Two ERC Starting Grants for Bocconi Research on Climate Risk and Environmental Markets
Grace Ballor, (Department of Social and Political Sciences and Dondena research center), and Matthias Rodemeier, (Department of Finance and Baffi research center), have each been awarded an ERC Starting Grant, among Europe’s most prestigious sources of funding for early-career scholars. Since this European fund was established, the total number of successful projects submitted by researchers at Bocconi University has thus risen to 75.
Both projects address a defining challenge of the coming decades: how societies can respond to climate change. They approach it from markedly different perspectives, combining historical research, economics, new technologies and large-scale field experiments.
Grace Ballor: Can Climate Risk Be Managed?
Grace Ballor’s project, EURISK – The History of Climate Risk Management in the European Union, challenges the common question: “why are we doing nothing about climate change?”
Rather than trying to explain climate inaction, EURISK deploys historical evidence to show how European institutions, businesses, insurers and courts have already been trying to anticipate and contain the economic consequences of climate change since the 1990s, when Anthropogenic warming became a salient political issue, the European Commission asserted its “global moral authority” on climate change, and widespread financialization transformed this tool originally developed for 18th century maritime commerce into a general approach across the economy. Drawing on archives and interviews, the project will reconstruct the emergence of different ways of forecasting, measuring and redistributing climate risk and show how climate risk management allows economic priorities to take precedence over ecological imperatives, the outcomes of which are often mistaken for inaction.
The research will examine the climate risk management of four sets of actors in the EU. It will investigate how supranational institutions have incorporated climate risk into policymaking; how companies have adapted their strategies and supply chains to rising climate costs; how insurers and reinsurers have developed new ways of pricing increasingly unpredictable hazards; and how courts and alternative dispute-resolution bodies have determined responsibility for climate-related losses.
By bringing these actors together within a single historical framework, EURISK aims to show how climate costs have been defined and disputed, how today’s approaches to climate risk were constructed, and whose interests, assumptions and choices shaped them. The project, based at the Dondena Research Centre, will also produce public databases, archived interviews, a monthly podcast and annual policy briefs.
Matthias Rodemeier: Can Markets Deliver Real Environmental Benefits?
Matthias Rodemeier’s M4E – Market-Based Solutions for Environmental Challenges examines the expanding role of private markets in areas where environmental regulation remains incomplete. This includes mitigation markets that avoid pollution, as well as adaptation markets that help market participants adjust to pollution and heatwaves. Both markets could be promising complements to environmental policy but suffer from severe informational frictions.
Carbon offsets, an example of mitigation markets, are intended to channel private money toward projects that reduce emissions. Yet buyers often have difficulty verifying whether the promised reductions in carbon emissions are real. In adaptation markets, multinational firms increasingly offer additional pay to workers to accept shifts during heatwaves or periods of severe air pollution. However, labor unions and regulators argue that workers underestimate the associated health risks of pollution and heat and may be lured into hazardous shifts by these incentives.
M4E will test whether better market design---through information disclosure, monitoring, and contract design---can make these private markets for the environment more effective. A large-scale field experiment involving around 20,000 clean cookstoves will use tamper-resistant, blockchain-based monitoring to measure the actual use and the true emission reductions of carbon offsets. Further experiments will investigate whether individually tailored advice through artificial intelligence can help firms and consumers distinguish high-impact carbon offsets from less credible ones.
A third part of the project will analyze data from more than seven million food deliveries in Italy. By combining information on couriers’ labor supply with real-time pollution and temperature data, Rodemeier will develop a novel algorithmic payment mechanism designed to compensate workers fairly for environmental health risks without encouraging uninformed workers to overexpose themselves to these hazards.
The European Research Council, established by the European Union in 2007, is Europe’s leading funding organization for excellent research. It funds researchers of any nationality and age to carry out projects across Europe. The ERC offers four main grant programs: Starting Grants, Consolidator Grants, Advanced Grants, and Synergy Grants.