Blog: Climate ChangeS

Climate ChangeS:  A selection of the most recent and most interesting working papers on the economics of climate change.

From the description:

Climate ChangeS provides researchers with a timely and accurate update of new research papers on the Economics of Climate Change. On a weekly basis, links to the most recent and interesting working papers are aggregated from a variety of sources for easy and convenient reference. The focus is on research at the frontier, with most contributions appearing just a few days after having been released. For this reason, journal articles are not tracked.



Geoengineering Reports from Copenhagen Consensus

The Copenhagen Consensus (Bjorn Lomberg) has issued two reports on geoengineering as a response to climate change.

Engineer a Better Climate : Policy and Pespective Papers

An Analysis of Climate Engineering as a Response to Climate Change

J Eric Bickel & Lee Lane


This paper offers a preliminary and exploratory assessment of the potential benefits andc ostsof climate engineering (CE). We examine two families of CE technologies, solar radiation management(SRM) and air capture (AC), under three emissions control environments: no controls, optimal abatement,andlimitingtemperaturechangeto2°C.Ouranalysissuggeststhat,today,SRMoffers larger net benefits than AC, but that both deserve to be investigated further. In the case of SRM,we investigate three specific technologies: the injection of aerosols into the stratosphere, theincrease of marine cloud albedo, and the deployment of a space-based sunshade.

We estimate direct benefit-cost (B/C) ratios of around 25 to 1 for aerosols and around 5000to 1 for cloud albedo enhancement. Technological progress might significantly lower direct costestimates of stratospheric aerosols and thus raise the expected benefits. Yet, large uncertaintiesremain about the science and engineering of SRM. Only a substantial research program couldresolve these uncertainties, but the very large potential net benefits of SRM offer strong prima facie evidence for including R&D on SRM as a part of any portfolio of climate policies duringthe next decade.

Therefore, we suggest that the Copenhagen Consensus allocate an average of approximately 0.3%of its $250 billion climate-change budget ($750 million per year) to SRM and AC research over thenext decade. SRM is the higher priority, owing to its larger and more current net benefit potential.This research program should explicitly focus on identifying possible side effects, especially thosewhich might imply non-trivial costs.

WeestimatethatthebenefitofasinglewattofSRMisworthover$6trillionunderanemissions control regime of optimal abatement. Furthermore, we show that a single watt of SRM has thesame economic benefit as capturing and sequestering almost 65% of yearly CO2emissions,which, in conjunction with AC’s significant costs, argues in favor of SRM in the near term.

A Perspective Paper on Climate Engineering as a Response to Climate Change

Anne E. Smith


In their Assessment Paper, “The Potential Benefits and Costs of Climate Engineering: A Case for Research,” Bickel and Lane have provided a deterministic case for funding a long-term,intensiveresearchanddevelopment(R&D)programforgeoengineering.Becausetheir estimate of the requisite R&D budget is about 0.1% of their deterministic estimates of the net benefits of using geoengineering, they argue that it is unlikely any of the uncertainties they did not analyze would affect the case for performing the R&D. This Perspectives Paper overlays a consideration of potential unintended consequences from geoengineering onto theiranalysis and extends it with calculations of value of information from the R&D. It finds that the value of perfect information is indeed much higher than Bickel and Lane’s proposed research budget for almost all but the most extreme assumptions about probabilities (eitheroptimisticor pessimistic) on whether geoengineering will produce significant unintended consequences. However, it also finds that imperfect information may have zero value for a wide range of assumptions. Thus, a standard analysis of value of information seems to undercut a view that uncertainties not addressed in the Assessment Paper are unlikely to affect the merits of conducting the further research on geoengineering. This Perspectives Paper, however, also takes a more critical look at the theoretical assumptions underpinning the standard formula for value of information, and finds that they may be inappropriate in a public policy making process. This paper suggests an alternative value of information formula to match the current issue’s role as part of societal decision making by groups who hold very different sets of probability assumptions. When the proposed alternative calculation of value of information in a social choice context is applied, one obtains much larger value of information estimates over a broad range of probability assumptions.