Essays on the Economics of Climate Change and Geoengineering

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Harding, Anthony
Besedes, Tibor
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In this dissertation, I examine the relationship between climate and economic activity. In particular, I analyze methods for the measurement of climate change impacts on macroeconomic outcomes and the role of solar geoengineering in reducing these impacts. Solar geoengineering is different from traditional mitigation in at least three ways; it is inexpensive, quick, and imperfect. These characteristics place the technology as an imperfect but arguably inevitable insurance policy against the extreme effects of climate change. As such, it is important to understand effect of the solar geoengineering option on aggregate and distributional economic outcomes. To examine the economic impacts of solar geoengineering, this study applies an empirically estimated causal relationship between country-level economic growth and climate to illustrative future climate scenarios with and without solar geoengineering. Solar geoengineering is found to have an uncertain, model dependent impact on global economic outcomes but is consistently found to reduce inter-country income inequality by averting the worst economic impacts of climate change in poorer countries. The final study of this dissertation examines the methodology for estimating macroeconomic impacts of climate change to analyze contrasting results between microeconomic and macroeconomic empirical studies of the US. This study develops a general equilibrium theoretical framework with weather shocks that demonstrates how local, micro-level weather shocks impact macroeconomic growth. Using the theoretical findings, I construct macroeconomic impacts of weather shocks across the spatial distribution and industrial composition of economic activity in the US. Weather shocks are found to have a significant impact at the microeconomic level, but as impacts are aggregated, the significance becomes masked by the aggregation. This suggests that macroeconomic impact estimates may obscure important underlying heterogeneity in weather impacts.
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