Effects of a Carbon Price in the U.S. on Economic Sectors, Resource Use, and Emissions: An Input-output Approach

Document Type

Article

Publication Date

7-2010

Publication Source

Energy Policy

Abstract

Despite differences in their implementation, most carbon policies aim to have similar outcomes: effectively raising the price of carbon-intensive products relative to non-carbon-intensive products. While it is possible to predict the simple broad-scale economic impacts of raising the price of carbon-intensive products—the demand for non-carbon-intensive products will increase—understanding the economic and environmental impacts of carbon policies throughout the life cycle of both types of products is more difficult. Using the example of a carbon tax, this study proposes a methodology that integrates short-term policy-induced consumer demand changes into the input–output framework to analyze the environmental and economic repercussions of a policy. Environmental repercussions include the direct and the indirect impacts on emissions, materials flow in the economy, and the reliance on various ecosystem goods and services. The approach combines economic data with data about physical flow of fossil fuels between sectors, consumption of natural resources and emissions from each sector. It applies several input–output modeling equations sequentially and uses various levels of aggregation/disaggregation. It is illustrated with the data for the 2002 U.S. economy and physical flows. The framework provides insight into the short-term complex interactions between carbon price and its economic and environmental effects.

Inclusive pages

3527-3536

ISBN/ISSN

0301-4215

Comments

Permission documentation on file.

Publisher

Elsevier

Volume

38

Issue

7

Place of Publication

Amsterdam, Netherlands

Peer Reviewed

yes

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