On the Potential Economic Costs of Cutting Carbon Dioxide Emissions in Portugal
The objective of this paper is to estimate the impact of reducing carbon dioxide emissions from fossil fuel combustion activities on economic activity in Portugal. We find that energy consumption has a significant impact on macroeconomic activity. In fact, a one ton of oil equivalent permanent reduction in aggregate energy consumption reduces output in the long term by €6,340. More importantly, and since carbon dioxide emissions are linearly related to the amounts of fuel consumed, our results allow us to estimate the costs of reductions in carbon dioxide emissions. We estimate that a uniform standard for reducing carbon dioxide emissions from fossil fuel combustion activities would lead to a marginal abatement cost of €95.74 per ton of carbon dioxide. This is a first rough estimate of the potential economic costs of policies designed to reduce carbon dioxide emissions. At this level one may conclude that uniform, across the board reductions in carbon emissions would have a clear negative effect on economic activity. Hence, at the aggregate level there is clear evidence for a trade-off between economic performance and a reduction in carbon emissions. This opens the door to the investigation of the scope for policy to minimize the costs of environmental policy and regulation.
|Date of creation:||26 Oct 2008|
|Date of revision:||15 Sep 2010|
|Contact details of provider:|| Postal: P.O. Box 8795, Williamsburg, VA 23187-8795|
Phone: (757) 221-4311
Fax: (757) 221-2390
Web page: http://www.wm.edu/economics/
More information through EDIRC
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.:
- Christopher A. Sims & Tao Zha, 1994.
"Error Bands for Impulse Responses,"
Cowles Foundation Discussion Papers
1085, Cowles Foundation for Research in Economics, Yale University.
- Gonzalo, J. & Lee, T.H., 1995.
"Pitfalls in Testing for Long Run Relationships,"
38, Boston University - Department of Economics.
- Zhang, ZhongXiang & Folmer, Henk, 1998. "Economic modelling approaches to cost estimates for the control of carbon dioxide emissions1," Energy Economics, Elsevier, vol. 20(1), pages 101-120, February.
- Scott, Michael J. & Roop, Joseph M. & Schultz, Robert W. & Anderson, David M. & Cort, Katherine A., 2008. "The impact of DOE building technology energy efficiency programs on U.S. employment, income, and investment," Energy Economics, Elsevier, vol. 30(5), pages 2283-2301, September.
- Gaskins, Darius W, Jr & Weyant, John P, 1993. "Model Comparisons of the Costs of Reducing CO2 Emissions," American Economic Review, American Economic Association, vol. 83(2), pages 318-23, May.
- Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1997.
"Monetary policy shocks: what have we learned and to what end?,"
Working Paper Series, Macroeconomic Issues
WP-97-18, Federal Reserve Bank of Chicago.
- Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148 Elsevier.
- Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1998. "Monetary Policy Shocks: What Have We Learned and to What End?," NBER Working Papers 6400, National Bureau of Economic Research, Inc.
- Christiano, Lawrence J & Eichenbaum, Martin & Evans, Charles, 1996.
"The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds,"
The Review of Economics and Statistics,
MIT Press, vol. 78(1), pages 16-34, February.
- Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 1994. "The effects of monetary policy shocks: evidence from the flow of funds," Proceedings, Federal Reserve Bank of Dallas, issue Apr.
- Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 1994. "The effects of monetary policy shocks: evidence from the Flow of Funds," Working Paper Series, Macroeconomic Issues 94-2, Federal Reserve Bank of Chicago.
- William D. Nordhaus, 1993. "Reflections on the Economics of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 11-25, Fall.
- Paul Crompton & Yanrui Wu, 2004.
"Energy Consumption in China: Past Trends and Future Directions,"
Economics Discussion / Working Papers
04-22, The University of Western Australia, Department of Economics.
- Crompton, Paul & Wu, Yanrui, 2005. "Energy consumption in China: past trends and future directions," Energy Economics, Elsevier, vol. 27(1), pages 195-208, January.
- Dale W. Jorgenson, 1998. "Growth, Volume 2: Energy, the Environment, and Economic Growth," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262100746, June.
- Francis, Brian M. & Moseley, Leo & Iyare, Sunday Osaretin, 2007. "Energy consumption and projected growth in selected Caribbean countries," Energy Economics, Elsevier, vol. 29(6), pages 1224-1232, November.
- Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, June.
When requesting a correction, please mention this item's handle: RePEc:cwm:wpaper:79. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daifeng He)or (Alfredo Pereira)
If references are entirely missing, you can add them using this form.