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Opportunity Cost and Employment Effect of Emission Reduction: An Inter-Industry Comparison of Targeted Pollution Reduction

Author

Listed:
  • Chuang Li

    (University of Connecticut)

  • Subhash C. Ray

    (University of Connecticut)

Abstract

All nations stand to benefit from addressing the problem of global warming caused by green-house gas emissions. However, the economic impact of pollution reduction in the form of reduction in GDP and jobs lost will be different for different countries and across different industries. In this paper, we estimate the opportunity cost of emission reduction in terms of the loss of intended output and, collaterally, the effect on employment that would result from a reduction in the con-sumption of fuel for various industries of different countries by using the data constructed from the World Input-Output Database. We conceptualize a production technology with one intended out-put and one undesirable output (CO2 emission) produced from labor, capital, and materials (treated as neutral input) and fuel (treated as the polluting input). The nonparametric Data Envelopment Analysis model of by-production formulated by Murty, Russell, and Levkoff (2012) and modified by Ray, Mukherjee, and Venkatesh (2018) is employed.

Suggested Citation

  • Chuang Li & Subhash C. Ray, 2021. "Opportunity Cost and Employment Effect of Emission Reduction: An Inter-Industry Comparison of Targeted Pollution Reduction," Working papers 2021-13, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2021-13
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    References listed on IDEAS

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    More about this item

    Keywords

    CO2 Emission; Opportunity Cost; DEA; Efficiency;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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