The role of international liability in the regulation of SRM field research: An

economic analysisJesse L. Reynolds – J.L.Reynolds@uvt.nl

Faculty of Law, University of Tilburg

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Today

• SRM field research and its risks

• Regulating research

• Economic analysis of law

• Relevant conditions of SRM research

• Consider possibilities

• A tentative proposal

Reynolds, Climate engineering research & international liability, 2014

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SRM field research risks

Reynolds, Climate engineering research & international liability, 2014

• SRM may be beneficial

• SRM will have risks

• Scientists will do (field) research to learn

• Large scale field research will have risks

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Means of “regulation” of SRM field research

Reynolds, Climate engineering research & international liability, 2014

• Existing (international) rules

• New (international) rules

• Moratorium

• Institutions

• Norms

• Liability?

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Goals of “regulation” of SRM field research

Reynolds, Climate engineering research & international liability, 2014

• Reduces risk from research

• Allows potential of SRM

• Consistent with legal norms

• Compensates victims

• Low administrative costs

• Politically feasible

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Economic analysis of law (1/2)

Reynolds, Climate engineering research & international liability, 2014

• Accidents (prevention and compensation)

• Risky activity has benefits

• Risks borne by others

• Not internalized in decision making

• Not just

• How to incentivize socially optimal levels of activity and care, i.e. max(benefit-cost)?

• And how to compensate?

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Economic analysis of law (2/2)

Reynolds, Climate engineering research & international liability, 2014

• Conditions:

• Who (injurer, victim, gov’t) knows what?

• Who can do what?

• What would be efficient?

• Compare regulatory tools:

• Rules

• Liability

• Injunctions

• Taxes

• Fines

• Insurance for injurers and victims

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An economic analysis: Conditions (1/2)

Reynolds, Climate engineering research & international liability, 2014

• SRM research would be socially beneficial

• Research would impose risks

• Researchers have better information re: risk reduction

• Researchers do not capture most of the benefits

• Assumes no patents, open publication

• Like a public good -> underproduced, subsidized

• Researchers want to know and publicize external negative effects

• Research will be state sanctioned

• Researchers will coordinate efforts

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An economic analysis: Conditions (2/2)

Reynolds, Climate engineering research & international liability, 2014

• Researchers have low ability to pay damages

• Injurers and victims may not have access to insurance

• Victims can take some care to reduce harm

• Victims’ info re: harm inflicted appears to be weak, and

• Harm would be widely dispersed, but:

• States as victims

• Researchers seeking and sharing information

• Causation will be difficult

• Politically controversial -> compensation will be important

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An economic analysis: Regulatory possibilities? (1/2)

Reynolds, Climate engineering research & international liability, 2014

• Rules?

• Limited: Knowledge of researcher vs. government

• CE changing

• First party insurance; state reinsurer?

• Poor access

• Victim pays

• Researchers strictly liable; insurance; state reinsurer / residuals?

• No insurance market

• Bankruptcy or high premiums

• Disincentive for public good production

11Reynolds, Climate engineering research & international liability, 2014

• State liability?

• Disincentive for public good production

• States collectively liable?

• Compensation not liability

• No incentives

An economic analysis: Regulatory possibilities? (2/2)

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A regulation proposal (1/2): General rules

Reynolds, Climate engineering research & international liability, 2014

• Researching Parties’ commitments for SRM research

• General safety standards (specific nationally)

• Environmental assessment

• Notification

• Consultation

• Public input

• State approval of projects

• Open publication of results

• No prohibitive SRM patents

• International coordination

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A regulation proposal (2/2): Liability / compensation

Reynolds, Climate engineering research & international liability, 2014

• Parties contribute to a compensation fund

• Mix of ability to pay, past emissions, and potential benefit

• Only harm in Party’s territory eligible

• Parties forego other legal action

• Claims limited in time, extent, amount

• Causation examined by an expert claims commission

• Proportional awards for uncertainty; threshold?

• Limited state liability if at fault, i.e. failed in its commitments

• [Sanctions of researcher, if at fault?]

• Fund pays all or remaining damages

• Contributory negligence?

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Politically feasible?

Reynolds, Climate engineering research & international liability, 2014

• All Parties get

• Something ≈ equitable sharing of (monetized) risk

• Researching Parties get:

• Clarity and limitation of liability

• Endorsement of a controversial but potentially beneficial activity

• Parties at risk of research’s negative effects get:

• Assurance of responsibility

• Potential compensation

• Clarity of process