Central bank communication about climate change
In this paper Arseneau et al. argue that as central banks learn more about the effects of climate change on financial markets and the broader economy it’s important that they communicate effectively this information to the public. But how have central banks communicated thus far about climate change? To answer this question they apply natural language processing techniques to a corpus of over 17,000 central bank speeches given by 100 central bankers over the past twenty-five years in order to identify the subset that are climate-related. Subsequently, they analyzed not only what central bank actually talk about when they talk about climate change, but also how they talk about the topic. They find:
- Central bank communication about climate change has expanded sharply in recent years both in advanced and emerging economies;
- The range of topics addressed is wide and includes the impact of climate change on the economy, sustainable finance, monetary policy, and the central bank mandate. Financial stability concerns are touched upon, but the speeches rarely discuss macroprudential policy;
- Central banks tend to use “speculative language”, or language that indicates uncertainty, more frequently in climate-related speeches relative to other speeches.
Given the complexity of the topic and the fact that climate change is not an area of traditional expertise for central banks, some degree of ambiguity about the topic in public communication seems appropriate. Nevertheless, previous studies of central bank communication have shown that clarity of language influences the credibility of the message.
Central Bank Communication about Climate Change
Authors: David M. Arseneau Alejandro Drexler Mitsuhiro Osada
From: Federal Reserve Board, Federal Reserve Bank of Chicago, Bank of Japan
Can more information change people’s willingness to pay for climate change mitigation
In this paper Bernard et al. study how information about ways to reduce carbon emissions induces survey participants to take costly actions to fight climate change, the willingness to pay (WTP) for voluntary offsetting CO2 emissions. Their analysis is based on a large representative survey of the German population, the Bundesbank Online Panel Households. In the first part of their study, they administer a survey experiment in which they provide information on ways to reduce individuals’ CO2 emissions and find individuals’ increase their WTP after the information provision. In particular:
- Providing information to individuals has the potential to change their WTP for climate change mitigation. In particular, women react more strongly to the provided signal. Individuals with a secondary school certificate but no tertiary education are most responsive, as are older survey participants. Bur survey participants earning below 2,000 euros do not adjust their WTP;
- Supporters of the center-right party (CDU/ CSU) do not react at all to the information treatments, nor do supporters of other smaller parties including the far-right party (AfD). Supporters of the center-left party (SPD) increase their WTP by more than 30 euros in response to the information treatments.
In a follow-up survey, they study the endogenous information acquisition of individuals and find:
- Respondents who have strong negative or positive priors toward climate change do not react at all to the different information;
- Overall, the results from the information acquisition experiment demonstrate that individuals largely choose to acquire information that confirms their prior views.
Climate Change and Individual Behavior
Authors: René Bernard, Panagiota Tzamourani, Michael Weber
From: Goethe University, Deutsche Bundesbank, University of Chicago
