RWTH Aachen University, Germany

Work in Progress Summary: The Effects of Natural Disasters on Green Innovation

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ABSTRACT

We study how inventors respond to natural disasters. We exploit random variation of natural disaster occurrence and location to estimate event study designs. We geolocate European inventors and spatially match them to natural disasters. In affected areas, exposure to natural disasters results in a 20% increase in green patents. The effect is primarily driven by increased innovation in mitigation technologies aiming to reduce emissions. There is no effect on non-green innovation. We propose a theoretical model to understand the underlying mechanism and provide empirical evidence that inventors respond to natural disasters by updating beliefs on future consumer demand for green goods. Our results highlight an important inefficiency in how innovation responds to climate change. In our model, purely local responses to natural disasters yield suboptimal research levels from a welfare perspective. The policy implication is that propagating the information carried by the disasters beyond locally affected inventors can raise welfare.

BIOGRAPHY

Lisa is a third-year Doctoral Candidate in Innovation, Strategy, and Organizations at RWTH Aachen. Her doctoral research draws on quantitative methods to explore private innovation in the public interest. She is interested in exploring firms' motivations to create green innovations following extreme events. Furthermore, she studies how the creation of regional embedded innovation ecosystems can help transform regional capabilities sustainably.  

Lisa holds a master’s degree in economics from the University of Cologne and a Bachelor of Science degree in International Business Administration from the European University Viadrina. Before joining the PhD program, Lisa worked as a business development and strategy analyst in the e-commerce and mechanical engineering sectors.