GTAP Resources: Resource Display
| GTAP Resource #7669 |
|---|
|
"Externality Tax Rates and Cost-Effective Mitigation with Coupled Pollutants: Carbon and Methane" by Lazarus, Eli Abstract Canonical theory holds that the efficient correction for pollution causing a diffuse negative externality is to tax the pollutant at its marginal social cost. This paper considers two co-produced pollutants that jointly give rise to a single externality. In a second-best setting where both pollutants are not optimally regulated, a tax on one should account for the combined externality from both. I look at the market failure of climate change and show that an extended general equilibrium Pigouvian rate for either a carbon or methane tax differs from its individual social cost due to the overlap in economic activities that generate these two major greenhouse gases. I also analyze the cost-effectiveness of carbon and methane taxes. In the U.S., nearly all anthropogenic carbon emissions are produced from fossil fuel combustion for energy, and almost half of methane emissions come from the fossil fuel energy system. I use a computable general equilibrium model of the United States to assess how economic interdependencies affect emissions in response to a set of policies. I find that the extended Pigouvian rate of a methane tax is over 200% above the social cost of methane, and the extended Pigouvian carbon tax is around 5% above the social cost of carbon. I determine that a combination of taxes at different rates, expressed in CO2 equivalent terms, is most welfare-efficient. I test a sector-specific methane policy, and a set of alternative specifications including the near-term global warming potential of methane. I find that efficient policy shifts toward methane as methane emissions become more significant in alternative specifications. |
| Resource Details () | GTAP Keywords | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
- Climate change policy - Environmental policies - Model integration and coupling - Software and modeling tools - North America |
| Attachments |
|---|
|
If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.
Public Access  GTAP Resource 7669: Multiple GHG policy paper and model repository (1.4 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions The model can be run by cloning the respository https://github.com/EliLazarus/WiNnat_model , and running the script MultiGHGNat.jl Julia must be installed, and all required packages as listed in the 'using' statements, including those used by AggWiNDCdata.jl and CESUtility.jl. Otherwise, I think that the directory references should work. Alternatively, downloading just the script, called scripts ("include", the two listed above), and all necessary data (and either updating or recreating the directory structure) would work. |
| Comments (0 posted) |
|---|
|
You must log in before entering comments.
No comments have been posted. |
Last Modified: 2/26/2026 1:27:51 PM
