The Economic Consequences of Delay in U.S.Climate Policy
The United States Environmental Protection Agency (EPA) has begun regulating existing stationary sources of greenhouse gases (GHG) using its authority under the Clean Air Act (the Act). The regulatory process under the Act is long and involved and raises the prospect that significant U.S. action might be delayed for years. This paper examines the economic implications of such a delay. We analyze four policy scenarios using an economic model of the U.S. economy embedded within a broader model of the world economy. The first scenario imposes an economy-wide carbon tax that starts immediately at $15 and rises annually at 4 percent over inflation. The second two scenarios impose different (and generally higher) carbon tax trajectories that achieve the same cumulative emissions reduction as the first scenario over a period of 24 years, but that start after an eight year delay. All three of these policies use the carbon tax revenue to reduce the federal budget deficit. The fourth policy imposes the same carbon tax as the first scenario but uses the revenue to reduce the tax rate on capital income. We find that by nearly every measure, the delayed policies produce worse economic outcomes than the more modest policy implemented now, while achieving no better environmental benefits.
|Date of creation:||Jul 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: http://cama.crawford.anu.edu.auEmail:
More information through EDIRC
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.:
- Bosetti, Valentina & Carraro, Carlo & Tavoni, Massimo, 2009.
"Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action,"
CEPR Discussion Papers
7394, C.E.P.R. Discussion Papers.
- Massimo Tavoni & Valentina Bosetti & Carlo Carraro, 2009. "Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action," Working Papers 2009.53, Fondazione Eni Enrico Mattei.
- Valentina Bosetti & Carlo Carraro & Massimo Tavoni, 2009. "Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action," CESifo Working Paper Series 2742, CESifo Group Munich.
- Valentina Bosetti & Carlo Carraro & Massimo Tavoni, 2009. "Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action," Working Papers 2009_13, Department of Economics, University of Venice "Ca' Foscari".
- Bento, Antonio M. & Jacobsen, Mark, 2007. "Ricardian rents, environmental policy and the `double-dividend' hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 17-31, January.
- repec:ner:tilbur:urn:nbn:nl:ui:12-3777015 is not listed on IDEAS
- Gerlagh, R. & Kverndokk, S. & Rosendahl, K.E., 2009.
"Optimal timing of climate change policy : Interaction between carbon taxes and innovation externalities,"
Other publications TiSEM
4312dde8-f323-4ee2-9764-a, School of Economics and Management.
- Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
- McKibbin, Warwick J. & Morris, Adele C. & Wilcoxen, Peter J., 2014. "Pricing carbon in the U.S.: A model-based analysis of power-sector-only approaches," Resource and Energy Economics, Elsevier, vol. 36(1), pages 130-150.
When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2014-49. 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: (Cama Admin)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.