Business, Climate, and Environment Lab

Environmental degradation and climate change may be the largest failures of free private markets that the world has ever observed. Governments and businesses have adopted myriad policies to solve these problems, sometimes with success but frequently with unintended consequences. Business and government will have to work together to solve the most pressing environmental challenges of our time, from climate change to species extinction. The Business, Climate, and Environment Lab supports cutting edge research, provides thought leadership, and brings together stakeholders from academia, government, communities, and the private sector to design smart public and private sector policies related to topics such as climate change, renewable energy, air and water pollution, waste disposal, biodiversity, and deforestation.

Climate Change and Financial Risk

Central Banking and Climate Change: Climate change may pose challenges to the Federal Reserve’s ability to ensure stable prices and maximum employment. To address this, ongoing work aims to provide policymakers with the tools to understand (1) the extent to which climate change poses a risk to financial stability and (2) the role that they can—and should—play to mitigate this risk.

Climate Risk Disclosures: While publicly traded firms in the United States are required to disclose all material risks to investors to ensure well-functioning markets, there is still a degree of uncertainty as to whether and how to disclose risks posed by climate change. Recently, a number of private standards have emerged to provide clarity for firms, but these private standards do not always completely align with one another. To further clarify this picture, we are currently exploring how materiality varies across industries and what regulators can learn from these private governance standards. Ultimately, we aim to provide guidance for companies on their disclosure practices and suggest regulatory changes to policymakers that would promote uniformity in climate risk disclosures. Read the Risk Center Primer on Climate Disclosures here.

Banks, Private Governance, and the Transition to a Low-Carbon Economy: Like central banks and regulatory agencies, banks themselves are taking steps to address environmental issues and promote the transition to a low-carbon economy—something referred to as private environmental governance. For example, major banks in the U.S. and abroad have recently begun to adopt standards to minimize their financial risk from this economic transition and to promote investment in “green” assets. This project will examine the extent and mechanisms of this form of private environmental governance and explore the role that banks can play as quasi-regulators to encourage a smooth transition to a low-carbon economy.

Energy and Environmental Markets

Carbon Trading, Emissions Leakage and Waterbeds: Carbon markets can be effective tools to reduce greenhouse gas emissions, but additional and overlapping climate policies by a subset of states or countries often lead to unintended side effects. This project investigates how policymakers can improve their designs to mitigate these issues and provides them the tools to compare and select between several different policies.

Renewable Energy Markets: Individual U.S. states often incentivize solar energy through renewable energy portfolio standards. This project aims to inform policymakers how to enhance the cost-effectiveness of these portfolio standards through regional integration, by which states combine their targets and allow renewable energy to be generated where it is cheapest.

Insuring Offsets: Since the beginning of 2021, the state of California requires that 50 percent of any offsets used to comply with its cap-and-trade program must be based in the state. Offsets allow firms and other covered entities to reduce their balance sheet of carbon emissions by purchasing the rights to carbon emissions reductions elsewhere—including through the creation or maintenance of ecosystems that sequester carbon. With increasingly severe wildfire seasons in California, however, this raises the question of what to do when these ecosystems are themselves destroyed. In this project, we explore whether insuring offsets is a viable solution to this problem and the benefits of insurance over other potential regulatory or private governance tools. We aim to provide insurance companies and regulators an understanding of how this process would work and give all involved stakeholders more certainty about their obligations.

Decarbonizing the Transportation Sector

Improving Transportation Policy: We are working on a number of projects aimed at informing and improving policy regarding transportation, the largest source of carbon emissions in the United States. We examine the efficacy of U.S. tailpipe standards for local air pollution. We also study how much potential car buyers actually take into account future fuel savings from more efficient cars, with important implications for fuel economy standards. Finally, we examine which factors explain long-run preferences for driving in the first place—and suggest how these preferences might be shaped by potential future policy. Generally, these projects aim to provide legislators with the tools to more quickly and cost-effectively reduce emissions and inform the automotive industry how various policies might impact their bottom line.

Green Growth

The Economics of Planetary Boundaries: To keep the earth stable and avoid crossing key environmental tipping points we need to solve a number of problems—including climate change, biodiversity loss, chemical pollution, and ocean acidification, to name a few. Humanity needs to stay within its “planetary environmental boundaries.” We ask the big questions: Which policies would be necessary to keep humanity within the planet’s safe operating space? Could policies that help one environmental challenge exacerbate another? This project aims to ground the research of the Risk Center and other institutions in a larger, comprehensive framework.

Environmental Policy in Emerging Economies: Emerging markets face increasing pressure on their natural environment and unique challenges in their environmental governance. Given their global importance, we study how effective policy-making in emerging economies must differ from in more developed economies. Specific examples include investigations of (1) the role political incentives and corruption play in these countries’ economic and environmental governance and (2) existing barriers in low-income countries to the adoption of cleaner technologies—and suggestions for how to design a policy to overcome these challenges.

