BY GERNOT WAGNER, CHRISTINE MERK
One pillar of conservative policy doctrine is that moral hazards should be avoided at all costs. Criticisms of universal health care, for example, are based on the idea that shielding individuals from some of the consequences of their decisions creates an incentive for riskier behavior. Many take the argument one step further, equating moral hazard with moral failing: government policy, the argument goes, makes people too dependent on handouts and crowds out personal responsibility.
The left is not immune to such lines of argument, either. On that side, the criticism typically focuses on policies that appear to free individuals from the responsibility of doing what’s right in the name of the common good. We all know, one argument goes, that we need to change our fossil-fueled lifestyles to stop climate change. Policies that encourage biking more and driving less, for example, are moral. Those that free individuals to do what they want (especially if it runs counter to the common good) are not.
Moral hazard is real, but using it as an argument for or against regulation is oftentimes a distraction—or worse. Seat-belt laws, for example, have reduced road deaths despite potentially encouraging riskier driving. Another telling example is environmentalists’ initial reactions to both climate adaptation and carbon capture and storage. In the 1990s, some environmentalists, among them Vice President Al Gore, went on the record decrying calls for adapting to climate change as a distraction from the need to cut greenhouse gas emissions.
Accepting the necessity of adaptations, such as building seawalls or moving to higher ground altogether, would have been psychologically difficult in the 1990s, since it would have meant admitting that returning the earth to its pristine state is no longer possible. It would thus be an implicit acknowledgment that it is too late to stop climate change altogether, which would only add to the long list of difficulties in communicating the need to cut greenhouse gas pollution.
These days, of course, many environmentalists, including Gore, do point to the need to adapt. Adaptation features heavily in the 2010 Cancun Agreements and the Paris Agreement adopted in December 2015. And far from crowding out other kinds of environmental policies, the argument goes, adaptation might even serve as a wake-up call for more rapid cuts to greenhouse gas emissions.
Yet moral hazard has once again resurfaced in climate conversations, this time in the context of carbon removal and solar geoengineering. Carbon removal refers to technologies that suck excess carbon dioxide out of the atmosphere. Solar geoengineering refers to proposed interventions that would reflect or release a small fraction of sunlight back into space in an effort to cool the planet.
Carbon removal and solar geoengineering are controversial. In part, that’s for good reason. They are also very different. The former helps address the root cause of climate change. The latter does not. For the most part, solar geoengineering merely masks the effects of excess greenhouse gases already in the atmosphere, but it might also be significantly faster and cheaper. Expert opinion differs on if and how either might play a role in a broader climate policy portfolio.
Much like with adaptation before it, environmentalists have rallied around the possibility that mere talk of geoengineering could discourage much needed mitigation and adaptation measures. To be sure, in a world of fully rational climate policy, both carbon removal and solar geoengineering would lead to less mitigation and adaptation. But the world is far from rational. Those grasping for excuses not to cut greenhouse gas emissions will surely point to both as yet another reason to delay sensible climate policies. Newt Gingrich has.
Sensible climate policy must rise above that level of argument, though, and take seriously all options for mitigating climate change. Think of carbon removal as a liposuction for the planet. Solar geoengineering could be thought of as statins to treat high levels of cholesterol, helping to prevent a heart attack. It is clear that the best approach would have been consistent diet and exercise. And that should still be part of the answer, but it might be too late for those who have already lived unhealthy lifestyles for too long.
As for how these new technologies might change behavior, recent polling data is instructive. A representative survey of the U.S. public probing attitudes toward carbon removal found that those told about carbon removal appear slightly less willing to support policies that would mitigate emissions. Meanwhile, public perception surveys and focus groups from several countries have shown that people are deeply skeptical about any possible solar geoengineering interventions, and that their potential doesn’t necessarily change behavior. In one study done in Germany, however, respondents were asked to offset their own carbon emissions after either being told about solar geoengineering or not. That study showed that those told about solar geoengineering actually appear a bit more likely to pay for offsets and buy more of them.
The question, however, is not whether either technology will encourage or discourage—crowd in or crowd out—emissions cuts. There is clearly potential for both. But the danger that innovations could slow necessary behavioral changes should not be used as an argument against possibly beneficial policies and technologies, much like the potential for moral hazard is not a good argument against health insurance or seat belts. If anything, the real question for those concerned with climate policy is how to encourage the crowding-in effect and combat those who use moral hazard arguments to avoid more difficult policy decisions.
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