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Solar geoengineering, uncertainty, and the price of carbon

Author

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  • Heutel, Garth
  • Moreno-Cruz, Juan
  • Shayegh, Soheil

Abstract

We consider the socially optimal use of solar geoengineering to manage climate change and its implications for carbon emissions abatement policy. We show that solar geoengineering is a substitute for emissions abatement; optimal policy includes less abatement, by up to eight percentage points, and has a lower carbon price, by up to fifteen percent, than recommended by models that ignore solar geoengineering. However, it is an imperfect substitute, since it reduces temperature without reducing atmospheric or ocean carbon concentrations. Carbon concentrations are higher but temperature is lower when allowing for solar geoengineering. Ignoring geoengineering in climate models can lead to welfare losses of up to 4 percent of GDP. Uncertainty over climate sensitivity leads to more abatement and solar geoengineering, while uncertainty over solar geoengineering damages leads to less geoengineering.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeeman:v:87:y:2018:i:c:p:24-41
    DOI: 10.1016/j.jeem.2017.11.002
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    Cited by:

    1. 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.
    2. 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.

    More about this item

    Keywords

    Q54; H23; C61; Geoengineering; Solar radiation management; Carbon tax; DICE;

    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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