Bracing for the typhoon: climate change and sovereign risk in Southeast Asia

This article investigates and empirically tests the link between climate change and sovereign risk in Southeast Asia. Southeast Asian countries are among those most heavily affected by climate change. The number and intensity of extreme weather events in the region have been increasing markedly, causing severe social and economic damage. Southeast Asian economies are also exposed to gradual effects of global warming as well as transition risks stemming from policies aimed at mitigating climate change. To empirically examine the effect of climate change on the sovereign risk of Southeast Asian countries, the paper employs indices for vulnerability and resilience to climate change and estimate country-specific OLS models for six countries and a fixed-effects panel using monthly data for the period 2002–2018.