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Climate Engineering Economics

Author

Listed:
  • Garth Heutel

    (Department of Economics, Georgia State University, Atlanta, Georgia 30302)

  • Juan Moreno-Cruz

    (School of Economics, Georgia Institute of Technology, Atlanta, Georgia 30332)

  • Katharine Ricke

    (Department of Global Ecology, Carnegie Institution for Science, Stanford, California 94305)

Abstract

This article reviews and evaluates the nascent literature on the economics of climate engineering. The literature distinguishes between two broad types of climate engineering: solar radiation management and carbon dioxide removal. We review the science and engineering characteristics of these technologies and analyze the implications of those characteristics for economic policy design. We discuss optimal policy and carbon price, interregional and intergenerational equity issues, strategic interaction in the design of international environmental agreements, and the sources of risk and uncertainty surrounding these technologies. We conclude that climate engineering technologies, similar to mitigation and adaptation, should be a fundamental part of future domestic and global climate policy design. We propose several avenues in need of additional research.

Suggested Citation

  • Garth Heutel & Juan Moreno-Cruz & Katharine Ricke, 2016. "Climate Engineering Economics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 99-118, October.
    • Handle: RePEc:anr:reseco:v:8:y:2016:p:99-118
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    File URL: http://www.annualreviews.org/doi/10.1146/annurev-resource-100815-095440
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    References listed on IDEAS

    as
    1. Gernot Wagner & Martin L. Weitzman, 2016. "Climate Shock: The Economic Consequences of a Hotter Planet," Economics Books, Princeton University Press, edition 2, number 10725.
    2. Heutel, Garth & Moreno-Cruz, Juan & Shayegh, Soheil, 2018. "Solar geoengineering, uncertainty, and the price of carbon," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 24-41.
    3. Jana Sillmann & Timothy M. Lenton & Anders Levermann & Konrad Ott & Mike Hulme & François Benduhn & Joshua B. Horton, 2015. "Climate emergencies do not justify engineering the climate," Nature Climate Change, Nature, vol. 5(4), pages 290-292, April.
    4. Emmerling, Johannes & Tavoni, Massimo, 2013. "Geoengineering and Abatement: A “flat” Relationship under Uncertainty," Climate Change and Sustainable Development 148917, Fondazione Eni Enrico Mattei (FEEM).
    5. Olivier Sterck, 2011. "Geoengineering as an alternative to mitigation: specification and dynamic implications," Working Papers halshs-00635487, HAL.
    6. Scott Barrett, 2008. "The Incredible Economics of Geoengineering," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(1), pages 45-54, January.
    7. Heyen, Daniel, 2015. "Strategic Conflicts on the Horizon: R&D Incentives for Environmental Technologies," Working Papers 0584, University of Heidelberg, Department of Economics.
    8. Ricke, Katharine L & Cole, Jason N S & Curry, Charles L & Irvine, Peter J & Ji, Duoying & Kravitz, Ben & MacMartin, Douglas G & Robock, Alan & Rasch, Philip J & Keith, David & Egill Kristjánsson, Jó, 2014. "A multi-model assessment of regional climate disparities caused by solar geoengineering," Scholarly Articles 23936192, Harvard Kennedy School of Government.
    9. Juan Moreno-Cruz & Katharine Ricke & David Keith, 2012. "A simple model to account for regional inequalities in the effectiveness of solar radiation management," Climatic Change, Springer, vol. 110(3), pages 649-668, February.
    10. Heutel, Garth & Moreno-Cruz, Juan & Shayegh, Soheil, 2016. "Climate tipping points and solar geoengineering," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 19-45.
    11. Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
    12. Martin L. Weitzman, 2015. "A Voting Architecture for the Governance of Free-Driver Externalities, with Application to Geoengineering," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1049-1068, October.
    13. Juan Moreno-Cruz & David Keith, 2013. "Climate policy under uncertainty: a case for solar geoengineering," Climatic Change, Springer, vol. 121(3), pages 431-444, December.
    14. Timo Goeschl & Daniel Heyen & Juan Moreno-Cruz, 2013. "The Intergenerational Transfer of Solar Radiation Management Capabilities and Atmospheric Carbon Stocks," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(1), pages 85-104, September.
    15. Gernot Klepper & Wilfried Rickels, 2014. "Climate Engineering: Economic Considerations and Research Challenges," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(2), pages 270-289.
    16. repec:awi:wpaper:540 is not listed on IDEAS
    17. Sillmann, Jana & Lenton, Timothy M. & Levermann, Anders & Ott, Konrad & Hulme, Mike & Benduhn, Francois & Horton, Joshua, 2015. "Climate emergencies do not justify engineering the climate," Scholarly Articles 22532507, Harvard Kennedy School of Government.
    18. Adam Millard-Ball, 2012. "The Tuvalu Syndrome," Climatic Change, Springer, vol. 110(3), pages 1047-1066, February.
    19. Klaus S. Lackner & Jeffrey D. Sachs, 2005. "A Robust Strategy for Sustainable Energy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 215-284.
    20. Derek Lemoine & Christian Traeger, 2014. "Watch Your Step: Optimal Policy in a Tipping Climate," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 137-166, February.
    21. J. Eric Bickel, 2013. "Climate engineering and climate tipping-point scenarios," Environment Systems and Decisions, Springer, vol. 33(1), pages 152-167, March.
    22. Scott Barrett, 2014. "Solar Geoengineering’s Brave New World: Thoughts on the Governance of an Unprecedented Technology," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(2), pages 249-269.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Campiglio, Emanuele & Dietz, Simon & Venmans, Frank, 2022. "Optimal climate policy as if the transition matters," LSE Research Online Documents on Economics 117610, London School of Economics and Political Science, LSE Library.
    2. Heutel, Garth & Moreno-Cruz, Juan & Shayegh, Soheil, 2018. "Solar geoengineering, uncertainty, and the price of carbon," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 24-41.
    3. Todd Sandler, 2018. "Collective action and geoengineering," The Review of International Organizations, Springer, vol. 13(1), pages 105-125, March.
    4. Benjamin K. Sovacool & Chad M. Baum & Sean Low, 2022. "Determining our climate policy future: expert opinions about negative emissions and solar radiation management pathways," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(8), pages 1-50, December.
    5. Waxman, Andrew R. & Corcoran, Sean & Robison, Andrew & Leibowicz, Benjamin D. & Olmstead, Sheila, 2021. "Leveraging scale economies and policy incentives: Carbon capture, utilization & storage in Gulf clusters," Energy Policy, Elsevier, vol. 156(C).
    6. Bento, Antonio M. & Miller, Noah & Mookerjee, Mehreen & Severnini, Edson R., 2020. "A Unifying Approach to Measuring Climate Change Impacts and Adaptation," IZA Discussion Papers 13290, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    climate change; geoengineering; solar radiation management; carbon dioxide removal; climate policy;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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