Work in Progress

The Effects of Natural Disasters on Green Innovation (joint with Lisa Keding) 

The impacts of climate change are already shaping people’s lives today: Natural disasters are increasing in frequency and severity. Innovation is a key measure against climate change. In this article, we study how inventors respond to natural disasters. We exploit random variation of natural disaster occurrence and location to estimate event study designs. We geolocate European inventors and spatially match them to natural disasters. In affected areas, exposure to natural disasters results in a persistent 20% increase in green patents. Overall, the effect is primarily driven by increased innovation in mitigation technologies aiming to reduce emissions, thus by the technologies combating the root cause of climate change. We find that disasters have no effect on non-green innovation. To better understand the underlying mechanism, we propose in a theoretical model and provide empirical evidence that inventors respond to natural disasters by updating beliefs on future consumer demand for green goods. This effect is stronger in product markets with fierce competition, as firms can escape competition with green innovation. Our results highlight an important inefficiency in how innovation responds to climate change. In our model, purely local responses to natural disasters yield suboptimal research levels from a welfare perspective. The policy implication is that propagating the information carried by the disasters beyond locally affected inventors can raise welfare.

Motivated Climate Change Denial (joint with Melisa Kurtis)

On the Equity-Efficiency-Tradeoff and the Social Cost of Carbon (joint with Felix Bierbrauer & Niklas Taft)