Funding climate change research in economics: Another bottleneck?

Funding climate change research in economics: Another bottleneck?

Two years ago, our journal assessment showed that economists’ response to the planetary emergency has been incommensurate with the magnitude and urgency of this crisis. Since then, other studies have added evidence to that claim (see Roos & Hoffart, 2021). In this blog piece, we examine one potential reason behind that: the lack of funding for economic research on climate change. 

Funding might be only a small reason for the research output gap, but it still matters. Looking at 100 275 SSCI indexed papers in economics published between 2009 and 2014, Zhao et al. (2016) find that only 8.3% of these papers were externally funded. This is quite low, compared to 22.4% funding ratio in all social science papers and a 56.5% funding ratio for the natural sciences. Nevertheless, public funding of research in economics remains a crucial tool for policymakers to steer the direction of the discipline. Public funding organizations have an enormous signaling effect that can inspire new tranches of research and can enable the undertaking of complex and otherwise not feasible projects. 

In economics, the biggest public funding player sits in the USA. A keyword analysis of articles in the top 300 economics journals available on the platform Scopus shows that the organization that funds most economics papers is the National Science Foundation (NSF) in the USA. It is followed by China’s National Natural Science Foundation (NNSF) and the UK’s Economic and Social Research Council. Interestingly, the top two institutions are primarily funders for natural science research. The dominance of the USA and the NSF in particular becomes even clearer when measuring it against the number of articles sponsored in the top 10 journals. 

China leads the funding landscape in climate change economics. The Chinese National Natural Science Foundation is by far the biggest sponsor of economics articles on climate change. With some distance follow the European Commission, the US National Science Foundation, and the UK Economic and Social Research Council. The number of climate change economics articles sponsored by the EU and the USA overall comes close to the overall research output related to Chinese funding, but does not surpass it. 

The paper output related to funding by the National Natural Science Foundation of China was at basically zero until 2012. Since then, it has increased significantly, and since 2017, it jumped upwards in big steps. The EU Commission and the UK’s Economic and Social Research Council started funding economists’ research on climate change much earlier, already in the early 2000s, but the related output has not been growing as consistently and as fast.  

Zooming in: The National Science Foundation in the USA. The NSF is a good potential case study because it is the biggest public funding research organization in the USA and in the field of economics. Its economics programme supports research in almost every area of economics, including econometrics, economic history, environmental economics, finance, industrial organization, international economics, labor economics, macroeconomics, mathematical economics, and public finance. Its database includes information about all grants that have been awarded in the economics programmes and can be filtered by keywords. It is more reliable than the data assembled on Scopus. For the analysis, we only select all active and expired grants in the NSF economics programme (code 1320) and enter the following search string: “climate change”, carbon, “global warming”, “greenhouse gases”.   

Less than 3% of all overall grants in the economic programme of the NSF have gone to climate change-related research. In terms of money, less than 5% of the economics budget was spent on climate change-related projects. Both facts relate the time period of 1990 till 2021. Overall, the number of awards has even been going down. 

In comparison to other topics it becomes clear that the amount of funding to climate change-related projects in the NSF economics programme is quite low. To illustrate, the NSF awards more grants on retirement and pensions than on climate change. 

Surely, more research is needed to better understand where and why there is a funding bottleneck for economics research on climate change. But given the magnitude of the climate and ecological crisis, we already know that we need to prioritize such research more. It is upon policymakers and public funding organizations to do so. 

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