IDEAS home Printed from https://ideas.repec.org/p/gta/workpp/2954.html
   My bibliography  Save this paper

Why Previous Estimates of the Cost of Climate Mitigation are Likely Too Low

Author

Listed:
  • Beckman, Jayson
  • Hertel, Thomas

Abstract

Computable general equilibrium (CGE) models have been heavily utilized in analyses of the costs of Greenhouse Gas mitigation policies. This is in large part due to their ability to simulate potential impacts of prospective economic policies taking into inter-sectoral and international interactions. Although CGE models have received heavy usage; they are often criticized as being insufficiently validated. Key parameters are often not econometrically estimated, and the performance of the model as a whole is rarely checked against historical outcomes. As a consequence, questions frequently arise as to how much faith one can put in CGE results. Our findings indicate that many earlier CGE-based studies may have understated the cost of meeting these targets by overstating the price elasticity of demand for energy. These results suggest that we must revisit the cost of climate policies in light of newly validated CGE models.

Suggested Citation

  • Beckman, Jayson & Hertel, Thomas, 2009. "Why Previous Estimates of the Cost of Climate Mitigation are Likely Too Low," GTAP Working Papers 2954, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    • Handle: RePEc:gta:workpp:2954
    Note: GTAP Working Paper No. 54
    as

    Download full text from publisher

    File URL: https://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=2954
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yingying Lu & David I. Stern, 2016. "Substitutability and the Cost of Climate Mitigation Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 81-107, May.
    2. Nalley, Lawton Lanier & Popp, Michael P. & Fortin, Corey, 2011. "The Impact of Reducing Greenhouse Gas Emissions in Crop Agriculture: A Spatial- and Production-Level Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(1), April.
    3. Dissou, Yazid & Karnizova, Lilia, 2016. "Emissions cap or emissions tax? A multi-sector business cycle analysis," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 169-188.
    4. De Miguel, Carlos J. & Ludeña, Carlos & Schuschny, Andrés Ricardo, 2012. "Climate change and reduction of CO2 emissions: the role of developing countries in carbon trade markets," Medio Ambiente y Desarrollo 150, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Nalley, Lawton Lanier & Popp, Michael P. & Niederman, Zara & Brye, Kristofor R. & Matlock, Marty B., 2012. "How Potential Carbon Policies Could Affect Where and How Cotton Is Produced in the United States," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 41(2), August.
    6. McFadden, Brandon R. & Nalley, L. Lanier & Popp, Michael P., 2013. "How Greenhouse Gas Emission Policy and Industry Pressure Could Affect Producer Selection of Rice Cultivars," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(2), August.
    7. Chantret, Francois & Gohin, Alexandre, 2009. "The Long-Run Impact of Energy Prices on World Agricultural Markets: The Role of Macro-Economic Linkages," 2009 Conference, August 16-22, 2009, Beijing, China 51560, International Association of Agricultural Economists.
    8. Honkatukia, Juha & Kaitila, Ville & Kotilainen, Markku & Niemi, Janne, 2012. "Global trade and climate policy scenarios – Impact on Finland," Working Papers 37, VATT Institute for Economic Research.
    9. Yazid Dissou & Lilia Karnizova & Qian Sun, 2015. "Industry-level Econometric Estimates of Energy-Capital-Labor Substitution with a Nested CES Production Function," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(1), pages 107-121, March.
    10. Zha, Donglan & Zhou, Dequn, 2014. "The elasticity of substitution and the way of nesting CES production function with emphasis on energy input," Applied Energy, Elsevier, vol. 130(C), pages 793-798.
    11. Enrica De Cian & Ramiro Parrado, 2012. "Technology Spillovers Embodied in International Trade: Intertemporal, regional and sectoral effects in a global CGE," Working Papers 2012.27, Fondazione Eni Enrico Mattei.
    12. Lyman, Nathaniel & Nalley, Lawton Lanier, 2013. "Incentivizing Net Greenhouse Gas Emissions Reductions in Rice Production: The Case of Arkansas Rice," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(01), February.
    13. Gohin, A. & Chantret, F., 2010. "The long-run impact of energy prices on world agricultural markets: The role of macro-economic linkages," Energy Policy, Elsevier, vol. 38(1), pages 333-339, January.
    14. Kuik, Onno & Hofkes, Marjan, 2010. "Border adjustment for European emissions trading: Competitiveness and carbon leakage," Energy Policy, Elsevier, vol. 38(4), pages 1741-1748, April.
    15. Zha, Donglan & Ding, Ning, 2015. "Threshold characteristic of energy efficiency on substitution between energy and non-energy factors," Economic Modelling, Elsevier, vol. 46(C), pages 180-187.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gta:workpp:2954. 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: (Jeremy Douglas). General contact details of provider: http://edirc.repec.org/data/gtpurus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.