Distributional Implications of Regional Climate Change Policies in the U.S
Ross, M., Beach, R. H., & Murray, B. C. (2004, June). Distributional Implications of Regional Climate Change Policies in the U.S. Presented at Association of Environmental and Resource Economists Workshop, Estes Park, CO.
Analyses of policy options to mitigate global climate change generally concentrate on national levels of governance. This is primarily due to the unique ability of centralized governments to set nationwide policy and engage in international negotiations, which are clearly important factors in responding to a global environmental issue. However, many subnational governments are committed to the development and implementation of climate change mitigation policies. For instance, among other motivating factors, recent decisions by the U.S. federal government not to impose mandatory limits on greenhouse gas emissions have prompted state governments to become increasingly active in developing policies to address these emissions at a subnational level. While many viable strategies have been identified, the limited scope and lack of integration associated with these policies may result in inefficiencies relative to more comprehensive policies covering more categories of emission sources, more greenhouse gases, and larger geographical areas. This paper uses the ADAGE model, a computable general equilibrium modeling system, to examine the cost and distributional implications of relying on limited regional approaches to climate change mitigation, rather than on policies with broader geographic scope. Our findings suggest that the comprehensiveness of a GHG mitigation plan is of vital importance in determining costs, and we provide estimates of the magnitudes of various inefficiencies. Model results show that attention may also need to be paid to distributional effects of GHG policies on households, the uses for revenues generated by the policies, and how model assumptions will affect estimated outcomes.