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Extreme weather events occurring around the world are a daily reminder that our climate is rapidly changing due to human activity. The long-term pattern of weather, or climate, is determined by human behaviour interacting with the physical properties of Earth’s climate system. To understand how the climate is changing and prepare for the future, both in terms of mitigation and adaptation, we need accurate forecasts of the climate. However, human behaviour is non-stationary from both stochastic trends and location shifts. Consequently, the time-series data generated by the interaction of humanity and the climate are non-stationarity from distributional shifts, resulting in forecasts that are uncertain and prone to failure howsoever they are generated. We discuss how climate scientists and climate econometricians produce forecasts, drawing parallels between the scenario projections of climate scientists based on varying initial conditions and the conditional forecasts of econometricians capturing model uncertainty. The success of forecasts made by either approach hinges on the ability to handle unanticipated shifts as climate change is characterised by ‘the change in the change’. While unanticipated changes cannot be avoided, whether shifts that were once in the future were expected or not, they later become in-sample, so empirical modelling must take account of those to avoid distortions in parameter estimates and the resulting forecasts. We look at why it is important to identify and model location shifts and how doing so improves the verisimilitude of the model and its forecasts. Using indicator saturation estimators to capture in-sample shifts, improved econometric models and their forecasts can be achieved, as demonstrated within a system of four of the key climate variables, atmospheric CO2, global mean surface temperature deviations, ocean heat content deviations and global sea-level rise.

Environmental Economics Seminar Series

Every Monday from 4.05 to 5.05 pm in Michaelmas Term

In person details: Manor Road Building Skills Lab - Tea and cake will be served 15 minutes beforehand.

Zoom details:

Please contact Fulvia Marotta:


Research Themes

Research Programmes