Sarah Duffy, Department of Economics DPhil, has been named as a co-recipient of the 2025 E-Axes Prize for her job market paper 'Climate Change, Adaptation, and Sovereign Risk'.
The award recognises outstanding research conducted by young scholars in macroeconomic policies and sustainability.
Sarah's paper addresses a critical question: what happens when climate vulnerability collides with sovereign risk? Her research shows that climate vulnerable economies can fall into an “adaptation trap”. High borrowing costs lead to under-investment in adaptation, greater vulnerability to natural disasters and higher borrowing costs in the future.
Using a novel dataset on adaptation spending, Sarah finds that investment in resilience is declining in sovereign risk. Her model estimates that around 10% of hurricane losses in the Caribbean can be attributed to this adaptation–sovereign risk channel. The findings offer important insights into how financial markets and climate policy interact, highlighting the need for mechanisms that can break the cycle of vulnerability and debt.
The E-Axes Prize Selection Committee praised Sarah's research for addressing the objectives of the Prize extremely well. The Forum assessed papers using three selection criteria: innovative thinking and scientific merit, implications for policymakers, and relevance to the themes outlined for this year's topic.
The committee selected her paper to share the award with Shifrah Aron-Dine of UC Berkeley for her paper 'Rebuild or Relocate? Recovery after Natural Disasters'.
Sarah will present her research at an E-Axes Forum webinar in January 2026, moderated by a member of the Prize Committee.
Our Department warmly congratulates Sarah on this achievement!
