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GTAP Resource #5018

"Key Issues and Challenges in Representing Non-Price Environmental Policies in an Applied General Equilibrium Framework"
by Garbaccio, Richard, Alex Marten, Ann Wolverton and et al.

This paper begins by describing the current process used to analyze air pollution policies in the United States as well as the typical analytical tools used to support decision making. We explore the steps involved, key assumptions, challenges, and options available for potentially extending the analytical toolset to include estimates of both the social cost and benefits of non-price policies to reduce air pollution in a CGE model. This paper develops a typology to represent the range and complexity of U.S. non-GHG air regulations and describes the typical approaches used to evaluate their costs and benefits. We divide U.S. air regulations into four broad categories: single sector emission rate limits; regional or state-implemented emission targets; multi-sector boiler or engine-level emission limits; and federal product standards. For each of the four categories of air regulations, we characterize several key attributes that may be important to consider when evaluating the relative merits of various modeling approaches, including CGE models.

This typology provides an important tool for understanding the main challenges that may be encountered when attempting to represent non-price air regulations in a CGE model. For instance, detailed information on what polluting entities are affected and how they comply may not map in clear cut ways to a more aggregate representation in a CGE model and thus may miss important components of social cost. Likewise, using the typical CGE modeling assumption of a representative agent may miss important differences in health effects across sub-populations (e.g., children and the elderly) that are highly relevant when contemplating how benefits interact with the rest of the economy. Working within this typology we explore the current options for and research needs for improving economy-wide models for use in environmental policy analysis.

Resource Details (Export Citation) GTAP Keywords
Category: 2016 Conference Paper
Status: Published
By/In: Presented at the 19th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2016
Created: Wolverton, A. (4/15/2016)
Updated: Wolverton, A. (4/15/2016)
Visits: 1,022
- Domestic policy analysis
- North America

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