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2025 Toronto Meeting on the Economics of Climate Change (TMEC)
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Presentations with a discussion are 40 minutes long, followed by a 10 minute discussion.
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Friday, June 20
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Room 3140, William G. Davis Building, 1867 Inner Circle Rd., Mississauga, ON L5L 1C6
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13:30 - 14:30Registration and Lunch
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Welcome14:30 - 15:00Land Acknowledgement and Welcome Remarks
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15:00 - 16:00Keynote Address: Challenges and Successes in Renewable Integration (slides)
Speaker: Mar Reguant (Northwestern)
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16:00 - 16:20Afternoon Tea
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Market Design16:20 - 17:10Barking Up the Wrong Tree: Can Forest Carbon Markets Work? (slides)Speaker:
Harry Nelson (UBC)		Discussant:
Rajat Kochhar
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Considerable effort, attention and resources have been invested in developing forest carbon markets (offsets) over the past two decades and despite poor press in recent years they are still being promoted as an essential climate solution and voluntary markets continue to expand and evolve (Reis and Evans 2025, Reuters 2024). Proponents tout their potential ability to offer cost-effective reductions in emissions and enhanced sequestration and provide additional co-benefits; while critics of this approach either largely focus on flaws in the accounting rules (Pietraci et al 2023, Pande 2024) and how they are measured or take philosophical exception to using economic instruments to incent forest stewardship and conservation (Gomez-Baggethun and Ruiz-Pérez 2011; Melanidis and Hagerman 2022). These approaches obscure more fundamental questions about market design in whether or not we can create forest Carbon markets. These questions centre on 1) what actually is being exchanged; 2) the high transaction costs associated with using these markets; and 3) the distributional consequences of these markets. We argue more attention should be paid to these questions and market design principles in evaluating the use of forest Carbon offsets and whether or not alternatives exist that would be more effective and more equitable way of achieving our goals around climate solutions and these other benefits.
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17:10 - 18:00Does Market Power in Agricultural Markets Hinder Farmer's Adaptation to Weather Shocks? (slides)Speaker:
Rajat Kochhar (Chicago)		Discussant:
Harry Nelson
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What role do government policies which distort market competition play in impeding farmers’ climate change adaptation? We study this question in the context of India, where longer-run adaptation to climate change has been inadequate — posing a considerable risk to its ∼250 million agricultural workers. We exploit spatial discontinuities in intermediary market power, created by state-level laws that restrict farmer intermediary transactions to the same state, to determine how spatial competition affects farmers’ adaptation. We find that a farmer selling in the 75th percentile of the competition index compared to one that faces the 25th percentile of the competition in dex achieves a 4.9 percent higher output for each additional day of extreme heat. This effect is driven by increased input usage by farmers in anticipation of higher prices after climate shocks, an effect limited only to high competition areas. We then propose and estimate a quantitative spatial trade model with intermediary market power to examine the welfare implications of higher competition for adaptation. Our structural estimates suggest that the farmer’s economic loss due to extreme weather (i.e. their climate damage function) could be mitigated by 13.8 percent if government regulation distorting market competition is dismantled. These results highlight the importance of understanding the political economy of reforming these competition-distorting laws to accelerate climate change adaptation.
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18:00 - 19:00Reception with Light Dinner
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19:00Bus to Kimpton Saint George Hotel (280 Bloor St W, Toronto, ON M5S 1V8)
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Saturday, June 21
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Max Gluskin House, 150 St. George St., Toronto, ON M5S 3G7
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8:30 - 9:00Breakfast
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Climate Impacts9:00 - 9:50How Are Insurance Markets Adapting to Climate Change? Risk Classification and Pricing in the Market for Homeowners InsuranceSpeaker:
Meredith Fowlie (Berkeley)		Discussant:
Amine Ouazad
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Property insurance is critical for reducing household exposure to severe weather risks and aiding in recovery when disaster strikes. As climate risks escalate, insurers are investing in more sophisticated methods to classify and price complex disaster risks. We use proprietary data on parcel-level wildfire risk, together with insurers’ regulatory filings, to investigate how wildfire risk insurance is being priced and provided in a large market for homeowners insurance. We document striking variation in insurers’ risk classification and pricing strategies. Firms that rely on coarser measures of wildfire risk are exposed to potentially severe adverse selection as a result of their information disadvantage relative to insurers with richer models. Consistent with this fact, firms relying on simpler pricing methods charge relatively high prices in high-risk market segments – or choose not to serve these areas at all. A theoretical model of a market for natural hazard insurance that incorporates both asymmetric risk classification and market regulation helps rationalize the empirical patterns we document. Our results highlight how the winner’s curse can increase prices and limit participation in insurance markets for large, hard-to-model risks.
