Why is geoengineering so tempting?

Geoengineering can be defined as the technologies that aim to deliberately alter geophysical mechanisms in order to alleviate the impacts of climate change. It has received increasing attention by economists and the public but remains deeply controversial. This paper studies the potential benefits from geoengineering in a standard one-sector growth model augmented with a carbon cycle and a climate system. These benefits can be interpreted as a lower bound for the direct and indirect costs which would make geoengineering less preferable to abatement. In the planner’s solution to the model, exogenous geoengineering in the future increases investment in physical capital and reduces abatement, both today and in the future. The central result of the paper is that the direct and indirect costs of geoengineering must be large for geoengineering not to be tempting. Nevertheless, substantial abatement is optimal even when geoengineering does not entail any costs. A sensitivity analysis establishes how the results change in a world with a lower initial capital stock; an earlier availability of geoengineering; and under different parameter values for the discount rate and the curvature of the damage function. Together these results show how the temptation to use geoengineering can be different for developing and advanced countries.