A market-led approach could be key to guiding policy, research and business decisions about future climate risks, a new study outlines.
Published today in the journal Nature Climate Change, the paper from academics at the Universities of Lancaster and Exeter details how expert 'prediction markets' could improve the climate-risk forecasts that guide key business and regulatory decisions.
Organisations now appreciate that they have to consider climate risks within their strategic plans - whether that relates to physical risks to buildings and sites, or risks associated with transitioning to achieve net zero.
However, the forward-looking information needed to inform these strategic decisions is limited, the researchers say.
Dr Kim Kaivanto, a co-author from Lancaster University's Department of Economics, said: "The institutional arrangements under which climate-risk information is currently provided mirrors the incentive problems and conflicts of interest that prevailed in the credit-rating industry prior to the 2007/8 financial crisis.
"In order to make sense of emissions scenarios and to support planning and decision-making, organisations have a pressing need for this type of forward-looking expert risk information.
