The Economic Benefits and Costs of Mitigating Climate Change: Interactions among Carbon Tax, Forest Sequestration and Climate Change Induced Crop Yield Impacts

Luis M. Pena-Levano, Farzad Taheripour and Wallace Tyner

No 205629, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: This paper uses an advanced computable general equilibrium model to evaluate the extent to which incorporation of climate change induced changes in crop yields could impact forest carbon sequestration with a carbon tax. We find that the reduction in crop yields in many regions does negatively impact the potential for forest carbon sequestration. The yield reduction causes more land to be needed for crop production making less available for forest. In addition, the crop yield reduction reduces overall crop production and significantly increases crop and livestock prices. These prices increase substantially even though demand has been reduced due to the negative economic impacts of the carbon tax. Developing countries have much more negative economic impacts than rich countries.

Keywords: Crop Production/Industries; Environmental Economics and Policy; International Relations/Trade; Land Economics/Use (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-agr, nep-env and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205629

DOI: 10.22004/ag.econ.205629

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