Daniela Arlia and Rachele Rizzo
The consequences of climate change and the transition to a carbon-neutral economy are not the same for all households, sectors and regions. Droughts, for example, can drive up food prices. This hits low-income households harder than others, as they spend a larger share of their income on essentials like food. Owners of energy-efficient homes may see the value of their properties increase, but homes in flood-prone areas may lose value.[1] These unequal effects matter for the ECB and other central banks because, if nothing is done to mitigate them, they can amplify and prolong economic shocks.
To illustrate this, think of a region dependent on coal mining: if coal is phased out as a source of energy, many firms and workers could be affected at the same time. If local employment opportunities are reduced, this could further weaken businesses, services and housing markets in the area. These cumulative effects may make it harder for the region to adapt. In more diversified regions, on the other hand, workers may find alternative employment opportunities more easily, which would help the local economy to recover after a transition shock.
Πηγή: ECB