Climate Economics & Finance

Economics Analysis and Climate Change

Economics is fundamentally concerned with valuing and optimising the use of resources to achieve efficient, equitable outcomes for society. Climate change and environmental degradation have become central variables in this calculus, not peripheral concerns, but structural drivers of risk, cost, and opportunity. This is especially true in India, where the economy remains deeply sensitive to shifting weather patterns and increasingly exposed to extreme climate events that affect agriculture, infrastructure, and livelihoods. At the same time, Indian policy operates under a dual mandate: sustaining high growth while advancing sustainable development. Climate economics provides the tools to navigate this tension, assessing risks, quantifying costs, and estimating future damages across emission and policy scenarios.

Financing Climate Action

Meeting India's NDC targets through 2030 demands an estimated USD 2.5 trillion, far exceeding what public budgets can deliver. This makes the economics of climate finance as consequential as the targets themselves: understanding how capital is mobilised, priced, and directed across mitigation, adaptation, and resilience strategies is essential to closing the gap efficiently and equitably.

Building the Evidence Base

GR produces novel research and policy-relevant analysis through economic modelling, generating the evidence needed to build a rigorous economic case for climate action. This spans quantifying the costs of action and inaction on short-lived climate pollutants, evaluating economy-wide climate risks, and developing analytical tools from social cost estimates to abatement cost curves that translate climate science into economic terms decision-makers can act on.

From Research to Policy

Evidence alone does not drive change; it must be translated into frameworks that shape investment, regulation, and fiscal strategy. GR's climate economics work is designed with this in mind: guiding India's climate investment strategies, informing regulatory frameworks, and supporting the alignment of monetary and fiscal policy with India's climate commitments, working across ministries, financial institutions, and market processes.

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Technical Capabilities

How we do it: By integrating Economic modelling and analysis to evidence-based climate science research

Reformed GHG Accounting: RFA
Conventional GWP₁₀₀ systematically undervalues short-lived climate pollutants. Our Radiative Forcing-based Accounting (RFA) framework assigns dynamic multipliers to multi-gas mitigation activities, calculating carbon credits based on actual radiative forcing contributions. Outputs include a peer-reviewed publication and an interactive dashboard, with ongoing engagement with BEE and voluntary carbon market participants.
Pricing the Cost of Inaction
We quantify the economic damage of emitting one additional tonne of GHGs, or the benefit of an equivalent reduction, using the GIVE Integrated Assessment Model. Current findings include India-specific social cost estimates to inform climate damage assessment frameworks and support mitigation and finance mobilisation strategies.
Following the Money: Fiscal Expenditure Analysis
Fiscal policy is a powerful lever for climate action, yet its climate alignment often goes unmeasured. We have examined India's Union Budget through a Climate Budget Tagging framework to classify climate-relevant spending, track trends across budget years, and generate recommendations to strengthen budget-climate alignment for finance and planning ministries.
From Abatement to Action: MACCs, T-MACCs, and Cost-Benefit Analysis
We develop sector-specific Marginal Abatement Cost Curves mapping mitigation potential and cost per tonne of emission/pollutant, extended into Temperature-aligned MACCs incorporating avoided warming impacts. Cost-Benefit and Cost-Effectiveness Analysis further evaluate climate and air quality interventions, translating abatement data into actionable investment guidance.
Economy-wide Assessments
We deploy foundation economic (such as CGE) and Integrated Assessment Models to evaluate macroeconomic climate risks at scale, highlighting systemic exposures that conventional climate assessments overlook. A key focus is how Arctic-driven shifts in temperature and precipitation propagate through India's agriculture, trade, labour productivity, and household behaviour.
Risk Assessment to Socio-economic Response
We can evaluate the impact of hazard, exposure, and vulnerability of climate extremes at both micro-economic and macro-economic levels, tracing how disaster events affect households, firms, and fiscal systems. This evidence can inform a range of responses, from ground-level adaptation action and financial instrument design to monetary policy calibration, building the analytical foundation for climate-resilient governance.