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A Welfare Analysis of Policies Impacting Climate Change

Author

Listed:
  • Robert W. Hahn
  • Nathaniel Hendren
  • Robert D. Metcalfe
  • Ben Sprung-Keyser

Abstract

We study the welfare impacts of 96 climate-related tax and spending policies. We extend and apply the marginal value of public funds (MVPF) framework, most notably providing a new method for incorporating learning-by-doing spillovers. We find subsidies for the production of clean energy (such as wind production tax credits) have higher MVPFs than all other subsidies in our sample, including EV subsidies. Conservation nudges have large MVPFs when targeting regions with dirty grids. Fuel taxes and cap-and-trade policies are highly efficient means of raising revenue. We also construct traditional cost-per-ton estimates and compare and contrast the lessons they provide.

Suggested Citation

  • Robert W. Hahn & Nathaniel Hendren & Robert D. Metcalfe & Ben Sprung-Keyser, 2024. "A Welfare Analysis of Policies Impacting Climate Change," NBER Working Papers 32728, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32728
    Note: DEV EEE PE PR
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    Citations

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    Cited by:

    1. Robert Metcalfe & Sefi Roth, 2025. "Making the Invisible Visible: The Impact of Revealing Indoor Air Pollution on Behavior and Welfare," Framed Field Experiments 00819, The Field Experiments Website.
    2. Bryan Bollinger & Kenneth Gillingham & A. Justin Kirkpatrick, 2025. "Valuing Solar Subsidies," CESifo Working Paper Series 11627, CESifo.
    3. Andor, Mark Andreas & Hümmecke, Eva & Memmen, Marvin, 2024. "Präferenzen und Einstellungen zu vieldiskutierten verkehrspolitischen Maßnahmen: Ergebnisse der dritten Welle des RWI Klima-Mobilitäts-Panels aus dem Jahr 2022," RWI Materialien 169, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Peter Levell & Martin O'Connell & Kate Smith, 2025. "The welfare effects of price shocks and household relief packages: evidence from an energy crisis," IFS Working Papers W25/03, Institute for Fiscal Studies.
    5. Andor, Mark A. & Dehos, Fabian T. & Gillingham, Kenneth T. & Hansteen, Sven & Tomberg, Lukas, 2025. "Public transport pricing: An evaluation of the 9-Euro ticket and an alternative policy proposal," Economics of Transportation, Elsevier, vol. 42(C).

    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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