Why Have Forests and the Economy Grown in Europe? The majority of the world’s forests, which provide essential ecosystem services and help sequester a great deal of carbon, are shrinking. However, this does not have to be the case. Satellite data shows that forest cover in Europe has increased over the past century—despite enormous growth in living standards and economic activity. We examine what factors are responsible for this trend and how they might be applied elsewhere—and study the importance of expanding protected nature areas.

Building Climate Resilience

Climate Risk Solutions: In the summer of 2019, researchers from across the university proposed 30 creative solutions aimed at managing climate risks. In honor of the 50th anniversary of Earth Day—and with a looming climate crisis—we also invited Penn students to submit their own climate risk solutions in the spring of 2020.

Risk Transfer for Climate Adaptation: Several interrelated projects are investigating how innovations in insurance and risk transfer can supplement existing policy tools and help promote climate adaptation in communities throughout the US. These innovations, which may require collaboration between public and private-sector actors, have the potential to more equitably and efficiently ensure disaster-struck communities can get back on their feet and lessen their risk moving forward.

Adaptation Blueprint: Adapting to the effects of climate change is a herculean task and will require novel policy approaches, creative new regulatory tools, and visionary planning ideas. Blueprint for Coastal Adaptation: Uniting Design, Economics, and Policy, edited by Carolyn Kousky, Billy Fleming, and Alan M. Berger, published in the spring in 2021, brings together experts in multiple disciplines to develop new policy and planning approaches for the coast.

Climate and Environmental Ethics

Business Ethics and Climate Change: In a series of projects, we will examine the ethical obligations and duties of business firm managers to limit their greenhouse gas emissions and environmental impacts, as well as the duties and obligations of individuals to the environment and to future generations.

Severen, C. and A.A. Van Benthem. Formative Experiences and the Price of Gasoline. Forthcoming in the American Economic Journal: Applied Economics.

Gillingham, K., S. Houde and A.A. Van Benthem.  Consumer Myopia in Vehicle Purchases: Evidence from a Natural Experiment. Forthcoming in the American Economic Journal: Economic Policy.

Han, J.S., J.F. Houde, A.A. Van Benthem and J.M. Abito (2021). When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation: Comment.  American Economic Review, 111(4): 1356-1372.

Engström, G., J. Gars, N. Jaakkola, T. Lindahl, D. Spiro and A.A. Van Benthem (2020).  What Policies Address Both the Coronavirus Crisis and the Climate Crisis? Environmental and Resource Economics 76(4): 789-810.

MacDuffie, J.P. and S.E. Light (2021). EV Turning Point: Momentum Builds for U.S. Electric Vehicle Transition. Yale Environment 360.

Light, S.E. (2021).  National Parks, Incorporated. University of Pennsylvania Law Review, 169, Rev. 33.

Berkey, B. The Philosophical Core of Effective Altruism. Forthcoming in Journal of Social Philosophy:

Berkey, B. Prospects for an Animal-Friendly Business Ethics. Forthcoming in Animals and Business Ethics (Springer).

Abito, J.M. (2020). Measuring the Welfare Gains from Optimal Incentive Regulation. Review of Economic Studies, 87(5): 2019–2048,

Wiley, H.J.P. and C. Kousky (2020).  Speeding Up Post-Disaster Housing BuyoutsSolutions. Volume 11, Issue 3. September.

Bento, A.M., M.R. Jacobsen, C.R. Knittel, and A.A. van Benthem (2020). Estimating the Costs and Benefits of Fuel Economy Standards. In: M.J. Kotchen, J.H. Stock, and C.D. Wolfram (eds.), Environmental and Energy Policy and the Economy 1.

Berkouwer, S.B. (2020). Electric Heating and the Effects of Temperature on Household Electricity Consumption in South Africa. The Energy Journal, Vol. 41:04

Berkouwer, S.B. and J.T. Dean (2020). “Credit and attention in the adoption of profitable energy efficient technologies in Kenya.” Working Paper.

Jacobsen, M.R., C.R. Knittel, J.M. Sallee and A.A. van Benthem (2020). The Use of Regression Statistics to Analyze Imperfect Pricing Policies. Journal of Political Economy 128(5).

Kousky, C., and H.J.P. Wiley (2020).  The Role of Insurance in Coastal Adaptation: Workshop Findings.  Philadelphia: Wharton Risk Center, University of Pennsylvania. March.

Kunreuther, H. and P. Slovic (2020). What the Coronavirus Curve Teaches Us About Climate Change. Politico Magazine. March.

Abito, J.M., C.R. Knittel, K. Metaxoglou and A. Trindade (2019). The Role of Output Reallocation and Investment in Coordinating Externality Markets. Working Paper.