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9:50 - 10:40Time Consistent Infrastructure Investments: Optimal Flood Protection Policies in Spatial Equilibrium (slides)Speaker:
Amine Ouazad (HEC Montreal)		Discussant:
Meredith Fowlie
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Place-based investments can have unintended general equilibrium effects and face challenges of time inconsistency. This paper simulates the granular impact of alternative spatial and temporal designs of such investments, using Quantitative Spatial Models where the strategy of the policymaker is endogenized, with time-consistent policy analysis or policies with commitment. It can apply to sunk, fixed costs investments in transportation infrastructure, levees, and other location-based investments. Applying this framework to the 1936 Flood Control Act, the largest investment in flood control infrastructure in US history protecting 5% of land, the study examines the general equilibrium effects of levee investments on housing prices, population density, and racial demographics over eight decades. Protected neighborhoods initially had lower property values, higher minority shares, and greater flood risk, but experienced sustained property appreciation and changes in population density. Structural analysis reveals that optimal levee designs prioritize high-density areas, reduce price capitalization, and minimize urban sprawl. Policymakers who cannot commit to long-term plans tend to overbuild and maintain larger systems compared to those with time-consistent strategies.
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10:40 - 11:00Break
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Climate Policy in Canada11:00 - 11:30A Comparative Study of Pro-Sustainability Behavior of Aboriginal and Non-Aboriginal Groups: A Case of Sustainable Forest Management in Ontario, Canada (slides)Speaker: Shashi Kant (Toronto)
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Sustainability is more than environment, and similarly Pro-Sustainability Behavior (PSB) is much broader than Pro-Environment Behavior (PEB). PSB supports and promotes all, not only environmental, domains of sustainability, but multiple domains are missing from PSB. We present a comparative view of multi-domain pro-sustainable-forest-management-behavior (PSFMB) of Aboriginal and Non-Aboriginal groups. We test: Do Aboriginal and /non-Aboriginal groups assign the equal weights to all domains and the equal weights to the different constituents of each latent explanatory variable of PSB? Do the influencing mechanisms vary between Aboriginal and non-Aboriginal people? Our PSB model integrates the key features of environmental psychology and economic models of PEB, and incorporates individual’s interactions with the self, environment, economic system, community members, and government. We use primary data from three pairs of one Aboriginal and one non-Aboriginal communities, and Structural Equation Modeling (SEM). Our results indicate that both groups make substantial pro-SFM contributions, but the contributions, domain weights, and influencing factors and the magnitudes and mechanisms of influences differ across groups and spheres. The results provide empirical evidence for some Aboriginal cultural attributes, and their implications for climate change mitigation and adaptation.
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11:30 - 12:00Plans, payouts, pricing, and new playbooks: Federal climate policy since Paris Speaker: Dave Sawyer (Canadian Climate Institute)
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With a new federal Liberal government set to build on a decade of post-Paris action, now is a pivotal moment to rethink Canada’s GHG mitigation strategy. This presentation reviews the current emissions and policy landscape, unpacks key phases of climate policy evolution in the past decade, and outlines why modernizing industrial carbon pricing—through updated large emitter trading systems—will be a high priority in the years ahead.
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12:00 - 12:30Political Lessons From Two Decades of Canadian Carbon PricingSpeaker: Robert Gillezeau (Toronto)
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After nearly two decades of increasing social support for carbon pricing and legislative action at the provincial and federal levels, Canada’s consumer carbon pricing system has rapidly unravelled in under two years. I discuss the political circumstances that allowed carbon pricing to succeed in its early iterations in British Columbia and Quebec and the key factors behind its eventual demise, including political polarization, tax salience, and the role of young voters. Finally, I discuss concerns with recent efforts to reframe climate policies as affordability measures.
