Mitigating Disaster Risks in the Age of Climate Changes. Keynote by Harrison Hong (Columbia)
Swedish House of Finance 
SHOF-ECGI Conference on sustainable finance and corporate governance 2020
Paper abstract: Emissions control cannot address the consequences of global warming for weather disasters until decades later. We model regional-level mitigation, which reduces the aggregate risks of disasters for capital stock in the interim. Unexpected disaster arrivals lead to pessimistic beliefs regarding the consequences of global warming and more mitigation spending. Competitive markets underprovide such spending because of externalities. Capital taxes to fund mitigation restores first-best. We value seawalls that protect against increasingly damaging Atlantic hurricanes. For moderately pessimistic beliefs, the optimal annual tax is 1.5% of housing stock and coastal properties are 8% too high compared to first-best.
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