Opportunity Cost and Employment Effect of Emission Reduction: An Inter-Industry Comparison of Targeted Pollution Reduction

Chuang Li and Subhash Ray
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Chuang Li: University of Connecticut

No 2021-13, Working papers from University of Connecticut, Department of Economics

Abstract: All nations stand to benefit from addressing the problem of global warming caused by green-house gas emissions. However, the economic impact of pollution reduction in the form of reduction in GDP and jobs lost will be different for different countries and across different industries. In this paper, we estimate the opportunity cost of emission reduction in terms of the loss of intended output and, collaterally, the effect on employment that would result from a reduction in the con-sumption of fuel for various industries of different countries by using the data constructed from the World Input-Output Database. We conceptualize a production technology with one intended out-put and one undesirable output (CO2 emission) produced from labor, capital, and materials (treated as neutral input) and fuel (treated as the polluting input). The nonparametric Data Envelopment Analysis model of by-production formulated by Murty, Russell, and Levkoff (2012) and modified by Ray, Mukherjee, and Venkatesh (2018) is employed.

Keywords: CO2 Emission; Opportunity Cost; DEA; Efficiency (search for similar items in EconPapers)
JEL-codes: C61 Q52 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-11
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2021-13

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