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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. 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 W25/55, Institute for Fiscal Studies.
    3. Barreto, Yuri & Britto, Diogo & Carrillo, Bladimir & Da Mata, Daniel & Emanuel, Lucas & Sampaio, Breno, 2025. "Cisterns for Life: Climate Adaptation Policies for Water Provision and Rural Lives," IZA Discussion Papers 18250, Institute of Labor Economics (IZA).
    4. Bryan Bollinger & Kenneth Gillingham & A. Justin Kirkpatrick, 2025. "Valuing Solar Subsidies," CESifo Working Paper Series 11627, CESifo.
    5. Johannes Emmerling & Frank Venmans & David Reinstein & Ben Balmford, 2025. "Evaluation Summary and Metrics: "A Welfare Analysis of Policies Impacting Climate Change"," The Unjournal Evaluations 2025-21, The Unjournal.
    6. 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.
    7. 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).
    8. Dalla-Zuanna, Antonio & Liu, Kai, 2025. "Using the MVPF to Allocate Treatment Under Imperfect Compliance and Supply-Side Constraints," IZA Discussion Papers 18259, Institute of Labor Economics (IZA).
    9. 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.
    10. Swati Dhingra & Stephen Machin, 2025. "Citizen training and the urban waste footprint," CEP Discussion Papers dp2124, Centre for Economic Performance, LSE.
    11. Chaurey, Ritam & Nayyar, Guarav & Sharma, Siddharth & Verhoogen, Eric, 2025. "Social Learning among Urban Manufacturing Firms: Energy-Efficient Motors in Bangladesh," IZA Discussion Papers 18183, Institute of Labor Economics (IZA).
    12. Metcalfe, Robert & Roth, Sefi, 2025. "Making the invisible visible: the impact of revealing indoor air pollution on behavior and welfare," LSE Research Online Documents on Economics 128514, London School of Economics and Political Science, LSE Library.
    13. Owen Kay & Michael David Ricks, 2025. "Time-Limited Subsidies: Optimal Taxation with Implications for Renewable Energy Subsidies," Working Papers 2530, Federal Reserve Bank of Dallas.

    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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