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Carbon Abatement Costs: Why the Wide Range of Estimates?

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Author Info
Fischer, Carolyn () (Resources for the Future)
Morgenstern, Richard () (Resources for the Future)

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Abstract

Estimates of marginal abatement costs for reducing carbon emissions derived from major economic-energy models vary widely. Controlling for policy regimes, we use meta-analysis to examine the importance of structural modeling choices in explaining differences in estimates. The analysis indicates that particular assumptions about perfectly foresighted consumers and Armington trade elasticities generate lower estimates of marginal abatement costs. Other choices are associated with higher cost estimates, including perfectly mobile capital, inclusion of a backstop technology, and greater disaggregation among regions and sectors. Some features, such as greater technological detail, seem less significant. Understanding the importance of key modeling assumptions, as well as the way the models are used to estimate abatement costs, can help guide the development of consistent modeling practices for policy evaluation.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-03-42-rev.

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Date of creation: 01 Sep 2003
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Related research
Keywords: climate models; carbon tax;

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Find related papers by JEL classification:
Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gernot Klepper & Sonja Peterson, 2003. "On the Robustness of Marginal Abatement Cost Curves: The Influence of World Energy Prices," Kiel Working Papers 1138, Kiel Institute for the World Economy. [Downloadable!]
  2. Toman, Michael, 2003. "Understanding the Design and Performance of Emissions Trading Systems for Greenhouse Gas Emissions: Proceedings of an Experts' Workshop to Identify Research Needs and Priorities," Discussion Papers dp-03-33, Resources For the Future. [Downloadable!]
  3. Atsushi Kurosawa & Hiroshi Yagita & Weisheng Zhou & Koji Tokimatsu & Yukio Yanagisawa, 1999. "Analysis of Carbon Emission Stabilization Targets and Adaptation by Integrated Assessment Model," The Energy Journal, International Association for Energy Economics, vol. 20(Special I), pages 157-176.
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  7. Thomas Rutherford, 1992. "The Welfare Effects of Fossil Carbon Restrictions: Results from a Recursively Dynamic Trade Model," OECD Economics Department Working Papers 112, OECD, Economics Department. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fischer, Carolyn & Fox, Alan, 2004. "Output-Based Allocations of Emissions Permits: Efficiency and Distributional Effects in a General Equilibrium Setting with Taxes and Trade," Discussion Papers dp-04-37, Resources For the Future. [Downloadable!]
  2. Parry, Ian W.H., 2006. "Are the Costs of Reducing Greenhouse Gases from Passenger Vehicles Negative?," Discussion Papers dp-06-14-rev, Resources For the Future. [Downloadable!]
    Other versions:
  3. Ho, Mun S. & Morgenstern, Richard & Shih, Jhih-Shyang, 2008. "Impact of Carbon Price Policies on U.S. Industry," Discussion Papers dp-08-37, Resources For the Future. [Downloadable!]
  4. Onno Kuik & Luke Brander & Richard S. J. Tol, 2008. "Marginal Abatement Costs of Carbon-Dioxide Emissions: A Meta-Analysis," Papers WP248, Economic and Social Research Institute (ESRI). [Downloadable!]
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