{"id":28339,"date":"2025-04-11T12:00:00","date_gmt":"2025-04-11T10:00:00","guid":{"rendered":"https:\/\/www.ie.edu\/uncover-ie\/?p=28339"},"modified":"2026-04-21T19:22:20","modified_gmt":"2026-04-21T17:22:20","slug":"expert-economist-professor-pedro-gete-explains-the-economics-of-climate-change","status":"publish","type":"post","link":"https:\/\/www.ie.edu\/uncover-ie\/expert-economist-professor-pedro-gete-explains-the-economics-of-climate-change\/","title":{"rendered":"Economic impacts of climate change: Insights from Pedro Gete"},"content":{"rendered":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\"><\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">min read<\/span><\/span>\n<p>The economic impacts of climate change will affecting nearly every aspect of our lives. That includes how we work, to where we travel, who we vote for, and what we buy. <a href=\"https:\/\/www.ie.edu\/university\/about\/faculty\/pedro-gete-sanchez\/\" target=\"_blank\" rel=\"noreferrer noopener\">Pedro Gete<\/a>, professor of the Master in Applied Economics, knows this all too well\u2014and is working to pave a brighter future through the lens of economics.<\/p>\n\n\n\n<p>Let&#8217;s look back at one of Pedro&#8217;s exclusive masterclasses at <a href=\"https:\/\/www.ie.edu\/business-school\/\" target=\"_blank\" rel=\"noreferrer noopener\">IE Business School<\/a> to uncover eonomic risks and solutions for the ongoing climate crisis.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-economics-helps-us-understand-climate-change\">How economics helps us understand climate change<\/h2>\n\n\n\n<p>Pedro boasts an impressive academic and professional trajectory, with both a Master and PhD in Economics from the University of Chicago under his belt. He&#8217;s taught at several American universities\u2014such as Georgetown University and the University of Pennsylvania\u2014as well as IE Business School.<\/p>\n\n\n\n<p>From the imminent risks caused by climate change to the response on behalf of banking institutions and <a href=\"https:\/\/www.ie.edu\/uncover-ie\/the-value-of-design-innovation-a-view-from-ren-yee-of-unstudio\/\" target=\"_blank\" rel=\"noreferrer noopener\">innovative<\/a> new startups, Pedro knows exactly how economics can help us understand the challenges and opportunities arising from climate-fueled changes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-risks-of-climate-change\">Risks of climate change<\/h2>\n\n\n\n<p>There&#8217;s been a surge of natural disasters in recent years, including floods, wildfires, drought and hurricanes. And no one is exempt from these disasters. Record-breaking storms are now hitting regions that normally don\u2019t see them, such as <a href=\"https:\/\/www.ie.edu\/uncover-ie\/future-of-europe-economy-challenges-for-the-eu-politics-economics-global-affairs\/\" target=\"_blank\" rel=\"noreferrer noopener\">Central Europe<\/a>.<\/p>\n\n\n\n<div class=\"wp-block-columns right-image is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img fetchpriority=\"high\" decoding=\"async\" width=\"740\" height=\"480\" src=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change3.jpg\" alt=\"Expert economist &amp; professor Pedro Gete explains the economics of climate change\" class=\"wp-image-28343\" srcset=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change3.jpg 740w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change3-300x195.jpg 300w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change3-150x97.jpg 150w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change3-585x379.jpg 585w\" sizes=\"(max-width: 740px) 100vw, 740px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<h3 class=\"wp-block-heading\" id=\"h-but-we-can-t-simply-wait-for-the-storm-to-pass-climate-change-has-no-expiration-date\">But we can\u2019t simply wait for the storm to pass: \u201cClimate change has no expiration date.\u201d<\/h3>\n<\/div>\n<\/div>\n\n\n\n<p>These disasters have both short-term and long-term economic impacts. \u201cWeather-related financial losses are increasing, but the percentage of losses that are insured is not matching the increase in loss,\u201d Pedro explains. \u201cHow do we provide insurance when there are so many unknowns, in terms of weather?\u201d For example, after a local flood, the community would not only have to pay for the damages to their homes\u2014they\u2019d also have to pay more to insure their property moving forward.<\/p>\n\n\n\n<div class=\"wp-block-columns left-image is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<h3 class=\"wp-block-heading\" id=\"h-besides-the-physical-and-financial-risks-stemming-from-climate-change-there-are-also-transition-risks-that-arise-from-a-change-in-society-s-mentality-pedro-explains\">Besides the physical and financial risks stemming from climate change, there are also \u201ctransition risks\u201d that arise from a change in society\u2019s mentality, Pedro explains.