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12:30 - 12:45Climate Goals as Economic Drivers: A Case Study of Remedial Interventions in TorontoSpeaker: Jagdish Yadav (City of Toronto)
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Climate action and economic growth need not be mutually exclusive. This presentation explores how strategic greenhouse gas (GHG) reduction measures can stimulate local economic development, using the City of Toronto’s TransformTO Net Zero Strategy (NZS) as a case study. Six focus areas—energy-efficient windows, heat pumps, solar panels, registered energy advisors, cycling infrastructure and tree canopy coverage—were analyzed for their economic potential. Findings suggest that implementing the NZS targets could generate significant economic benefits, including job creation and increased wages across sectors (e.g., cycling: $1.2 billion; heat pumps: $440 million; energy advisors: $42.3 million). These figures represent direct gains, while additional impacts are expected through broader supply chain and manufacturing activity. However, realizing these potential demands well-designed policy frameworks and strong collaboration among stakeholders.
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12:45 - 13:30Lunch
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Equity in Climate Policy13:30 - 14:20Green DevelopmentSpeaker:
José-Luis Cruz (NY Fed)		Discussant:
Chris Timmins
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The fast decline in the cost of renewable energy has promoted a shift toward cleaner sources. In this paper, we evaluate whether the green transition might spur faster growth in parts of the developing world by reshaping the world’s economic geography. To this end, we develop a spatial dynamic economic model with an explicit energy sector. In our model, locations differ in their endowments and technology to produce fossil fuels and clean energy, as well as in the costs of shipping these energy goods across locations. These factors, in turn, determine the level of investment between energy sources and, thus, the local pace of the green transition and the overall growth of the economy. We quantify the model for more than 18,000 locations in the world using data on fossil fuel reserves, clean energy suitability, taxes and subsidies by energy source, and transportation networks. Our simulations suggest a strong inertia, as the locations that currently produce fossil fuels and clean energy increase their extent of specialization over time. Although some regions of the developing world are geographically well endowed to generate clean energy, their overall low productivity hinders a green development.
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14:20 - 15:10Racial Dynamics of Federal Property Buyouts in Flood-Prone Areas (slides)Speaker:
Chris Timmins (Duke)		Discussant:
José-Luis Cruz
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Recent climate projections forecast significant increases in flood risks, and the greatest increases are anticipated to be in communities of color. The use of managed retreats, or “buyouts,” of flood-prone properties as an adaptation response is also likely to grow. This paper investigates the equity implications of managed retreat by analyzing the role of race and ethnicity in buyout bargaining outcomes and how those outcomes affect longer-run neigh- borhood change. To do this, we combine nationwide administrative data on federal property acquisitions and housing sales transactions with a database tracking individual movement over time. We then estimate the discount in buyout payments relative to a property’s fair market value, how the payment received affects where households relocate, and whether these impacts differ by race. We find that the buyout compensation received by households of color is at least 6 percent lower than that received by white households. Moreover, these price dis- counts detract from individual wealth and the quality of the neighborhood to which families relocate. Our work highlights how government policy, aimed to address increasing climate impacts, may exacerbate the burden of climate change on vulnerable communities.
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15:10 - 15:30Afternoon Tea
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Climate Adaptation15:30 - 16:20Growth, Degrowth, and the Use of Material ResourcesSpeaker:
Conor Walsh (Columbia)		Discussant:
Remy Levin
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Use of material resources in the US grew strongly in the first part of the twentieth century, before beginning to decline after 1970. This decline was widespread, occurring across energy inputs, metals, construction inputs, and biological materials. I show that over half of this decline came from material-saving technical change, spurred on by high energy prices. The remainder was due to slowing goods expenditure with rising incomes, and a measure from foreign trade. I discuss the possibilities for continued degrowth in material inputs in the coming century.
