Project goals
Small economies (e.g., island states) are highly exposed to hydrometeorological shocks. The goal of the project is to propose a tractable model that links (i) a low-dimensional water-balance model, (ii) an input--output (IO) model for the propagation of water shortages across sectors, and (iii) macro-financial dynamics mapping GDP and fiscal responses into sovereign default risk. The aim is to generate drought stress scenarios suitable for policy analysis and climate stress testing).
Project domain: Natural resource economics, sustainable finance
This project is proposed in the framework of the chair "Modeling of economic and financial nature-related risks", sponsored by Banque de France