2025 Theses Doctoral

Essays on Climate Change, Real Assets Markets and the Macroeconomy

Bierdel, Aimé

This dissertation consist of three independent chapters.

The first chapter addresses thequestion: Will technology help us adapt to future climate conditions? I examine the case of irrigation—an essential technology for adapting agriculture to climate change- and find a "hump-shaped" adoption pattern in the United States: irrigation use increases at mild dryness levels and declines under severe dryness despite increasing benefits and willingness to pay for irrigated land. I provide evidence that water scarcity, itself worsened by climate change, drives these dynamics by limiting the effectiveness of irrigation technologies and their adoption in the United States. This "window of opportunity" pattern —where adaptation technologies are most effective under moderate climate change and lose effectiveness thereafter— holds true for many climate adaptation strategies.

To explore its consequences, I incorporate this feature into a stylized macro-finance model with climate change and an adaptation technology. The model yields diverging adaptation strategies depending on the intensity of global warming: Adaptation investment is high for moderate warming and low for severe scenarios. As a consequence, I find that uncertainty about future climate discourages adaptation investment by making its returns uncertain. This result highlight the benefits of commitment mechanisms that can reduce climate uncertainty as they encourage more proactive adaptation efforts.

The second chapter focuses on the link between spatial allocation of resources and adaptation by focusing on the fascinating case of Spanish agriculture. Over the past 25 years, agricultural value added has grown the most in Spanish regions where dryness worsened the most, a trend that contradicts the predictions of current spatial integrated assessment model. I resolve this paradox by demonstrating that this growth coincides with the widespread adoption of irrigation technology, which exhibits increasing returns to scale.

Using a stylized multi-region macroeconomic model that incorporates climate change and adaptation technologies, I show that if the cost of climate adaptation scales less than linearly with the capital it protects, a strategy of concentrating capital in highly productive and well-protected areas dominates reallocating resources to less exposed regions. This mirrors the observed dynamics in Spain. Given that scale benefits are common in current climate adaptation technologies, these findings suggest migration and regional investment patterns that differ markedly from those predicted by integrated assessment models, which often overlook technological adaptation. Specifically, the model implies a reallocation of resources toward wealthier areas capable of affording protection, rather than a shift to less exposed regions.

The final chapter of this dissertation is a co-authored project that addresses the macroeconomic implications of asymmetric information in capital markets. We build a quantitative capital-accumulation model in which capital is traded in illiquid markets, with sellers having more information about capital quality than buyers. Asymmetric information distorts the terms of trade for sellers of high-quality capital, who list higher prices and are willing to accept lower trading probabilities to signal their type. Led by the model’s predictions, we measure the distortions from asymmetric information by studying the relationship between listed prices and trading probabilities in a unique dataset of individual capital units listed for trade. By combining the empirical measurement with the model, we show that information asymmetries can play a quantitatively large role during economic crises when the degree of asymmetric information deteriorates.