (2018). Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants. Journal of Environmental Economics and Management, 88, 1-17.
  102. Zhang, P., Zhang, J., and Chen, M. (2017). Economic Impacts of Climate Change on Agriculture: The Importance of Additional Climatic Variables other than Temperature and Precipitation. Journal of Environmental Economics and Management, 83, 8-31.
  103. Zhang, R. (2022). Language Commonality and Sell-side Information Production. Management Science, 68(6), 4435-4453.
  104. Zhong, Z., Chen, Z., and He, L. (2022). Technological Innovation, Industrial Structural Change and Carbon Emission Transferring Via Trade-------An Agent-based Modeling Approach. Technovation, 110, 102350.
  105. Zhou, K., Lin, B., and Fan, J. (2020). Post-Earthquake Economic Resilience and Recovery Efficiency in the Border Areas Affected by the Wenchuan Ms 8.0 Earthquake in Sichuan, China in 2008. Journal of Geographical Sciences, 30(8), 1363-1381.