In the course of industrialization and the resulting economic growth, the environment was increasingly affected. For a long time, little emphasis was placed on environmentally friendly production processes and environmentally friendly consumption. The main reason for this is the occurrence of external effects in which the producer or consumer of a good does not have to bear all the economic consequences of their actions. For example, if wastewater can be discharged into public waterways or exhaust gases can be discharged into the air, those responsible save on cleaning or disposal costs and as a result, too many of these environmentally damaging behaviors are carried out. The overexploitation of the earth’s environmental resources is becoming increasingly visible. In addition, according to the overwhelming majority of opinions, the production techniques used and consumption habits have contributed significantly to the ongoing process of global warming and will probably continue to do so in the future.

Against this background, HWWI conducts intensive research in the field of environmental and climate economics. The aim is to show how economic instruments can be used to harmonize economic activity and the environment and to appropriately internalize external effects. Since many environmental assets cross borders, these analyzes necessarily have to be carried out in an international context.

HWWI deals particularly intensively with climate economic issues. Research is carried out into how climate change influences the prosperity and subjective well-being of societies, what attitudes the population has towards climate protection and climate policy, and which climate policy measures appear to be suitable for limiting global warming. Particular attention is paid to the question of how climate-related extreme weather events (such as droughts, floods or storms), which occur with greater frequency or intensity as a result of climate change, influence economic activity and how negative effects can be prevented or at least limited.