James H. Stock
Department of Economics and Harvard Kennedy School Harvard University
Key Points
• The possibility of very negative outcomes, combined with deep uncertainty that makes it difficult to estimate the probability of those outcomes, typically justifies adopting a precautionary principle in which special attention is paid to avoiding worst case outcomes.
• An example of a precautionary principle is Weitzman’s “dismal theorem,”
which holds that if very bad climate outcomes are possible in the future, then society should be willing to pay a large price now to avoid them – even if it is difficult to pin down probabilities of such outcomes with much precision.
• With regard to solar geoengineering (SG), such a severely negative outcome might result from relatively early SG adoption which, even if well-inten-tioned, provides an incentive to postpone emissions reduction, leading to very high greenhouse gas concentrations, resulting in heavy reliance on continued SG leading to potentially grave but uncertain ecosystem disrup-tion and potential internadisrup-tional conflict associated with suspension of SG.
• International SG governance needs to be structured so as to avoid such an outcome.
The basic insight of decision analysis under uncertainty is that a decision should weigh the expected benefits of an action against the expected costs. For decisions about small projects or decisions by firms, these costs and benefits can be measured in dollars. For decisions that affect consumer well-being, or the well-being of many individuals collectively, these costs and benefits are more appropriately cast in terms of utility or, at the collective level, social welfare.
When framed in terms of social welfare, non-diversifiable risk plays an important role for two reasons. First, negative monetary outcomes result in a greater loss of social welfare than a positive monetary outcome of the same magnitude: downside risk matters. Second, when the decision ventures into uncharted territory, so that it is difficult if not impossible to assess probabilities, the standard apparatus of social welfare maximization needs to be extended to take into account this deeper lack of knowledge (“unknown unknowns”). Together, these two features – the very negative consequences of severe downsides and inability to quantify uncertainty – typically justify adopting a precautionary principle, in which special attention is paid to avoiding worst case outcomes.
104 « GOVERNANCE OF THE DEPLOYMENT OF SOLAR GEOENGINEERING
In the climate sphere, an example of this precautionary principle is Weitzman’s (2009) “dismal theorem,” which holds that if very bad climate outcomes are possible in the future, then society should be willing to pay a price now to avoid them. Weitzman’s theorem reminds us of an impor-tant point. Much of the climate debate centers on incremental differences, for example changes in agricultural productivity as arable lands shift north or increased mortality arising from a one-degree increase in temperature. While these effects are important, Weitzman reminds us that as long as there is some probability of dire outcomes, that alone should suffice for us to take action today to mitigate outcomes – even if it is difficult to pin down those probabilities with much precision.
What does all this have to do with the governance of solar geoengineering (SG)? Surprisingly, quite a bit, because it is a reminder to focus on governance that is robust to very bad outcomes, even if we are unsure of the mechanisms that would lead to those outcomes and even if we have difficulty assigning numerical probabilities to those outcomes. Consider three scenarios for SG.
Under the first scenario, SG is deployed as part of a modeled optimal path to smooth the transi-tion to a zero-carbon economy. Typically those optimal paths have atmospheric concentratransi-tions of greenhouse gases overshooting, followed by carbon removal and sequestration. SG would serve to mitigate the costs along that path, then would be phased out and eliminated once we revert to the target concentration, say 450 ppm.
The second scenario is the first, but with glitches. Although the world transitions to a zero-carbon economy, promises today to remove zero-carbon fifty years from now are not kept, perhaps because the cost of the energy transition has already been so high. If the warming target is 1.5°C and atmospheric concentrations stabilize at 600 ppm, the world will be in a permanent need of (say) 1° SG. That will not be very costly, and because the dynamic response of temperature to a lapse in SG at those levels will be quick (e.g., 0.7°C warming within a decade), it is plausible that a breakdown of an international SG program would be replaced by an individual state or smaller collection of states. Here, SG will have costs – the higher concentrations will have nega-tive effects on ocean and terrestrial ecosystems – but the temperature effects would be mitigated.
In the third scenario, SG commences under an international regime, as in the first, but the low cost of SG is seen to be an attractive alternative to a carbon tax or taking other international efforts to mitigate emissions. In this scenario, SG delays mitigation and fossil fuel consump-tion continues so that concentraconsump-tions reach 800 ppm by the end of this century. (This is the baseline level assumed in the Trump Administration’s Draft Environmental Impact Statement of its proposed rollback of the light-duty fuel economy standards.) At this point, carbon removal to bring us back to 450 ppm could be seen as prohibitively expensive, and even if there is subsequent decarbonization, atmospheric CO2 concentrations would be at such high levels that severe ecosystem damage could occur (although with currently unknown extent and probabil-ity). Moreover, even a temporary suspension of SG would result in very rapid and large changes in temperature with highly uncertain climate consequences. Such a suspension could occur as a result of wars or severe social disruption, and finely tuned SG could be weaponized, with poten-tially large ecosystem damages as well as human costs.
The lesson of Weitzman’s theorem, and of the precautionary principle more generally, is that international SG governance needs to be structured so as to avoid the third outcome – bearing in mind that with some creativity, it is surely possible to imagine worse SG outcomes than that. For example, one such governance institution would be a treaty banning SG. Such a treaty would forego the benefits of the first scenario but would avoid the downside of the third scenario. One can imagine variations on this – for example, a treaty that grants non-tradable SG rights to countries contingent on demonstrated emissions reductions, or a treaty that ties SG operations to global emissions reductions (and suspends operations if reductions are insufficient) – but such approaches seem too clever by half.
A secondary question, one that is currently more pressing, is how best to govern research into solar geoengineering. Returning to the basic insight of the precautionary principle, I would suggest that the appropriate way to answer that question is to focus on how the SG-research-governance framework increases or decreases the likelihood of very bad outcomes, such as the third scenario.
Reference
Weitzman, Martin L. 2009. “On Modeling and Interpreting the Economics of Catastrophic Climate Change.” The Review of Economics and Statistics 91 (1): 1–19. https://doi.
org/10.1162/rest.91.1.1.