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16:20 - 17:10The Politics of Drought Relief: Evidence from Southern IndiaSpeaker:
Lisa Tarquinio (Western)		Discussant:
Conor Walsh
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As climate change increases the frequency and intensity of extreme weather events, government efforts to mitigate disaster become increasingly more important. This paper evaluates the trade-off between a strict rules-based approach for targeting disaster relief and allowing for government discretion. Studying state governments’ allocations of drought relief to local areas in India, I document both adherence to national environmental guidelines for identifying drought and systematic deviations. Examining the deviations, I provide evidence that states redirect relief to areas facing non-drought agricultural shocks but also causally identify politically motivated misdirecting of relief. Evaluating the consequences for agriculture, I show that allowing discretion is costly: at the margin, relief targeted to guidelines-defined drought is nearly twice as effective in improving following-year agricultural outcomes as misdirected relief.
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17:10 - 18:00The Global Impacts of Climate Change on Risk PreferencesSpeaker:
Remy Levin (Connecticut)		Discussant:
Lisa Tarquinio
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We study the direct impacts that long-run experiences of climate change have on individual risk preferences. Using panel surveys from Indonesia and Mexico (total N = 25,000), we link within-person changes in elicited risk preferences to state-level, lifetime experiences of climate change. In line with the predictions of a Bayesian model of learning over background climate risk, we find that in both settings increases in the experienced means of temperature and precipitation cause significant decreases in measured risk aversion, while increases in the experienced variance of temperature in Indonesia and the variance of precipitation in Mexico lead to significant increases in measured risk aversion. We replicate this analysis globally using a survey with a representative sample from 75 countries (N = 75,000) containing an elicited measure of risk preference which we link to country-level, lifetime climate experiences. We find significant results for both the means and variances of both climate variables that are consistent with our panel analyses. Across all settings, experiences of climate variance have first-order effects, with coefficient magnitudes of the standard deviation of climate 0.6-2.6 times that of the climate mean. We develop a novel method for estimating the welfare effects of observed risk preference changes using panel data, and find that the climate-induced changes in risk preferences we observe increased welfare in both Indonesia and Mexico by approximately 1%.
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18:30 - 20:30Conference Dinner for Presenters and Invitees at the Faculty Club (41 Willcocks St.)
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Sunday, June 22
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Max Gluskin House, 150 St. George St., Toronto, ON M5S 3G7
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8:30 - 9:00Breakfast
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Policy and Politics9:00 - 9:50Reaching Across the Aisle: Does Affective Polarization Hinder Grassroots Climate Mobilization? (slides)Speaker:
Lucy Page (Pitt)		Discussant:
Matthias Rodemeier
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Policy change typically requires bipartisan support in Congress, and bipartisan constituent lobbying might be key to building these coalitions. Political movements spread through social networks, so citizens may themselves shape the composition of grassroots movements. Do citizen activists try to build bipartisan coalitions or to recruit others like them? We focus on the climate movement, where most advocates are Democrats. Even if citizens recognize the value of bipartisan action, record-high affective polarization—animosity towards counter-partisans—may hold back outreach across party lines. In online experiments with 21,000 participants, we give Democrats opportunities to recruit Americans across the political spectrum (all of whom believe climate change is human-caused) for climate advocacy. Democrats do try to recruit others, but they are 27% more likely to invite other Democrats than Republicans to email Congress—even while they say that a bipartisan climate movement would be more effective. This outreach gap does not arise from Democrats’ own distaste for cooperating with counter-partisans, but rather can be explained by accurate beliefs that their invitation will have half as much impact on Republicans’ action. Anticipated affective polarization drives these beliefs: Democrats estimate that Republicans would respond three times more to invitations that did not identify them as Democrats.
