Governing Climate Geoengineering: Side-Payments Are Not Enough

Abstract

Climate geoengineering strategies can help reduce the economic and ecological impacts of global warming. However, governing geoengineering is challenging: since climate preferences vary across countries, excessive deployment relative to the socially optimal level is likely. Through a laboratory experiment on a public good-or-bad game, we study whether side-payments can address this governance problem. While theoretically effective, our experimental results show only a modest impact of side-payments on outcomes, especially in a multilateral setup. Replacing unstructured bilateral exchanges with a treaty framework simplifies the action space and performs moderately better.

Keywords: climate governance, public good-or-bad, free-driving, transfers, promises, experi- ment, Coase theorem

JEL Classification: C70, C90, H40, Q50