Dr Kamiar Mohaddes wrote an article for Donya-e-Eqtesad, Iranian daily newspaper. In it he discusses the economics of climate change and the effect of climate change on sovereign creditworthiness.

To bridge the gap between climate science and real-world financial indicators, we simulate the effect of climate change on sovereign credit ratings for 109 countries, creating the world’s first climate-adjusted sovereign credit rating. Under various warming scenarios, we find evidence of climate-induced sovereign downgrades as early as 2030(!!), increasing in intensity and across more countries over the century.

Perhaps most importantly, our approach demonstrates that it is possible to “do ESG” without compromising scientific credibility. We show that existing climate science and economics are capable of supporting credible, decision-ready green finance indicators.

The article I wrote is based on the following two papers (supported by the Keynes Fund):

Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness, Patrycja Klusak, Matthew Agarwala, Matt Burke, Moritz Kraemer, Kamiar Mohaddes, Management Science, Vol. 69, No. 12, 2003, https://doi.org/10.1287/mnsc.2023.4869

Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis, Matthew E. Kahn, Kamiar Mohaddes, Ryan N.C. Ng, M. Hashem Pesaran, Mehdi Raissi, Jui-Chung Yang, Vol 104, 2021, https://doi.org/10.1016/j.eneco.2021.105624