Abstract

The paper analyzes solar geoengineering and strategic interactions in an integrated assessment model (IAM) of climate change. For this purpose, we (i) derive a new class of solutions to analytic IAMs that allows us to (ii) solve an integrated assessment model with sulfur-based geoengineering and damages in closed form, and to (iii) model strategic interactions be-tween two active regions, and a passive rest of the world. We examine the determinants of a region’s engagement in geoengineering and analyze the Markov game and its equilibria. Sulfur deployment is highly sensitive to potential geoengineering damages. For a global social planner, solar geo-engineering could cut the social cost of carbon (SCC) into half if damages turn out negligible. However, current damage guesstimates would reduce the globally optimal SCC by only 12-22%. In the non-cooperative regional model, the availability of geoengineering can both increase or decrease theSCC, in both the active regions and the rest of the world.

Co-author : Felix Meier

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