Saturday, October 17, 2009

Geoengineering and the Economics of Climate Change

Do we address threats ex-ante or ex-post? The anticipated access to ex-post remedies creates a moral hazard effect through lulling. A recent University of Chicago PHD thesis argued that we are getting fatter over time because we anticipate that if we get too fat we can (ex-post) have stomach surgery or other procedures to lose weight. Such technological optimism leads to less effort in the present for tackling hard social problems.

In the case of climate change, do we take ex-ante measures (i.e reduce greenhouse gas emissions to achieve 350 ppm to minimize Weitzman's nightmare scenarios) or do keep living the American Dream and when Carbon hits 800 ppm and bad Al Gore scenarios start to play out, we call in the geoengineers to scrub the planet with their science fiction approaches? If we believe ex-ante that such ex-post efforts will work, why be lean and mean today? This is what I mean by the moral hazard effect. Columbia's Scott Barrett has thought hard about the economics of geoengineering. Have the authors of Superfreakonomics spoken to him? Did they read this paper of his ?

I am a believer in holding a portfolio. We should simultaneously be enacting a carbon incentive and doing the basic research to prepare for geoengineering solutions. It would help policy makers to be more gutsy in making costly decisions if we do not view mitigation and geoengineering as perfect substitutes.

I am certainly a fan of questioning the "conventional wisdom". I will want to read the Superfreakonomics' Global Warming chapter when it is published later this month.