While much of the future is unknown, Mary Daly, president of the San Francisco Federal Reserve named one thing our “uncertain certainty”. In the early summer of 2021, Daly gave an address emphasizing the guaranteed threat of climate change on our economic life and economic stability. The takeaway? Climate change influences economics.
Throughout the summer of 2021, there were several events which made the impacts and uncertainty of climate change feel pretty certain. Extreme weather such as unprecedented heatwaves across the US and disastrous flooding in both western Germany and China, led to lives lost, businesses shut down, and economic life put on pause. Likewise, the IPCC report released in August 2021 painted a stark picture; climate warming and its consequences are unavoidable.
But first, to fight the consequences of climate change, we must acknowledge the role between economics and environmental degradation, and specifically its connection to women in economic life and the economics profession.
Within Economic Life
Within economic life, the environmental and climate change consequences disadvantage women more than men.
Existing studies have established that there is a strong correlation between climate change and gender issues. Like climate change, gender equity is a horizontally integrated issue that largely exists in a vertically integrated policy framework. Looking at climate change from the gender perspective helps us to understand the direct effects of climate change on gender. For example, women are more likely to be displaced by the changing climate, suffer from pollution-related health problems, lose income when climate-related disasters strike, and experience violence in the aftermath of climate-related disasters. Climate change amplifies the existing gap in gender equality. According to a report, women and children are 14 times more likely to be harmed by the effects of climate change 1. Around 80% of people displaced by climate change are women.
However, evidence shows that the reverse relation exists as well; gender inequality increases the threat of climate change. For example, research shows that countries experiencing higher levels of gender inequity tend to have higher levels of negative environmental effects and degradation 2.
On the other hand, countries with more women in the parliament are more likely to ratify international environmental treaties 3. There is a myriad of evidence and research showing positive links between climate change and gender equality. The problem, however, is that women are not being utilised fully for their potential in helping combat climate change.
Within the Field of Economics: Policy and Academia
Within the economics profession, women have been the primary force speaking out on the economic consequences of climate change. While men have been outspoken as well, a handful of women in policy and academia are the face of acknowledging the connection between climate change and economics.
In economic policy, Christine Lagarde, similar to Daly, has spoken out about the need to recognize the economic consequences of climate change and environmental degradation.
In the wake of the IPCC report, Lagarde, president of the European Central Bank (ECB), released a road map for “greening” monetary policy. Lagarde argues climate change poses a threat to price stability and so falls within the ECB’s mandate and must be addressed. Other women leading the conversation include Janet Yellen, Kristalina Georgieva and Ursula von der Leyen 4.
Yet, Jerome Powell, Chair of the Federal Reserve and Lagarde’s American counterpart, believes that policy on climate change is not within the role of a central bank and therefore the Federal Reserve 5. At the Green Swan Conference in June 2021, Powell stated “climate change is not something we directly consider in setting monetary policy.” While Powell recognized the risks posed by climate change, he did not acknowledge its direct connection to the field of economics nor economic life.
In academia, Elinor Ostrom paved the way for thinking about the role of the environment in economics with her groundbreaking research on the management of common resources. Before Ostrom, the belief was communities would exploit common areas of natural resources which would lead to a “tragedy of the commons”. However, in the 1990s, Ostrom showed communities could avoid the overuse of common resources and instead sustainably manage them in the long run. Today, Ostrom’s work at the intersection of economics and the environment informs policymakers that it is possible to balance both a communities’ economic and environmental needs.
Today in academia, Kate Raworth’s theory Doughnut Economics has been the leading framework for a society that acknowledges the connection between the economy and the environment. Her theory argues for balancing the economic needs of people while staying within the bounds of our planet’s ability. Following the Covid-19 pandemic, Amsterdam and Brussels announced they would adopt the framework of Doughnut economics in their recovery efforts.
Today, women in economic policy and academia are leading the way in not only raising awareness, but directly addressing the role of economics in climate change.
Acknowledge the connection
The intersection of climate change and economics is unavoidable. Yet, many still deny its presence. To combat the challenges ahead, we must first acknowledge the extent of the problem and the role women play in the fight against climate change.
In no way have we addressed every voice or aspect worth noting at this intersection of economics, climate change, and gender. But we must start the conversation to acknowledge the role of economics and gender in the fight against climate change to prepare for the coming “uncertain certainty”.
- Katica Roy, “Gender equity and climate change have more in common than you think,” World Economic Forum, July 14, 2020..
- Natalie Elwell and Yasmine Williams, “If You Care about the Environment, You Should Care About Gender,” World Resources Institute, March 7, 2016.
- “How Climate Change Impacts Women,” Video from the NRDC, March 1, 2017.
Janet Yellen, “Secretary of the Treasury Janet L. Yellen’s Remarks to the Institute of International Finance,” U.S. Department of the Treasury, April 21, 2021.
Kristalina Georgieva, “Securing a Green Recovery: The Economic Benefits from Tackling Climate Change,” International Monetary Fund, April 15, 2021.
Roula Khalaf, “Ursula von der Leyen on European recovery, climate change and life after Brexit,” Financial Times, December 2, 2020.
Howard Schneider, “Powell says Fed does not seek to set climate policy for U.S.,” Reuters, June 4, 2021.
Michael S. Derby, “Powell Says Climate Change ‘Poses Profound Challenges,’ but Plays Down Fed’s Role,” Wall Street Journal, June 4, 2021.