http://m.pnas.org/content/early/2016/05/04/1520795113.abstract

Estimating option values of solar radiation management assuming that
climate sensitivity is uncertain

Yosuke Arino et al

Edited by M. Granger Morgan, Carnegie Mellon University, Pittsburgh, PA,
and approved April 4, 2016

Significance

Stratospheric sulfur injection is an unprecedented manipulation of climate
systems to rapidly decrease the global mean temperature and could entail
environmental risk as well as confront ethical and governance challenges.
Nonetheless, most studies have only evaluated impacts of solar radiation
management (SRM) on the premise of its deployment. This paper presents one
possible methodology for estimating option values of SRM assuming a fairly
moderate scenario on SRM’s use compared with preceding literature, which
would be helpful to examine realistic values of SRM for the society where
social acceptability of SRM’s actual deployment is not high. Our results
emphasize the near- to mid-term role of retaining SRM as a later
risk-hedging option in the face of the uncertainty about climate
sensitivity.

Abstract

Although solar radiation management (SRM) might play a role as an emergency
geoengineering measure, its potential risks remain uncertain, and hence
there are ethical and governance issues in the face of SRM’s actual
deployment. By using an integrated assessment model, we first present one
possible methodology for evaluating the value arising from retaining an SRM
option given the uncertainty of climate sensitivity, and also examine
sensitivities of the option value to SRM’s side effects (damages).
Reflecting the governance challenges on immediate SRM deployment, we assume
scenarios in which SRM could only be deployed with a limited degree of
cooling (0.5 °C) only after 2050, when climate sensitivity uncertainty is
assumed to be resolved and only when the sensitivity is found to be high
(T2x = 4 °C). We conduct a cost-effectiveness analysis with constraining
temperature rise as the objective. The SRM option value is originated from
its rapid cooling capability that would alleviate the mitigation
requirement under climate sensitivity uncertainty and thereby reduce
mitigation costs. According to our estimates, the option value during
1990–2049 for a +2.4 °C target (the lowest temperature target level for
which there were feasible solutions in this model study) relative to
preindustrial levels were in the range between $2.5 and $5.9 trillion,
taking into account the maximum level of side effects shown in the existing
literature. The result indicates that lower limits of the option values for
temperature targets below +2.4 °C would be greater than $2.5 trillion.

solar radiation management,  option value, climate sensitivity,
 uncertainty,  decision tree analysis

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