How markets can help society adapt to climate change 

Philadelphia, PA — When carefully designed and supported by thoughtful public policy, markets can play a meaningful role in helping communities effectively and efficiently manage the risks of climate change, according to a new article coauthored by Dr. R. Jisung Park. Dr. Park is an assistant professor at Penn’s School of Social Policy & Practice (SP2) with a secondary appointment at the Wharton School.

Published in Science (Policy Forum), the article draws on the growing body of economic research on climate adaptation, defined by the authors as any decision made in response to the climate, ranging from individual actions to largescale public infrastructure projects. 

“Carefully designed and regulated markets can, in many cases, encourage the economy to adapt to the complex and widespread impacts of the current climate and future climate change,” Dr. Park and coauthors write. But the article also emphasizes that government policy strongly shapes how, and how well, markets function.

The authors find that certain policy interventions can make markets function more efficiently, while others may inadvertently hinder markets’ potential to enable climate adaptation. Reassessing potentially constraining or counterproductive policies can make markets more effective and better incentivize adaptation.

Government action can also help create new markets that deliver social benefits and support innovation. “Facilitating market formation is a powerful way to prepare key segments of the economy for climate change,” the authors explain.

The article also emphasizes that some challenges, such as equity concerns, political barriers, incomplete property rights, and large public good needs, cannot be addressed by markets alone and require direct policy intervention. Because markets often reward profit over social benefit and do not always ensure fairness, the authors argue that government intervention may be necessary to protect marginalized groups.

Decisions made around climate adaptation today carry long-term implications and enormous financial stakes. “Without thoughtful policy, society may underinvest in adaptation, and investments may be made in the wrong locations or solutions,” the authors conclude, “The stakes are tremendous and the obstacles daunting, but careful research shines a light on promising paths to a better-adapted future.”

The article, “Using markets to adapt to climate change,” appears in the February 12, 2026 issue of Science (Vol. 391, Issue 6786).

Dr. R. Jisung Park is an environmental and labor economist interested broadly in how environmental factors shape economic opportunity. He is author of the book “Slow Burn: The Hidden Costs of a Warming World,” and will lead the forthcoming Center for Climate Adaptation and Resilience at Penn. Prior to joining Penn, he was a member of the faculty at UCLA and a post-doctoral fellow at Harvard. Park’s research combines data, quasi-experimental methods, and economic analysis to better understand the implications of environmental change for human flourishing and how effective policy responses may be designed.