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A Model of Solar Radiation Management Liability

Pfrommer, Tobias

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Solar Radiation Management (SRM) is a set of potential technologies to counteract climate change. Liability regimes are one potential form of governance institution to avoid global externalities caused by the SRM "free-driver" problem. In this paper I examine the incentives structure and welfare consequences of SRM liability regimes. Characteristics specific to SRM impact on the incentives that liability regimes provide via the definition of harm and the liability standard. Consequently, a liability regime is defined as a combination of a definition of harm and a liability standard in the model. Providing several interpretations of these two dimensions adequate for the SRM context, I show that only one combination implements the social optimum. A numerical implementation of the model yields that the free-driver problem is moderate given a metric of mean temperature and extreme given a metric of mean precipitation. Furthermore, the implementation suggests that liability regimes are generally capable of mitigationg the free-driver problem substantially and that the choice of the definition of harm is more consequential than the choice of the liability standard.

Item Type: Working paper
Series Name: Discussion Paper Series
Volume: 0644
Publisher: University of Heidelberg
Place of Publication: Heidelberg
Date Deposited: 24 Jan 2018 14:25
Date: 17 January 2018
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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