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Economics Research International
Volume 2012 (2012), Article ID 316564, 20 pages
http://dx.doi.org/10.1155/2012/316564
Review Article

The Real Economics of Climate Engineering

The Environment and Natural Resources, Kiel Institute for the World Economy, Hindenburgufer 66, 24105 Kiel, Germany

Received 6 April 2012; Accepted 19 June 2012

Academic Editor: Xie Zhu

Copyright © 2012 Gernot Klepper and Wilfried Rickels. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In 2008 Scott Barrett wrote a paper on “The incredible economics of geoengineering” in which he argued that the potentially low cost of climate engineering (CE) measures together with the quick response of the earth’s temperature to such interventions will change the whole debate about the mitigation of climate change. Whereas Barrett was mostly focusing on the cost of running CE measures, we point out that several determinants of overall economic cost like price or external effects are not yet sufficiently accounted for and that the question of dynamic efficiency is still unresolved. Combining the existing theoretical investigations about the topic from the literature, we show that even though these new measures provide new options to deal with climate change, several of them might also reduce our scope of action. Consequently, we suggest that economic research should shift its focus to portfolios of CE measures and put more emphasis on those measures which control atmospheric carbon concentration and therefore allow extending our scope of action. Additionally, economic research should address the question of phase-in and phase-out scenarios for measures which directly influence the radiation balance.