IPCC Expert Meeting on Geoengineering

Annex 3: Keynote Abstracts
Keynote I-3: A Primer on the Economics of Solar Radiation Management
Scott Barrett
School of International and Public Affairs and Earth Institute, Columbia University, USA
‘Solar radiation management’ (SRM) is a term sometimes used for engineering interventions that seek to alter the Earth’s
climate without affecting the atmospheric concentration of greenhouse gases. Put very crudely, the idea involves an
engineering intervention that either increases the reflectivity of the Earth or that reduces the amount of incoming solar
radiation before it reaches the Earth (Keith, 2000; Crutzen, 2006). Though engineering serves as a means for
accomplishing the end of influencing the climate, “management” may not be the best word to describe its application.
There may be sharp disagreement about the circumstances in which this engineering intervention should be considered—or
even if it should be considered at all (Robock, 2008). There may also be disagreement about the desired end. (What is the
ideal global climate?) The central social, political, legal, and ethical challenges posed by this technology all concern
governance (Schelling, 2006; Bodansky, 1996; Barrett, 2008; Victor, 2008). The economics of this form of geoengineering
is important mainly because it makes this challenge of governance acute: some forms of geoengineering are very
inexpensive (Barrett, 2009).
Possible use of this form of geoengineering should be considered in the context of the other ways in which climate change,
and the effects of climate change, can be influenced. Emissions of greenhouse gases can be reduced, to limit increases in
atmospheric concentrations; R&D can be undertaken, to lower the costs of reducing emissions in the future; affected
parties can adapt, to lower the damages (and possibly to augment the advantages) attributable to climate change; and
techniques for “direct carbon removal” can be used to limit concentrations directly.
Anything that affects the climate will have global implications. Countries not involved in the effort will also be affected, for
better or worse (making these interventions a global public good or a global public bad). For these reasons, countries have
weak incentives individually to reduce their emissions—even though they may have great incentives collectively to do so
(Barrett, 2007). This is known as the “free riding” problem. Similarly, because the benefits of R&D are derived from the
likelihood that technologies embodying the R&D will be deployed for the purpose of reducing emissions, if the incentives to
deploy are weak, the incentives to invest in R&D will be weak (Barrett, 2006). The incentives to adapt will be very
powerful. A substantial portion of the benefits from adaptation can be captured by the parties that invest in it. Much of the
rest involves the supply of local public goods (dikes being an example), which can be provided by national (or even local)
governments, with no need for international cooperation. The incentives to deploy direct carbon removal are mixed. Some
approaches are inexpensive, but also limited in scale. Other approaches can potentially be undertaken at a great scale, but
are very expensive (Barrett, 2009).
It is sometimes said that SRM creates a “moral hazard”—since SRM can be used to lower temperature in the future, there
will be incentives for countries to expend less effort in reducing emissions today (Victor et al., 2009). As Robock (2008)
says, “This is the oldest and most persistent argument against geoengineering.”
However, while it’s true that that these incentives exist, this is an incorrect use of the term. (An example of moral hazard is
the International Monetary Fund’s role in offer financing to avert a financial crisis—a role that is believed to make such
crises more likely to occur.) Moral hazard normally describes a situation in which there are different parties (the IMF and
various government) with different interests (the IMF wants not to have to intervene, whereas the government wants to
spend money more freely) and information (the IMF can’t tell if the government is managing its economy well). Moral
hazard results in an economic inefficiency. By contrast, while knowledge that geoengineering could be used to limit climate
change in the future will likely influence emissions policy today, that effect need not be inefficient. If SRM were expected to
work, and without harmful consequences, it would be desirable for countries to use it—and to ease up on their efforts to
reduce emissions today.
There are other reasons why too little effort will be devoted to reducing emissions, perhaps the main one being free riding.
Moreover, since the costs of deploying SRM are low, the incentives to deploy it unilaterally or minilaterally will be strong.
We will tend to substitute more geoengineering for less emission reductions not because of moral hazard but because of
collection action failures (Barrett, 2008).
<strong>IPCC</strong> <strong>Expert</strong> <strong>Meeting</strong> on Geoengineering - 24