Climate econometric models indicate solar geoengineering would reduce inter-country income inequality

Climate change poses significant risks, necessitating action to mitigate its harms. While emission reduction is the most direct solution, its high cost and free-rider incentives have led to considerations of solar geoengineering—the intentional reflection of solar radiation to cool the planet. However, concerns exist about the global and distributional socioeconomic impacts of such interventions. Understanding these impacts is crucial for informed decision-making. Current climate change impact assessments often use temperature anomalies as proxies for damage, but this approach is inadequate for solar geoengineering because the correlations between temperature and other variables (precipitation, ocean pH) may differ significantly from those under greenhouse gas-driven change. This paper addresses this gap by applying a state-of-the-art macroeconomic climate impacts assessment approach to evaluate the global and distributional impacts of solar geoengineering on socioeconomic outcomes. The methodology estimates the historical relationship between mean annual temperature and precipitation and country-level GDP per capita growth. This relationship is then applied to stylized climate scenarios derived from climate change and solar geoengineering model simulations. The paper evaluates how solar geoengineering affects global economic growth and inter-country income inequality by comparing economic outcomes across different scenarios. While acknowledging the limitations of using mean annual temperature and precipitation as indicators and the exclusion of factors like climate variability, extremes, UV changes, and ocean acidification, the study aims to compare the impacts of various climate change scenarios using a well-established methodology to provide meaningful insights.

The paper draws upon existing literature on climate change impacts, solar geoengineering, and climate econometrics. It references studies that have explored the social and economic impacts of climate change, the concept of solar geoengineering, and policy perspectives on geoengineering. It also mentions the limitations of existing climate change impact assessment frameworks in adequately addressing the effects of solar geoengineering, highlighting the need for a more comprehensive approach. Furthermore, the authors review existing studies examining the impacts of temperature and precipitation on economic growth, providing a basis for their chosen methodology.

The study uses a macroeconomic climate impacts assessment approach, estimating the historical relationship between mean annual temperature, precipitation, and country-level GDP per capita growth (using data from 1960-2010 for 165 countries). Multiple econometric models are employed, incorporating linear and non-linear effects, different country trends, climate variables (with lags up to 5 years), and growth and level effects. This allows for a broad sensitivity analysis to assess the robustness of the findings across various model specifications. Four illustrative future climate scenarios are constructed based on RCP8.5 (a high-emissions scenario) and GeoMIP G1 simulations (solar geoengineering scenarios). These scenarios include: no climate change, RCP8.5 alone, geoengineering-stabilized RCP8.5 (geoengineering offsetting RCP8.5 warming), and geoengineering-mirrored RCP8.5 (geoengineering cooling at the same rate as RCP8.5 warming). The Shared Socioeconomic Pathways (SSPs) are used to project baseline economic growth. The analysis focuses on SSP3, representing high challenges to both mitigation and adaptation. The estimated climate-economy relationship is applied to each scenario to project GDP per capita for each country over the 21st century. Lorenz curves and Gini coefficients are used to analyze changes in global income inequality. A sensitivity analysis is conducted using multiple econometric model specifications and bootstrap estimations to assess the robustness of the findings. The study acknowledges that the models only capture the effects of annual-mean temperature and precipitation, excluding other potentially important factors such as climate extremes, ocean acidification, and changes in ground-level UV radiation.

The study finds that the economic impacts of greenhouse gas-driven warming and solar geoengineering-driven cooling are model-dependent, but the effects on inter-country income inequality are consistently similar across model specifications. Specifically, solar geoengineering consistently reduces inter-country income inequality. Under the RCP8.5 scenario, a significant portion of countries experience economic losses. However, with solar geoengineering (both stabilized and mirrored RCP8.5 scenarios), this percentage is greatly reduced. The magnitude of economic gains varies greatly across the econometric model specifications, resulting in significant variation in global GDP. In the geoengineering-mirrored scenario (actively cooling the globe at the same rate as RCP8.5 warming), global GDP increases substantially due to economic growth in currently warmer developing nations. The analysis using Lorenz curves demonstrates that income convergence—the narrowing of the global income distribution—is hindered or reversed by RCP8.5 but is restored or even enhanced by solar geoengineering. The Gini coefficients consistently show a decrease in inequality with the implementation of solar geoengineering, across all socioeconomic scenarios, climate models, and economic model combinations. Even considering uncertainty in precipitation responses to solar geoengineering, the finding of reduced income inequality remains consistent. The insignificance of precipitation effects in the empirical models suggests that large hydrological changes from solar geoengineering may not significantly impact economic outcomes.

The results challenge several prevailing concerns about solar geoengineering. The findings suggest a potentially large global economic gain, but this doesn’t imply that a globally governed deployment would perfectly mirror the stylized scenarios. The study highlights the need for further research on the governance of solar geoengineering to ensure collective benefit. The significant model dependency on the economic impacts, while potentially concerning, might indicate limitations in the macroeconomic modeling approach itself for predicting future climate damages, not just for solar geoengineering but also for greenhouse gas-driven climate change. The consistency in the reduction of inter-country inequality across all models points to a robust finding. The relative unimportance of precipitation in the models is a key finding that contrasts with common concerns about solar geoengineering's hydrological impacts.

This study demonstrates that across various model specifications, solar geoengineering consistently reduces inter-country income inequality. While the magnitude of overall economic impacts varies, the impact on inequality is robust. Further research is needed to explore the impacts of different deployment scenarios and governance structures. The reliance on annual mean temperature and precipitation as key indicators should also be addressed in future research to fully account for the potential impacts of solar geoengineering.

The study acknowledges limitations such as the reliance on annual mean temperature and precipitation as proxies for climate impacts, neglecting factors like climate extremes, ocean acidification, and changes in ground-level UV radiation. The use of historical data to project future impacts also introduces uncertainty. The stylized scenarios used may not represent real-world deployment strategies. The study’s conclusions are dependent on the validity of the historically trained climate-econometric models in predicting future impacts.