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

Andres Alonso-Robisco, Jose Manuel Carbo, Emily Kormanyos and Elena Triebskorn
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Andres Alonso-Robisco: Banco de España
Jose Manuel Carbo: Banco de España
Emily Kormanyos: DEUTSCHE BUNDESBANK
Elena Triebskorn: DEUTSCHE BUNDESBANK

No 2428, Occasional Papers from Banco de España

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.

Keywords: satellite data; sensors; green finance; central banking (search for similar items in EconPapers)
JEL-codes: C55 C8 Q56 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2024-08
New Economics Papers: this item is included in nep-agr, nep-cba and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2428e

DOI: 10.53479/37572

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