Climate Engineering Economics
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 on economic policy design. We discuss optimal policy and carbon price, inter-regional and inter-generational equity issues, strategic interaction in the design of international environmental agreements, and the sources of risk and uncertainty surrounding these technologies. Along with mitigation and adaptation, climate engineering technologies can be incorporated into future domestic and global climate policy design. More research on the topic is needed.
This paper was prepared for the Annual Review of Resource Economics. Excellent research assistance was provided by Evgeniya Tsybina. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.