Department of Economics

The global food system is a significant contributor to greenhouse gas emissions that drive climate change. Animal agriculture accounts for a large share of food-system emissions, both directly and through the production of animal feed. Global population growth and rising incomes imply a further increase in demand for animal-source foods if current trends persist. Limiting global warming to the targets set by the international community will not be possible without the rapid reduction of a substantial share of animal-source foods. We show that the rapid adoption of alternatives to animal-source foods, such as plant-only diets or plant-based, cultured, or fermentation-derived analogs to animal products, can be consistent with climate goals while satisfying global demand for calories and protein. Importantly, timing is crucial: the longer the delay in adopting alternatives, the larger the share of the diet that must shift away from animal-source food by 2050 for the food system to remain within its carbon budget.

Measuring the financial value of nature is difficult, often resulting in insufficient funding directed to nature conservation and restoration. As coastal risks increase due to development and climate change, a tangible benefit of nature is the protection it offers against storm damage. Many studies from the risk industry and others assess the direct effects of wetlands for reducing damage during storms. However, the value of wetlands for coastal protection could extend to many other benefits, including home prices in areas where storms are common. We use property-level housing transaction data from Zillow and show that proximity to mangroves in Florida moderates home price decline and dispersion following major hurricanes. The effects are substantial in magnitude, reducing the probability of losing a quarter or more of the housing value by 2–7 percentage points, which corresponds to 20–40-thousand-dollar value for a million-dollar property, conditional on a hurricane.

To answer this question, we develop a new Sahm-type recession indicator that combines vacancy and unemployment data. The indicator is the minimum of the Sahm indicator -- the difference between the 3-month trailing average of the unemployment rate and its minimum over the past 12 months -- and a similar indicator constructed with the vacancy rate -- the difference between the 3-month trailing average of the vacancy rate and its maximum over the past 12 months. We then propose a two-sided recession rule: When our indicator reaches 0.3pp, a recession may have started; when the indicator reaches 0.8pp, a recession has started for sure. This new rule is triggered earlier than the Sahm rule: on average it detects recessions 0.8 month after they have started, while the Sahm rule detects them 2.1 months after their start. The new rule also has a better historical track record: it perfectly identifies all recessions since 1929, while the Sahm rule breaks down before 1960. With August 2024 data, our indicator is at 0.54pp, so the probability that the US economy is now in recession is 48%. In fact, the recession may have started as early as March 2024.

In the past two decades, a number of banks joined global initiatives aimed to mitigate climate change by “greening” their asset portfolios. We study whether banks that made such commitments have a different emission exposure of their portfolios of syndicated loans than banks that did not. We rely on loan-level information with global coverage combined with country-industry information on emissions. We find that all banks have reduced their loan-emission exposures over the last 8 years. However, we do not find differences between banks that did and those that did not signal their sustainability goals, with the exception of early signers of Principles of Responsible Investments (PRI), who already had lower exposure to emissions through their syndicated lending. In addition, banks that signed PRI shortened the maturity of the loans extended to highly-emitting industries but only temporarily. Thus, we conclude that banks reduced their exposure to climate transition risks on average, but voluntary climate commitments did not contribute to syndicated loan reallocation away from highly-emitting sectors.