Knowledge Asymmetries and Climate Finance: An Inquiry into Environmental Market Failures and Political Legitimacy
Cambridge Journal of Climate Research, 2025
In archetypal credit and capital markets, informational gaps can lead to the withdrawal of high-impact participants and incentivise excessive risk-taking by parties unaware of the risks they face. Within climate-related markets there is a similar trend: investors systematically underestimate tail risks associated with carbon-intensive assets—including risks from climate-caused natural events, which threaten those assets—while firms strategically under-disclose their exposure to these physical and transition risks.
Recommended citation: Rice, James. (2025). "Knowledge Asymmetries and Climate Finance: An Inquiry into Environmental Market Failures and Political Legitimacy." Cambridge Journal of Climate Research, 2(2), 117-135.
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