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Houston, we have a problem: can satellite information bridge the climate-related data gap?

Author

Listed:
  • Andres Alonso-Robisco

    (Banco de España)

  • Jose Manuel Carbo

    (Banco de España)

  • Emily Kormanyos

    (DEUTSCHE BUNDESBANK)

  • Elena Triebskorn

    (DEUTSCHE BUNDESBANK)

Abstract

Central banks and international supervisors have identified the difficulty of obtaining climate information as one of the key obstacles to the development of green financial products and markets. To bridge this data gap, the use of satellite information from Earth Observation (EO) systems may be necessary. To better understand this process, we analyse the potential of applying satellite data to green finance. First, we summarise the policy debate from a central banking perspective. We then briefly describe the main challenges for economists in dealing with the EO data format and quantitative methodologies for measuring its economic materiality. Finally, using topic modelling, we perform a systematic literature review of recent academic studies to identify the research areas in which satellite data are currently being used in green finance. We find the following topics: physical risk materialisation (including both acute and chronic risk), deforestation, energy and emissions, agricultural risk and land use and land cover. We conclude with a comprehensive analysis on the financial materiality of this alternative data source, a mapping of these application domains to new green financial instruments and markets under development, such as thematic bonds or carbon credits, and some key considerations for policy discussion.

Suggested Citation

  • Andres Alonso-Robisco & Jose Manuel Carbo & Emily Kormanyos & Elena Triebskorn, 2024. "Houston, we have a problem: can satellite information bridge the climate-related data gap?," Occasional Papers 2428, Banco de España.
  • Handle: RePEc:bde:opaper:2428e
    DOI: https://doi.org/10.53479/37572
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    References listed on IDEAS

    as
    1. Beyer, Robert & Yao, Jiaxiong & Hu, Yingyao, 2022. "Measuring Quarterly Economic Growth from Outer Space," VfS Annual Conference 2022 (Basel): Big Data in Economics 264007, Verein für Socialpolitik / German Economic Association.
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    4. Feng, Cong & Fay, Scott, 2022. "An empirical investigation of forward-looking retailer performance using parking lot traffic data derived from satellite imagery," Journal of Retailing, Elsevier, vol. 98(4), pages 633-646.
    5. Monica Singhania & Neha Saini, 2023. "Institutional framework of ESG disclosures: comparative analysis of developed and developing countries," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 13(1), pages 516-559, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    satellite data; sensors; green finance; central banking;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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