Why is geoengineering so tempting?

Geoengineering can be de ned as the technologies that aim to deliberately alter geophysical mechanisms in order to alleviate the impacts of climate change. It has received increasing attention by economists and the public but remains deeply controversial. This paper studies the potential bene ts from geoengineering in a standard one-sector growth model augmented with a carbon cycle and a climate system. These bene ts can be interpreted as a lower bound for the direct and indirect costs which would make geoengineering less preferable to abatement. In the planner's solution to the model, exogenous geoengineering in the future increases investment in physical capital and reduces abatement, both today and in the future. The central result of the paper is that the direct and indirect costs of geoengineering must be large for geoengineering not to be tempting. Nevertheless, substantial abatement is optimal even when geoengineering does not entail any costs. A sensitivity analysis establishes how the results change in a world with a lower initial capital stock; an earlier availability of geoengineering; and under di erent parameter values for the discount rate and the curvature of the damage function. Together these results show how the temptation to use geoengineering can be di erent for developing and advanced countries. ∗Email: [email protected] †I have bene ted from insightful conversations with Alex Bowen, Anca Pana, Emanuele Campiglio, Antoine Dechezleprêtre, Sam Fankhauser, Sjak Smulders and Massimo Tavoni, and from comments by seminar participants in the Grantham Workshop, as well as in the CEA 2013 Meetings in Montreal. The research is part of the Green Growth Programme in the Grantham Research Institute at the London School of Economics and is funded by the Global Green Growth Institute, the Grantham Foundation for the Protection of the Environment, and the Economic and Social Research Council through the Centre for Climate Change Economics and Policy. All errors and omissions are exclusively mine.