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Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input-output approach

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  • Choi, Jun-Ki
  • Bakshi, Bhavik R.
  • Haab, Timothy

Abstract

Despite differences in their implementation, most carbon policies aim to have similar outcomes: effectively raising the price of carbon-intensive products relative to non-carbon-intensive products. While it is possible to predict the simple broad-scale economic impacts of raising the price of carbon-intensive products--the demand for non-carbon-intensive products will increase--understanding the economic and environmental impacts of carbon policies throughout the life cycle of both types of products is more difficult. Using the example of a carbon tax, this study proposes a methodology that integrates short-term policy-induced consumer demand changes into the input-output framework to analyze the environmental and economic repercussions of a policy. Environmental repercussions include the direct and the indirect impacts on emissions, materials flow in the economy, and the reliance on various ecosystem goods and services. The approach combines economic data with data about physical flow of fossil fuels between sectors, consumption of natural resources and emissions from each sector. It applies several input-output modeling equations sequentially and uses various levels of aggregation/disaggregation. It is illustrated with the data for the 2002 U.S. economy and physical flows. The framework provides insight into the short-term complex interactions between carbon price and its economic and environmental effects.

Suggested Citation

  • Choi, Jun-Ki & Bakshi, Bhavik R. & Haab, Timothy, 2010. "Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input-output approach," Energy Policy, Elsevier, vol. 38(7), pages 3527-3536, July.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3527-3536
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Kun & Wang, Qian & Liang, Qiao-Mei & Chen, Hao, 2016. "A bibliometric analysis of research on carbon tax from 1989 to 2014," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 297-310.
    2. Renato Agurto & Fernando Fuentes & Carlos Garcia & Esteban Skoknic, 2013. "Power Generation and the Business Cycle: The Impact of Delaying Investment," ILADES-Georgetown University Working Papers inv290, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    3. Lindberg, Gunnar & Midmore, Peter & Surry, Yves R., 2011. "Agriculture’s inter-industry linkages, aggregation bias and rural policy reforms," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99358, European Association of Agricultural Economists.
    4. repec:eee:enepol:v:114:y:2018:i:c:p:262-273 is not listed on IDEAS
    5. Choi, Jun-Ki & Morrison, Drew & Hallinan, Kevin P. & Brecha, Robert J., 2014. "Economic and environmental impacts of community-based residential building energy efficiency investment," Energy, Elsevier, vol. 78(C), pages 877-886.
    6. Liu, Hongtao & Polenske, Karen R. & Xi, Youmin & Guo, Ju'e, 2010. "Comprehensive evaluation of effects of straw-based electricity generation: A Chinese case," Energy Policy, Elsevier, vol. 38(10), pages 6153-6160, October.
    7. Iuliia Ogarenko & Klaus Hubacek, 2013. "Eliminating Indirect Energy Subsidies in Ukraine: Estimation of Environmental and Socioeconomic Effects Using Input–Output Modeling," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-27, December.
    8. Li, Fujia & Dong, Suocheng & Li, Zehong & Li, Yu & Li, Shantong & Wan, Yongkun, 2012. "The improvement of CO2 emission reduction policies based on system dynamics method in traditional industrial region with large CO2 emission," Energy Policy, Elsevier, vol. 51(C), pages 683-695.
    9. Choi, Jun-Ki & Bakshi, Bhavik R. & Hubacek, Klaus & Nader, Jordan, 2016. "A sequential input–output framework to analyze the economic and environmental implications of energy policies: Gas taxes and fuel subsidies," Applied Energy, Elsevier, vol. 184(C), pages 830-839.
    10. G. Lindberg & P. Midmore & Y. Surry, 2012. "Agriculture’s Inter-industry Linkages, Aggregation Bias and Rural Policy Reforms," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(3), pages 552-575, September.
    11. Bassi, Andrea M. & Yudken, Joel S., 2011. "Climate policy and energy-intensive manufacturing: A comprehensive analysis of the effectiveness of cost mitigation provisions in the American Energy and Security Act of 2009," Energy Policy, Elsevier, vol. 39(9), pages 4920-4931, September.

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