The Fiscal Costs of Climate Change

Lint Barrage

AEA Papers and Proceedings, 2020, vol. 110, 107-12

Abstract: This paper explores the fiscal consequences of climate change. The analysis considers climate change impacts on (i) the cost of existing government services (e.g., disaster assistance) and (ii) the need for publicly provided anticipatory adaptation (e.g., sea walls). These channels are integrated into the COMET, a dynamic general equilibrium climate-economy model with distortionary taxation and government expenditures. The main result is that accounting for fiscal impacts may increase the welfare benefits of efficient climate policy by up to 30 percent. Business-as-usual climate change may necessitate increases in income tax rates and elevate the marginal cost of raising public funds.

JEL-codes: E12 E62 H24 Q54 Q56 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (10)

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DOI: 10.1257/pandp.20201082

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