Berkey, B. (2019). Climate Justice, Climate Policy, and the Role of Political Philosophy. Ethics, Policy & Environment, 22:2, 145-147.

Berkey, B. (2019). Collective Obligations and Demandingness ComplaintsMoral Philosophy and Politics6(1), 113-132.

Berkey, B., and E.W. Orts (2019). Review of Ryan Burg, Business Ethics for a Material World. Business Ethics Quarterly 29: 143-146.

Kousky, C. (2019). Time for a New Apollo Project: A Climate-Friendly EconomyThe Hill. July 27.

Kousky, C., K. Greig, and B. Lingle (2019). Financing Third Party Wildfire Damages: Options for California’s Electric Utilities. Philadelphia: Wharton Risk Center, University of Pennsylvania. January.

Kousky, C., and S. Light (2019). Insuring NatureDuke Law Journal, 69 Duke Law Journal 323.

Light, S.E. (2019). The Law of the Corporation as Environmental Law71 Stanford Law Review 137.

Light, S.E. (2019). The Role of Universities in Private Environmental Governance Experimentalism33 Organization & Environment 57.

Perino, G., R.A. Ritz, and A.A. van Benthem (2019). Understanding Overlapping Policies: Internal Carbon Leakage and the Punctured Waterbed. National Bureau of Economic Research.

Pless, J., and A.A. van Benthem (2019). Pass-Through as a Test for Market Power: An Application to Solar Subsidies. American Economic Journal: Applied Economics 11(4): 367-401.

Walls, M., M. Wibbenmeyer, and C. Kousky (2019). Does the Coastal Barrier Resources Act Provide a Policy Template to Address Wildfire Risk?  Resources. March 20.

Hagenlocher, M., S. Schneiderbauer, Z. Sebesvari, M. Bertram, K. Renner, F.G. Renaud, H. Wiley, and M. Zebisch (2018). Climate Risk Assessment for Ecosystem-based Adaptation: A guidebook for planners and practitioners. Bonn: GIZ.

Harari, M., and E. La Ferrara (2018). Conflict, Climate and Cells: a Disaggregated Analysis. Review of Economics and Statistics 100 (4), 594-608.

Light, S.E. (2018). Regulatory Horcruxes, 67 Duke Law Journal 1647.

MacDuffie, J.P. (2018). Response to Perkins and Murmann: Pay Attention to What Is and Isn’t Unique about TeslaManagement and Organization Review, 14(3), 481-489.

Berkey, B. (2017). Prospects for an Inclusive Theory of Justice: The Case of Nonhuman Animals. Journal of Applied Philosophy 34: 679-695.

Berkey, B (2017). Human Rights, Harm, and Climate Change Mitigation Canadian Journal of Philosophy 47: 416-435:

Berkey, B (2017). Benefiting from Unjust Acts and Benefiting from Injustice: Historical Emissions and the Beneficiary Pays Principle, In: Climate Justice and Historical Emissions (Cambridge University Press)

Cornell, N. & Light, S.E. (2017). Wrongful Benefit & Arctic Drilling, 50 U.C. Davis Law Review 1845.

Light, S.E. (2017). Precautionary Federalism and the Sharing Economy, 66 Emory Law Journal 333.

Berkey, B (2016). Review of Darrel Moellendorf, The Moral Challenge of Dangerous Climate Change. Ethics, Policy, & Environment 19: 108-111.

Epanchin-Niell, R., C. Kousky, A. Thompson, and M. Walls (2016). “Threatened Protection: Sea Level Rise and Coastal Protected Lands of the Eastern United States.” Ocean and Coastal Management. 137(March 1):118-130.

Jacobsen, M.R., and A.A. van Benthem (2015). Vehicle Scrappage and Gasoline PolicyAmerican Economic Review 105(3): 1312-1338.

Light, S.E. (2015). The New Insider Trading: Environmental Markets within the Firm, 34 Stanford Environmental Law Journal 3.

Light, S.E. & Orts, E.W. (2015). Parallels in Public and Private Environmental Governance, 5 Michigan Journal of Environmental & Administrative Law 1.

van Benthem, A.A. (2015). Energy LeapfroggingJournal of the Association of Environmental and Resource Economists 2(1): 93-132.

A selection of past research projects:

Flood Resilience Research – Collaboration with Zurich Insurance

The Risk Center joined with Zurich and partners to develop key initiatives focused on broadening the scope of flood resilience research, in order to advance global understanding of flood impact, risk reduction, financial protection, and community resilience.

South Florida Water, Sustainability and Climate

A 5-year project was initiated in 2013 to develop criteria for evaluating current and future water use and provide new insights into the value of water resources in the region and the trade-offs for decision-makers under various climate change scenarios.

