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Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric

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Abstract

We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous countries or group of countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature. Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private benefits, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a tradeoff actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in affecting incentives for cooperation or unilateral actions.

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Notes

  1. See also Moreno-Cruz and Keith (2012) and Emmerling and Tavoni (2013) for an analysis of SRM activities under uncertainty.

  2. Throughout this paper, the game with two heterogeneous countries applies equally to two heterogenous groups of countries.

  3. See for example Basar and Olsder (1999) for the theoretical foundations and the survey by Jorgensen et al. (2010) and the references therein.

  4. This measure can be associated for example with how productive a country is in using energy to produce output.

  5. As mentioned in the introduction, the use of geoengineering methods could intensify ocean acidification. Although the natural absorption of CO\(_{2}\) by the world’s oceans helps to mitigate the climatic effects of anthropogenic emissions of CO\(_{2}\), it is believed that since geoengineering will cause an increase in GHG emissions, the resulting decrease in pH will have negative consequences, primarily for oceanic calcifying organisms, and so there will be an impact on marine environments. For a discussion of damage functions related to climate change, see Weitzman (2010).

  6. A situation can be envisioned in which SRM generates extra benefits to a country, in addition to those accruing from a decrease in average global temperature, due for example to favorable change in regional climatic conditions. In this case \(c_{i\zeta }\) could take negative values.

  7. A homogeneous-earth model is a “zero-dimensional” model since it does not contain spatial dimensions but only the temporal dimension. For the use of one-dimensional and two-dimensional EBCMs in climate change economics, see Brock et al. (2013, 2014).

  8. SRM can be regarded as increasing the global albedo, since it blocks incoming radiation. We use a sensitivity function which is linear in aggregate SRM instead of a nonlinear function in order to simplify the exposition.

  9. At this stage we do not consider the transportation of heat across the globe, which is a standard assumption of the EBCM developed by North (e.g., North 1975a, b, 1981; North et al. 1979). Thus we study a homogeneous-earth, zero-dimensional model. This allows us to obtain tractable results regarding the mitigation/geoengineering tradeoff. The analysis of the mitigation/geoengineering tradeoff in the context of a one-dimensional spatial model is an area for further research.

  10. McClellan et al. (2012) perform an engineering cost analysis of systems capable of delivering 1–5 million metric tonnes (Mt) of albedo modification material to altitudes of 18–30 km. They compare the cost of aircraft and airships to the cost of survey rockets, guns, and suspended gas and slurry pipes for the delivery of stratospheric aerosol geoengineering at middle and high altitudes. They conclude that the most cost effective way to deliver material to the stratosphere at million tonnes per year is through the use of existing aircraft or new aircraft designed for the geoengineering mission.

  11. Graphs of the optimal paths are available in Appendix A1 of the Working Paper version of the paper (http://wpa.deos.aueb.gr/wpa_show_paper.php?handle=1511).

  12. Graphs are provided in A2 at http://wpa.deos.aueb.gr/wpa_show_paper.php?handle=1511.

  13. List and Mason’s (2001) sources of asymmetry correspond to the intercept of marginal benefits from emissions (the \(A_{1i}\) in terms of our model), and the slope of marginal damages from global pollution (or \(c_{T}).\)

  14. We run the following scenarios of asymmetric heterogeneity: \(+\)20 and \(-\)90 %; \(+\)20 and \(-\)70 %; \(+\)40 and \(-\)70 %; \(+\)40 and \(-\)90 %; \(+\)20 and \(-\)40 %; \(-\)20 and \(+\)90 %; \(-\)20 and \(+\)70 %; \(-\)40 and \(+\)70 %; \(-\)40 and \(+\)90 %; \(-\)20 and \(+\)40 %.

  15. See Appendix A.4 at http://wpa.deos.aueb.gr/wpa_show_paper.php?handle=1511.

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  1. Athens University of Economics and Business, 76 Patission Street, 104 34, Athens, Greece

    Vassiliki Manoussi & Anastasios Xepapadeas

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  1. Vassiliki Manoussi
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  2. Anastasios Xepapadeas
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Correspondence to Anastasios Xepapadeas.

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Manoussi, V., Xepapadeas, A. Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric. Environ Resource Econ 66, 605–627 (2017). https://doi.org/10.1007/s10640-015-9956-3

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