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9:50 - 10:40Judging Nudging: Understanding the Welfare Effects of Nudges Versus TaxesSpeaker:
Matthias Rodemeier (Bocconi)		Discussant:
Lucy Page
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While behavioral non-price interventions (“nudges”) have grown from academic curiosity to a bona fide policy tool, their relative economic efficiency remains under-researched. We develop a unified framework to estimate welfare effects of both nudges and taxes, while allowing for normative ambiguity about how nudges map into utility. We showcase our approach by creating a database of more than 300 carefully hand-coded point estimates of non-price and price interventions in the markets for cigarettes, influenza vaccinations, and household energy. While nudges are effective in changing behavior in all three markets, they are not necessarily the most efficient policy. When nudges are debiasing, they are more efficient in the market for cigarettes, while taxes are more efficient in the vaccine and energy market. Interestingly, these conclusions also often hold when nudges are deceptive rather than debiasing. We identify two key factors that govern the difference in results across markets: i) an elasticity-weighted standard deviation of the behavioral bias, and ii) the magnitude of the average externality. Nudges dominate taxes whenever i) exceeds ii). Finally, we consider cases in which nudges cause direct psychic costs or benefits to consumers.
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10:40 - 11:00Break
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Climate Change Mitigation11:00 - 11:50Carbon Rollercoaster: A Historical Analysis of Decarbonization in the United StatesSpeaker:
Akshaya Jha (Carnegie Mellon)		Discussant:
Ashwin Rode
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This paper documents the changing trends in US carbon emissions and discusses the main factors that contributed to the historical carbon emissions rollercoaster. We divide the discussion into four periods -- up to 1920, 1920-1960, 1960-2005 and after 2005. For each period, we discuss the main drivers of national carbon emissions. We then discuss trends in carbon emissions in the electricity sector. Electricity sector emissions were initially very small, but would become the largest source of US carbon emissions over the period 1980-2015, and the largest contributor to decarbonization since 2007. In the last section, we offer some lessons for what developing economies might learn from the US experience.
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11:50 - 12:40Can Cost-Benefit Analysis Rise to the Climate Challenge?Speaker:
Ashwin Rode (Chicago)		Discussant:
Akshaya Jha
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This paper presents the first estimates of the social cost of a marginal ton of carbon dioxide emissions that combine theoretical insights on the welfare economics of climate change with a rich set of empirically grounded, probabilistic projections of future climate damages across five impact categories: human mortality, agricultural productivity, energy consumption, labor disutility, and coastal flooding. We find that depending on the choice of key valuation parameters, accounting for the full welfare effects of uncertain and unequal climate damages can raise the social cost of carbon (SCC) by an order of magnitude relative to previous prevailing estimates based on deterministic projections and a global representative agent. In scenarios with low carbon abatement, agents would be willing to pay a substantial risk premium to avoid the long right tail of damages. This risk premium also reduces the endogenously calculated discount rate, as optimizing agents place relatively more weight on the future when accounting for the presence of potential adverse events. Perhaps surprisingly, adjusting the valuation of climate damages to capture the welfare consequences of spatially unequal damages has ambiguous effects on the magnitude of the SCC. While the agent behind the proverbial veil places greater value on climate damages that accrue disproportionately to low-income future populations, they are also more reluctant to reduce emissions by sacrificing consumption for present day populations.
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12:40 - 13:10Emissions at scale: Dynamic LCA of Vehicle Fleets and Energy System Interactions
Speaker: Daniel Posen (Toronto)
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Life cycle Assessment (LCA) is a well-established method for analyzing the environmental consequences of a product from raw material extraction through manufacturing, use and disposal. It has traditionally been developed and applied to individual technologies with a focus on results normalized per unit of product (e.g., 1 vehicle, 1 MJ of fuel, 1 plastic bottle). In a world of climate targets and sweeping technological shifts, however, there is a need to assess environmental impacts at a larger scale – looking at aggregate and cumulative emissions across technology fleets. This talk will provide an overview of recent and ongoing work in the Sustainable Systems Research Group to extend LCA to national-scale passenger and heavy-duty vehicle fleets to assess the climate, material flow and air quality impacts of vehicle and fuel technologies out to 2050. This will include applications of the Fleet Life Cycle Assessment and Material Flow Estimation (FLAME) model to investigate pathways for meeting greenhouse gas budgets within vehicle fleets, and related analyses in both the U.S. and Canada demonstrating interactions between electric vehicle deployment and resulting emissions from the electric grid or broader energy system.
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13:10Closing Remarks and Lunch
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