Integrated Risk and Uncertainty Assessment of Climate Change Response Policies

Howard Kunreuther was one of two Coordinating Lead Authors for the 2014 Intergovernmental Panel on Climate Change (IPCC) chapter “Integrated Risk and Uncertainty Assessment of Climate Change Response Policies” for the Fifth Assessment Report of the IPCC.

Protecting the Ozone

The World Bank funded the Risk Center to develop decision criteria for disseminating project funds to reduce ozone-depleting substances (ODS) production, and to develop efficiency criteria and incentive structures to assist implementation of these projects.

Tackling the Climate Crisis: Can Business Lead the Way?

On October 20, 2021, BCE Lab Scholars Sarah Light and Benjamin Keys joined Dean Erika James for a virtual panel, titled “Tackling the Climate Crisis.” This event was a part of the Wharton School’s ongoing Beyond Business series.

Read about the event in this Knowledge @ Wharton article and watch the recording here.

Watch Wharton Climate Prof

Inspired by “Iron Chef” and Wharton’s own “Iron Prof” events, our “Wharton Climate Prof” took place during Penn’s Climate Week 2021 to showcase the climate-related research of Wharton faculty. Please check out the recordings to hear from ten Wharton scholars who each presented their cutting-edge research on climate and business in five minutes or less.

Energy Economics & Finance Seminar

This seminar series is jointly organized between the Business Economics and Public Policy Department, the Kleinman Center for Energy Policy, and the Wharton Risk Center’s BCE Lab. The scope of the seminar includes regulation and policy for energy, environmental, and transportation issues. View the schedule here.

Contributing Wharton Scholars:

Arthur A. van Benthem, Associate Professor of Business Economics & Public Policy, and Sarah E. Light, Associate Professor of Legal Studies & Business Ethics, are the faculty members responsible for leading the Business, Climate, and Environment Lab.

In response to a call for research proposals during the spring of 2021, five Wharton faculty members of this lab and the Disaster Risk Management Lab were awarded grants for research related to climate and sustainability issues. Read about the awardees and their projects here.

Arthur van Benthem (1)

Arthur van Benthem

Associate Professor of Business Economics and Public Policy

Research Areas: Energy Policy; Environmental Policy; Transportation Policy


Sarah E. Light

Associate Professor of Legal Studies & Business Ethics

Research Areas: Climate Law & Policy; Environmental Law & Policy; Private Environmental Governance

Mike Abito (2)

Jose Miguel (Mike) Abito

Assistant Professor of Business Economics & Public Policy

Research Areas: Industrial Organization; Regulation; Environmental Economics

Brian Berkey

Brian Berkey

Assistant Professor of Legal Studies & Business Ethics

Research Areas: Climate Ethics; Climate Justice; Animal Ethics


Susanna Berkouwer

Assistant Professor in Business Economics & Public Policy

Research Areas: Development Economics; Environmental Economics

Wit 3 (3)

Witold Henisz

Deloitte & Touche Professor of Management

Research Areas: Climate Risk Disclosure; Materiality & Management of ESG Factors

Ben Keys

Benjamin Keys

Rowan Family Foundation Professor of Real Estate

Research Areas: Property Markets; Housing Markets; Mortgage Markets


Steven Kimbrough

Professor of Operations, Information, and Decisions

Research Areas: Risk & Uncertainty; Deep Decarbonation Pathways; Market Design

Carolyn Kousky

Carolyn Kousky

Executive Director, Wharton Risk Management Center

Research Areas: Disaster Insurance; Natural Disaster Policy; Climate Adaptation

Howard Kunreuther

Howard Kunreuther

Co-Director Emeritus and Senior Fellow, Wharton Risk Management Center

Research Areas: Disaster Insurance; Communication of Climate Risks; Climate Change Policy

Cait Lamberton

Cait Lamberton

Duran President’s Distinguished Professor of Marketing

Research areas: Consumer Psychology; Financial Decision Making; Risk Management

John Paul MacDuffie1

John Paul MacDuffie

Professor of Management, Management Department

Research Areas: Vehicle & Mobility Innovations; Urban Transportation; Environmental Law & Policy

canva-photo-editor-15-qer5o8 (2)

Eric W. Orts

Guardsmark Professor of Legal Studies; Management

Research Areas: Environmental Law and Policy; Environmental Management & Governance

Contributing Doctoral Students:

Lauren Kaufmann

Lauren Kaufmann

Legal Studies and Business Ethics

Research areas: Social and environmental impact investing; Business ethics; Business & society

Prakash Mishra

Prakash Mishra

Applied Economics

Research Areas: Land use and transportation economics.

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Philip Mulder

Applied Economics

Research Areas: Public economics and environmental risks and climate change in urban environments.


For more information on the Business, Climate, and Environment Lab, contact Carolyn Kousky, Executive Director, at

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