Monica Billio, Irene Monasterolo, Stefano Battiston

I.S.E.O. Institute is partnering with Università degli Studi di Brescia for the project “Nobels, Economists and Scientists for Covid-19”: a gathering of articles, essays and short videos by Nobel Laureates in Economics, economists and scientists from all over the world willing to give their contribute to comprehend what effects the Covid-19 spread will have on our lives and economies. We will be regularly publishing columns on our website (under the section Conferences/Covid) and on the webpage of University of Brescia. As you all know, our area is at the heart of the Coronavirus spreading: and with all our events suspended, we felt like we had to carry on our activity anyway. This is exactly the mission our beloved founder Franco Modigliani wanted the I.S.E.O. Institute to have: help understanding global economy. If we can’t do it by promoting conferences and Summer Schools because of the virus, we can do it by sharing distinguished and respected economists’ views on the web, reaching a huge and worldwide audience.

The importance of compound risk in the nexus of COVID-19, climate change and finance

ABSTRACT (full paper at the bottom of this page)

Current approaches to manage the COVID-19 pandemic have a narrow focus on public health and on the short-term economic and financial repercussions. This prevents us to look at how pandemic risk interplays with sustainable and inclusive development goals in the next decade. To fill this gap, Monica Billio, Irene Monasterolo, Stefano Battiston analyse how risk can compound in the nexus of non-linear interactions among pandemic, climate change and finance. They show that neglecting compound risk can lead to a massive underestimation of losses, which can be amplified by financial complexity, as well as to policies that impose unnecessary trade-offs among the economic recovery, health and climate objectives. To address these challenges, they propose an interdisciplinary research agenda to inform effective policies and improve the resilience of our socio-economic systems.