Governing climate geoengineering: Side-payments are not enough

Climate geoengineering might reduce the economic and ecological impacts of global warming. However, its governance is challenging: since climate preferences vary across countries, excessive climate geoengineering relative to the socially optimal level is a likely risk. Through a laboratory experiment on a public good-or-bad game, we study to what extent side payments can curb geoengineering efforts and restore efficiency. Although the availability of side payments is theoretically effective, its impact is modest in the experiment, especially in a multilateral setup. Replacing unstructured bilateral agreements with a structured framework improves outcomes.