Comparing Applied General Equilibrium and Econometric Estimates of the Effect of an Environmental Policy Shock

Carbone, Jared C.; Rivers, Nicholas; Yamazaki, Akio; Yonezawa, Hidemichi

doi:10.1086/708734

Cited by 20 publications

(14 citation statements)

References 25 publications

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“…see discussions in OECD 1997;Andersen 2004;Ekins and Barker 2001;Cropper et al 2018). Consistent with this view, a recent assessment of British Colombia's carbon tax in Carbone et al (2020) finds that the sign and magnitude of the policy coefficient(s) estimated via a reduced form econometric policy response model correspond closely with those derived from a large CGE model, suggesting that the former are not undermined by general equilibrium effects and can provide empirical evidence that informs subsequent parametrization of the latter. Note: DiD = Difference-in-differences; IV = instrumental variable; LP = local projection; SVAR = structural vector autoregression; GSC = generalized synthetic control; IFE = interactive fixed effects; ML = machine learning; RDiT = regressiondiscontinuity-in-time.…”

Section: Evidence From Previous Evaluationsmentioning

confidence: 76%

Carbon Pricing and the Elasticity of CO2 Emissions

Rafatya

Dolphin

Pretis

2020

INET Working Paper Series

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We study the impact of carbon pricing on CO2 emissions across five sectors for a panel of 39 countries over 1990-2016. Using newly constructed sector-level carbon price data, we implement a novel approach to estimate the changes in CO2 emissions associated with (i) the introduction of carbon pricing regardless of the price level; (ii) the implementation effect as a function of the price level; and (iii) post-implementation marginal changes in the CO2 price. We find that the introduction of carbon pricing has reduced growth in CO2 emissions by 1% to 2.5% on average relative to counterfactual emissions, with most abatement occurring in the electricity and heat sector. Exploiting variation in carbon pricing to explain heterogeneity in treatment effects, we find an imprecisely estimated semi-elasticity of a 0.05% reduction in emissions growth per average $1/metric ton (hereafter abbreviated as: ton) of CO2. After the carbon price has been implemented, each marginal price increase of $1/tCO2 has temporarily lowered the growth rate of CO2 emissions by around 0.01%. These are disappointingly small effects. Simulating potential future emissions reductions in response to carbon price paths, we conclude that – in the absence of complementary non-pricing policy interventions – carbon pricing alone, even if implemented globally, is unlikely to be sufficient to achieve emission reductions consistent with the Paris climate agreement.

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Section: Evidence From Previous Evaluationsmentioning

confidence: 76%

Carbon Pricing and the Elasticity of CO2 Emissions

Rafatya

Dolphin

Pretis

2020

INET Working Paper Series

View full text Add to dashboard Cite

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“…see discussions in OECD 1997; Andersen 2004;Andersen et al 2000;Ekins and Barker 2001;Cropper et al 2018). Consistent with this view, a recent assessment of British Colombia's carbon tax in Carbone et al (2020) finds that the sign and magnitude of the policy coefficient(s) estimated via a reduced form econometric policy response model correspond closely with those derived from a large CGE model, suggesting that the former are not undermined by general equilibrium effects and can provide empirical evidence that informs subsequent parametrization of the latter. 7 The reliance on ex ante simulation approaches hitherto is understandable given the data-related challenges attendant to empirical carbon pricing evaluations (see §III), the scarcity of real-world carbon pricing initiatives until the past decade or so, and the growing interest of policymakers in acquiring reasonable projections of the likely environmental and macroeconomic impacts of carbon pricing proposals over the coming decades.…”

Section: Evidence From Previous Evaluationsmentioning

confidence: 87%

Carbon Pricing and the Elasticity of Co2 Emissions

Rafaty¹,

Dolphin

Pretis

2022

SSRN Journal

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“…Such transformation is likely to have substantial effects on employment and livelihoods with distinct winners and losers within and between economies. While the current evidence as often shows net gains in total employment and “green jobs” (Hille & Möbius, 2019 ; Yamazaki, 2017 ), the risks of disruption may be especially high to less skilled workers (Marin & Vona, 2019 ) and more carbon intensive sectors (Carbone et al, 2020 ), like the fossil fuel industry and other natural resource sectors. The effects of these higher costs and changes to the labor market will also depend on the design of the taxation policy and social policy related to training and employment.…”

Section: A Typology Of Climate Policies and Pathways To Armed Conflictmentioning

confidence: 98%

Climate mitigation policies and the potential pathways to conflict: Outlining a research agenda

Gilmore

Buhaug

2021

WIREs Climate Change

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Climate policies will need to incentivize transformative societal changes if they are to achieve emission reductions consistent with 1.5°C temperature targets. To contribute to efforts for aligning climate policy with broader societal goals, specifically those related to sustainable development, we identify the effects of climate mitigation policy on aspects of socioeconomic development that are known determinants of conflict and evaluate the plausibility and importance of potential pathways to armed conflict and political violence. Conditional on preexisting societal tensions and socioeconomic vulnerabilities, we isolate effects on economic performance, income and livelihood, food and energy prices, and land tenure as most likely to increase conflict risks. Climate policy designs may be critical to moderate these risks as different designs can promote more favorable societal outcomes such as equity and inclusion. Coupling research with careful monitoring and evaluation of the intermediate societal effects at early stages of policy implementation will be a critical part of learning and moderating potential conflict risks. Importantly, better characterizing the future conflict risks under climate policy allows for a more comprehensive comparison to the conflict risk if mitigation is not implemented and graver climate damages are experienced. This article is categorized under: The Carbon Economy and Climate Mitigation > Benefits of Mitigation

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Comparing Applied General Equilibrium and Econometric Estimates of the Effect of an Environmental Policy Shock

Cited by 20 publications

References 25 publications

Carbon Pricing and the Elasticity of CO2 Emissions

Carbon Pricing and the Elasticity of CO2 Emissions

Carbon Pricing and the Elasticity of Co2 Emissions

Climate mitigation policies and the potential pathways to conflict: Outlining a research agenda

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