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Abstract Higher temperatures linked to climate change lead to people feeling increasingly heat stressed compromising their health and reducing economic activity. In this paper we assess the potential economic impact of heat stress on working people in urban Malaysia by analysing the loss in productivity that they associate with heat stress. We found that nearly every respondent (99%) from a sample of 514 drawn from an online survey sometimes feels heat stressed and also less productive as a result. The median number of days in a year on which people felt their productivity had been compromised because of heat stress was 29. On those days half of the respondents felt their work capacity had been at least halved. The estimated median annual loss from reduced productivity was 257 €, nearly 10% of respondents' median annual income. Respondents who work in mentally challenging jobs are more affected by heat than those in physically intense jobs. They also receive the highest incomes, so suffer the highest losses. Our research suggests that the real economic costs of heat has probably been under-estimated because most research has so far focused on people working in physically intense outdoor jobs or those performed in very hot environments. Highlights • We conducted an online survey with 514 people across urban Malaysia • Almost every respondent reported to feel heat stress where they live • When feeling hot many respondents only work at half of their capacity • The median annual productivity loss from heat stress is 257 € per person [ABSTRACT FROM AUTHOR]

This paper develops a stock-flow-fund ecological macroeconomic model that combines the stock-flow consistent approach of Godley and Lavoie with the flow-fund model of Georgescu-Roegen. The model has the following key features. First, monetary and physical stocks and flows are explicitly formalised taking into account the accounting principles and the laws of thermodynamics. Second, Georgescu-Roegen's distinction between stock-flow and fund-service resources is adopted. Third, output is demand-determined but supply constraints might arise either due to environmental damages or due to the exhaustion of natural resources. Fourth, climate change influences directly the components of aggregate demand. Fifth, finance affects macroeconomic activity and the materialisation of investment plans that determine ecological efficiency. The model is calibrated using global data. Simulations are conducted to investigate the trajectories of key environmental, macroeconomic and financial variables under (i) different assumptions about the sensitivity of economic activity to the leverage ratio of firms and (ii) different types of green finance policies. [ABSTRACT FROM AUTHOR]

In integrated assessment models (IAMs) economic activity leads to global warming, which causes future economic costs. However, typical IAMs do not explicitly represent the role of natural capital. In this paper, the DICE model by Nordhaus (2008) is expanded with a natural capital variable that is affected both by climate change and by depletive effects of economic activity. Due to a synergy between the two effects, the optimal policy of the expanded model features more and earlier abatement of CO 2 emissions than DICE. Interestingly, the policy implications are different from what follows if one tries to capture the depletive effects on natural capital by simply reducing factor productivity growth in DICE. Acknowledging considerable uncertainty, simulations show that climate- and savings rate policies from the expanded model are more robust in the long term than policies that do not consider non-climatic depletion effects on natural capital. [ABSTRACT FROM AUTHOR]

Ecological economics was formally established in 1989 with the ambitious vision of developing a new economic paradigm embedding the social and economic systems in the biophysical world. Ecological economics had its roots in the biophysical understanding of economics that pioneers of the field Georgescu-Roegen (1971), Odum (1971), Daly (1977), Jansson (1984), Martinez-Alier (1987) and others developed while studying the thermodynamic bedrocks shared by natural and social systems. Subsequently, however, ecological economics has explicitly but controversially adopted a 'big umbrella' approach to methodological pluralism, focusing more on topics such as valuing nature and its functions rather than attempting to understand and quantify the biophysical roots of economic activities. Biophysical economics was established in response to these concerns, focusing more on developing analyses and models of the transformations of nature to generate wealth and approached mostly from an energy and material flows perspective. The present paper argues that to achieve its original vision ecological economics must return to its biophysical roots. Collaboration between the two fields will help the next generation of thinkers to address the socio-ecological challenges of the 21st century requiring an energy transformation called for by aspirations such as the Green New Deal and the UN Sustainable Development Goals. • The biophysical foundation of socio-economic systems must be at the center of the research agenda of ecological economics. • The socio-ecological challenges of the 21st century are biophysical in nature and will require education, management and policy that is based more on these biophysical realities and principles. • Prioritizing these biophysical foundations is fundamental for the next energy transition. • If proper biophysical procedures (such as comprehensive energy analyses) are not undertaken no "sustainable" recommendations can be considered valid. [ABSTRACT FROM AUTHOR]