We develop and apply a framework to test for and measure green waste: the misallocation of public subsidies for green investment projects. Our context is a major Norwegian subsidy program to reduce carbon emissions. We apply the framework to detailed project-level data on carbon emissions and subsidy amounts for both marginal and inframarginal projects. We find that the decision-maker could have achieved the same level of emission reductions at less than half the cost. To isolate the sources of this green waste, we use data on both ex-ante expected and ex-post realized emission reductions for each project. We find that the decision-maker is able ex-ante to identify the projects with the highest ex-post emission reductions but unwilling to select them.

I study how climate change affects housing markets, mortgage credit, and private adaptation in a general-equilibrium overlapping-generations model. Climate events damage housing and degrade land, which is inelastically supplied. While exposure to future climate risk lowers expected resale values, realized climate damages reduce effective housing supply, raising house prices over time. In frictionless markets, forward-looking prices support efficient adaptation. However, credit-constrained households underinvest in resilience, implying that price signals alone are insufficient. Unequal adaptation amplifies wealth inequality and accelerates land degradation, tightening credit constraints and widening the adaptation gap. I show that a shift toward landlord-based ownership can restore efficiency.

We develop a spatial model of climate risks when goods markets across regions are economically integrated but firms can only insure against local climate shocks. We show that firms' insurance demands across regions can be strategic complements or substitutes depending on the correlation of climate shocks across regions. Strategic complementarity can result in equilibrium multiplicity when regions are highly integrated, leading to underinsurance traps. Underinsurance can persist even at actuarially fair insurance premiums and can be Pareto dominated by an economy without insurance markets. We show that insurance market collapse in one region creates contagion effects, potentially contracting insurance markets in other regions. Insurance subsidies can paradoxically worsen the underinsurance problem.