Optimal Environmental Policies for Multiple Externalities of Energy: An Empirical Study for the United States

Tsung-Chen Lee and Richard Boisvert

No 331232, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The goal of this paper is to contribute the proper design of a set of energy-environmental policies where the use of fossil fuels generates multiple externalities. We develop a computable general equilibrium (CGE) model for the United States with an explicit treatment of energy substitution, physical energy use and corresponding emissions of greenhouse gases and local air pollutants, as well as a wide range of different effects caused by these emissions. Our simulation scenarios are designed to illustrate how ignorance of jointly optimal policies affects the overall welfare, energy use, environmental consequences, and economic activities. Specifically, three scenarios on energy taxes, including taxing greenhouse gases alone, taxing local air pollutants alone, and joint implementation of the above two taxes, are analyzed. Our numerical results are consistent with the optimal policy rule of “full social costs pricing of energy”: the United States can achieve a higher welfare gain along with lower fuel use and pollution emissions in the scenario where joint taxes on greenhouse gases and local air pollutants are adopted. The estimated overall welfare gains are $12,308 million, where welfare gains of reductions in climate change damage and in adverse health effects make substantial contributions. With respect to the welfare gains from the reductions in the adverse health effects, the monetary health benefits estimates are dominated by the reductions in acute mortality and the chronic bronchitis effects, which represent about 98 percent of the total monetary health benefits.

Keywords: Environmental Economics and Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 27
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/331232/files/1998.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331232

Access Statistics for this paper

More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().