Geoengineering and Economic Growth: Making Climate Change Irrelevant or Buying Time?

Sjak Smulders, Department of Economics and CentER, Tilburg University

Geoengineering is defined as the intentional large-scale manipulation of the environment. We focus on the application of geoengineering to reduce the impacts of climatic change. We build a small analytical general equilibrium model of investment-driven economic growth in which both mitigation (traditional abatement policies) and geoengineering are incorporated. In contrast to the "naive" interpretation of the role of geoengineering, we find that geoengineering does not make traditional mitigation and abatement strategies redundant. We model the technical and economic characteristics of geoengineering in line with the recent geoengineering literature from physical and environmental management sciences. We investigate (i) whether geoengineering makes traditional abatement and mitigation strategies redundant, (ii) whether geoengineering and mitigation are strategic substitutes or strategies complements, (iii) whether geoengineering allows for postponing mitigation "buying time"), and (iv) whether geoengineering is beneficial in a world in which coordination and free-rider problems lead to sub-optimally low levels of mitigation.

About the speaker
Sjak Smulders is professor of economics at Tilburg University (Department of Economics and CentER, on leave until September 2008) and at the University of Calgary, where he holds the Svare Chair in Energy Systems Analysis.

Together with Jason Shogren he is managing editor of Resource and Energy Economics. He is on the editorial council of Journal of Environmental Economics and Management, Environmental and Resource Economics, and Journal of Economics. He is on the board of the European Association of Environmental and Resource Economists.

Smulders obtained his Ph.D. in economics from Tilburg University in 1994. He was a visiting assistant professor at Stanford in 1995-1996 before returning to Tilburg in 1996. He held a research-fellowship sponsored by the Royal Dutch Academy of Arts and Sciences for five years, and became a tenured associate professor in 2001. As of September 2006 he works and lives in Calgary.

Smulders' research examines the impact of environmental and energy policies on economic growth as well as the sources of economic growth in a variety of contexts. He has analysed under what conditions economic growth can be sustained without deteriorating environmental quality. Recent work has focused on the question whether the stimulation of technological change can reduce the cost of environmental policies in general and the cost of climate change and energy conservation policies in particular. Most of the work is based on small analytical models in the endogenous growth tradition.

Other recent work on growth has focussed on factors that determine the income gap between developing and developed countries, with special attention to the role of capital flows; on the sources behind the rise in wage inequality; and on the role of social and cultural factors in explaining the differences in growth rates in Europe. Other work on the environment has focussed on the design of environmental taxes and biodiversity conservation. Smulders teaches undergraduate and graduate courses in macroeconomics and environmental and resource economics.

Venue: Keizer Karelplein 19, Maastricht

Date: 08 November 2007

Time: 16:00