Advances in remote sensing and real-time monitoring technology are rapidly and radically lowering the costs...

When COVID-19 swept the world in early 2020 and closed or restricted business activity, researchers and policymakers scrambled to determine the virus’s economic impact on everything from employment, income, and childcare to business closures, commercial property, and work-from-home strategies. Policymakers needed answers fast to plan the most efficacious responses and direct limited resources to benefit those who needed it the most.

That unchecked climate change will profoundly affect the world’s economy well into the future is almost universally accepted among researchers. But the world is not a homogeneous economy; likewise, climate change will also affect different parts of the world in different ways.

In recent years, some central banks have added a new responsibility to their list of tasks: ameliorate the effects of climate change. This could mean monitoring the short- and long-term exposure of financial institutions to climate change, or it could mean actively directing regulated financial institutions to invest in certain industries. In either case, central banks will have to determine how best to anticipate the likely effects of climate change many years into the future.