Michela Boldrini (Università Bocconi): “Negative Emission Technologies and Climate Cooperation”

Negative Emissions Technologies (NETs) – a range of methods which remove and storage carbon dioxide from the atmosphere – are presented as a crucial innovation in the effort to meet temperature targets set by international climate agreements. However, mechanisms which undo the adverse consequences of short-sighted actions (as NETs) can fuel substitution effects and crowd out virtuous behavior (e.g., mitigation efforts). For this reason, the impact of NETs on environmental preservation is an open question among scientists and policy-makers. We model this problem through a novel restorable common-pool resource game and use a laboratory experiment to exogenously manipulate key features of NETs and to assess their consequences. We show that crowding out only emerges when NETs are surely available and cheap. The availability of NETs does not allow experimental communities to either conserve the common resource for longer or to accrue higher earnings and it makes the distribution of earnings more unequal.