<\/h3>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"740\" height=\"480\" src=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change4.jpg\" alt=\"Expert economist &amp; professor Pedro Gete explains the economics of climate change\" class=\"wp-image-28344\" srcset=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change4.jpg 740w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change4-300x195.jpg 300w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change4-150x97.jpg 150w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change4-585x379.jpg 585w\" sizes=\"(max-width: 740px) 100vw, 740px\" \/><\/figure>\n<\/div>\n<\/div>\n\n\n\n<p>These include shifts in policy, technologies, personal preferences and norms. In turn, they will have an effect on households, companies, and entire countries. For example: if a business decides to do away with plastic packaging and switch to recycled carton, this could result in a higher cost of doing business. This is later be reflected in the prices of the goods they offer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-central-banking-amp-regulations-shape-economic-impacts-of-climate-change\">Central banking &amp; regulations shape economic impacts of climate change<\/h2>\n\n\n\n<p>Of course, it\u2019s not just individuals and companies who play their part in responding to the climate crisis.<\/p>\n\n\n\n<div class=\"wp-block-columns right-image is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"740\" height=\"480\" src=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change1.jpg\" alt=\"Expert economist &amp; professor Pedro Gete explains the economics of climate change\" class=\"wp-image-28341\" srcset=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change1.jpg 740w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change1-300x195.jpg 300w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change1-150x97.jpg 150w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change1-585x379.jpg 585w\" sizes=\"(max-width: 740px) 100vw, 740px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<h3 class=\"wp-block-heading\" id=\"h-it-is-also-the-responsibility-of-governments-ngos-and-banking-institutions-to-try-to-pave-the-way-forward\">It is also the responsibility of governments, NGOs and banking institutions to try to pave the way forward.<\/h3>\n<\/div>\n<\/div>\n\n\n\n<p>The European Banking Authority has been collaborating with organizations to create better policies. One such policy includes the rule that EU banks must disclose the percentage of their loans and securities which adhere to the EU taxonomy. These new policies and guidelines aim to steer capital away from polluters and force investors. As such, money can be channeled into greener initiatives.<\/p>\n\n\n\n<p>Several countries have placed their bets on is <strong>climate stress testing<\/strong>. As Pedro explains, this \u201cconsists of testing banks\u2019 and corporations\u2019 resilience in a range of different climate scenarios.\u201d These tests can help us better prepare for climate crises\u2014both gradual and acute\u2014so as to stabilize the market. However, Pedro warns that we\u2019re still perfecting these testing programs. We simply don\u2019t yet have a solid way to quantify different indicators of risk.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-new-careers-in-economics-sustainable-startups-amp-climate-smart-investing\"><a><\/a>New careers in economics: Sustainable startups &amp; climate-smart investing<\/h2>\n\n\n\n<p>So, how can future economists like you play a part in creating a more stable and sustainable future?<\/p>\n\n\n\n<p><a href=\"https:\/\/www.ie.edu\/uncover-ie\/how-to-start-a-startup\/\" target=\"_blank\" rel=\"noreferrer noopener\">Innovative startups<\/a> like Cooler Future, <a href=\"https:\/\/trine.com\/\">Trine<\/a>, and <a href=\"https:\/\/os-climate.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">OS-C<\/a> (which Goldman-Sachs has recently joined as a member), make it easier to invest without hurting the planet. \u201cThese initiatives are part of a bigger wave of <strong>climate-smart investing<\/strong>,\u201d says Pedro. \u201cThey promote investments that are financially smart, low risk and make a positive impact.\u201d<\/p>\n\n\n\n<p>As an applied economist, you can encourage climate-smart investing in any role, whether you\u2019re a consultant, the founder of a startup, or a leader in a multinational corporation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-winners-and-losers-real-estate-and-climate-change\">Winners and losers: Real estate and climate change<\/h2>\n\n\n\n<p>\u201cReal estate is directly affected by climate.