Solar Geoengineering Governance: A Dynamic Framework of Farsighted Coalition Formation

Climate interventions with solar geoengineering could reduce climate damages if deployed in a globally coordinated regime. In the absence of such a regime, however, strategic incentives of single actors might result in detrimental outcomes. A well-known concern is that a "free-driver" (Weitzman 2015), the country with the strongest preference for cooling, might unilaterally set the global thermostat to its preferred level, thus imposing damages on others. Governance structures, i.e. more or less formal institutional arrangements between countries, could steer the decentralized geoengineering deployment towards the preferable global outcome. In this paper, we show that the coalition formation literature (an excellent summary is Ray & Vohra 2015) can make a valuable contribution to assessing the relative merit of different governance schemes. An important feature of the coalition formation literature is the sophisticated dynamic structure. A country pondering whether to leave a coalition anticipates that its departure could spark another process of disintegration among the remaining members of that coalition, which in turn may affect the assessment of whether leaving the coalition is worthwhile in the first place. This dynamic structure thus enables a more realistic picture of what coalitions are likely to form and remain stable. A second important feature of coalition formation models is wide control over the "rules of the game", for instance, which agents need to consent to a transition from one coalitional arrangement to another. This control over the institutional setting allows consistently comparing and discussing various international governance arrangements.

Reframing strategic, managed retreat for transformative climate adaptation

Human societies will transform to address climate change and other stressors. How they choose to transform will depend on what societal values they prioritize. Managed retreat can play a powerful role in expanding the range of possible futures that transformation could achieve and in articulating the values that shape those futures. Consideration of retreat raises tensions about what losses are unacceptable and what aspects of societies are maintained, purposefully altered, or allowed to change unaided. Here we integrate research on retreat, transformational adaptation, climate damages and losses, and design and decision support to chart a roadmap for strategic, managed retreat. At its core, this roadmap requires a fundamental reconceptualization of what it means for retreat to be strategic and managed. The questions raised are relevant to adaptation science and societies far beyond the remit of retreat.

Protecting local water quality has global benefits

Surface water is among Earth’s most important resources. Yet, benefit–cost studies often report that the costs of water quality protection exceed its benefits. One possible reason for this seeming paradox is that often only a narrow range of local water quality benefits are considered. In particular, the climate damages from water pollution have rarely been quantified. Recent advances in global water science allow the computation of the global methane emission from lakes caused by human nutrient enrichment (eutrophication). Here, we estimate the present value of the global social cost of eutrophication-driven methane emissions from lakes between 2015 and 2050 to be $7.5–$81 trillion (2015 $US), and in a case-study for one well-studied lake (Lake Erie) we find the global value of avoiding eutrophication exceeds local values of either beach use or sport fishing by 10-fold.

Discounting under Risk

The debate on the economics of climate change has focused primarily on the choice of the social discount rate, which plays a key role in determining the desirability of climate policies given the long-term impacts of climate damages. Discounted utilitarianism and the Ramsey Rule dominate the debate on discounting. The chapter examines the appropriateness of the utilitarian framework for evaluating public policies. More specifically, it focuses on the risky dimension of climate change, and on the failure of utilitarianism in expressing both concerns for the distribution of risks across the population and concerns for the occurrence of catastrophic outcomes. The chapter shows how a shift to the prioritarian paradigm is able to capture those types of concerns, and briefly sketches the main implications for the choice of the social discount rate.

Improving the decision-making in DICE: self-adaptive climate policies to handle explicit uncertainty and adaptation modelling

<p>DICE (Dynamic Integrated Climate Economy) and other cost-benefit integrated assessment models are used to study the economically optimal climate policy or to evaluate economic performance of alternative policies, such as 2°C compliant emission trajectories.</p><p>Recently, DICE has been updated to provide economically optimal climate policies keeping global warming in line with the Paris Agreement. Yet, explicit uncertainty and adaptation modelling are still overlooked. Introducing these components requires a transition from the traditional perfect-foresight static decision-making framework to a dynamic one, able to change strategy in order to react to the realization of uncertainties.</p><p>In this work, starting from the updates proposed by Hansel et al. (2020), we present an updated DICE model that: i) explicitly represents adaptation in the form of temporary and long-term adaptation investment; ii) explicitly describes stochastic, parametric and structural uncertainty over the physical and socio-economic components of the model including adaptation efficiency and climate damages specification; iii) leverages self-adaptive control policies to implement a more realistic decision-making scheme that allows to adjust climate policy after that new information arises.</p><p>Results show that the self-adaptive policies allow for a reduction in the discrepancy between economically optimal climate policy and the 2°C temperature target set with the Paris Agreement, which resurfaces when introducing adaptation, also in presence of uncertainty. When using self-adaptive policies, average adaptation costs remain low and, thanks to the ability to modulate adaptation choices depending on the scenario eventually unfolding, also climate damages are maintained at a low level. As a result, more economic resources are made available for mitigation in the short-term resulting in a reduced temperature increase in 2100 for a same level of welfare.</p>

The Role of Uncertainty in Controlling Climate Change

Integrated assessment models (IAMs) of the climate and economy aim to analyze the impact and efficacy of policies that aim to control climate change, such as carbon taxes and subsidies. A major characteristic of IAMs is that their geophysical sector determines the mean surface temperature increase over the preindustrial level, which in turn determines the damage function. Most of the existing IAMs assume that all of the future information is known. However, there are significant uncertainties in the climate and economic system, including parameter uncertainty, model uncertainty, climate tipping risks, and economic risks. For example, climate sensitivity, a well-known parameter that measures how much the equilibrium temperature will change if the atmospheric carbon concentration doubles, can range from below 1 to more than 10 in the literature. Climate damages are also uncertain. Some researchers assume that climate damages are proportional to instantaneous output, while others assume that climate damages have a more persistent impact on economic growth. The spatial distribution of climate damages is also uncertain. Climate tipping risks represent (nearly) irreversible climate events that may lead to significant changes in the climate system, such as the Greenland ice sheet collapse, while the conditions, probability of tipping, duration, and associated damage are also uncertain. Technological progress in carbon capture and storage, adaptation, renewable energy, and energy efficiency are uncertain as well. Future international cooperation and implementation of international agreements in controlling climate change may vary over time, possibly due to economic risks, natural disasters, or social conflict. In the face of these uncertainties, policy makers have to provide a decision that considers important factors such as risk aversion, inequality aversion, and sustainability of the economy and ecosystem. Solving this problem may require richer and more realistic models than standard IAMs and advanced computational methods. The recent literature has shown that these uncertainties can be incorporated into IAMs and may change optimal climate policies significantly.

Heat Waves, Climate Change, and Economic Output

Climate change is likely to affect economies not only through warming, but also via an increase in prolonged extreme events like heat waves. However, the impacts of heat waves on economic output are not well captured by standard empirical approaches that ignore when hot days occur. Using a global dataset spanning 1979–2016, we show agricultural losses from past heat waves are up to an order of magnitude larger than suggested by standard approaches. Combining these estimates with a suite of climate models implies that by the end of the century, climate damages in agriculture may be 5–10 times larger than is predicted by a focus on mean temperature shifts alone. These findings have important implications for targeting and evaluating climate adaptation efforts.