\u201d If you had any doubt before the masterclass, Pedro made it very clear that the real estate industry is not exempt from the effects of climate change, with coastal properties sinking, beach houses falling off cliffs, and buildings being swallowed by receding shorelines. But not all buyers bear the brunt of these effects.<\/p>\n\n\n\n<p>Pedro cited a Greenpeace report about La Manga del Mar Menor, predicting the land will sink across subsequent decades. After the report&#8217;s release, property prices logically dropped on the coast. However, rental prices for more inland spots stayed the same.<\/p>\n\n\n\n<p>Why is this an issue? According to Pedro, this response creates a divide, a line drawn between the winners and the losers of climate change. \u201cHigh-income earners will move to the top of the hill, so to speak, and low-income people will be stuck at the bottom of the hill, in high-risk areas of real estate.\u201d This divide is called<strong> climate gentrification<\/strong>, and its biggest enemy is those people and companies who vote for policies that only favor their own interests, without prioritizing long-term effects.<\/p>\n\n\n\n<div class=\"wp-block-columns left-image is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<h3 class=\"wp-block-heading\" id=\"h-we-need-a-way-to-all-work-together-with-the-same-goals-because-climate-change-has-a-great-impact-on-inequality-pedro-concluded\">\u201cWe need a way to all work together with the same goals, because climate change has a great impact on inequality,\u201d Pedro concluded.<\/h3>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"740\" height=\"480\" src=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change2.jpg\" alt=\"Expert economist &amp; professor Pedro Gete explains the economics of climate change\" class=\"wp-image-28342\" srcset=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change2.jpg 740w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change2-300x195.jpg 300w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change2-150x97.jpg 150w, https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change2-585x379.jpg 585w\" sizes=\"(max-width: 740px) 100vw, 740px\" \/><\/figure>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-big-picture\">The big picture<\/h2>\n\n\n\n<p>Pedro makes clear the climate crisis will affect the real estate sector, the banking industry and the broader economy. The best way forward\u2014for your career and for the planet\u2014is to <strong>embrace the innovative, long-term solutions <\/strong>that put equality and the planet front and center.<\/p>\n\n\n\n<div class=\"wp-block-columns banner h-banner banner-b is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<h3 class=\"wp-block-heading banner-title\" id=\"h-discover-more-about-the-economic-impacts-of-climate-change\">Discover more about the economic impacts of climate change<\/h3>\n\n\n\n<p class=\"banner-content\">Discover how our new Master in Applied Economics can propel you to the forefront of the industry.<\/p>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button banner-btn\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.ie.edu\/school-global-public-affairs\/programs\/graduate\/master-in-applied-economics\/\" target=\"_blank\" rel=\"noreferrer noopener\">Learn More<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The effects reach far beyond what you might have expected\u2014but there&#8217;s hope.<\/p>\n","protected":false},"author":56,"featured_media":28340,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[1094,337],"tags":[916,446,483,952],"class_list":["post-28339","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sustainability","category-thought-leadership-identity","tag-finance-economics-and-trade","tag-master-in-applied-economics","tag-masters","tag-school-of-politics-economics-and-global-affairs"],"acf":[],"yoast_head":"<!-- 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for expert insights on the world&#039;s future.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ie.edu\/uncover-ie\/expert-economist-professor-pedro-gete-explains-the-economics-of-climate-change\/\" \/>\n<meta property=\"og:site_name\" content=\"Uncover IE\" \/>\n<meta property=\"article:published_time\" content=\"2025-04-11T10:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-04-21T17:22:20+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.ie.edu\/uncover-ie\/wp-content\/uploads\/2021\/12\/Pedro-Gete-explains-the-economics-of-climate-change.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1437\" \/>\n\t<meta property=\"og:image:height\" content=\"733\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Benjamin Bridson\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" 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