White Paper – Pew Center on Global Climate Change
White Paper
The Economic Costs of a
Market-based Climate Policy
By
Dale W. Jorgenson, Harvard University
Richard J. Goettle, Northeastern University
Peter J. Wilcoxen, Syracuse University
Mun Sing Ho, Harvard University
With contributions from
Hui Jin, Harvard University
Patrick A. Schoennagel, Northeastern University
Prepared for the
Pew Center on Global Climate Change
By
Dale W. Jorgenson Associates
June 2008
White Paper – Pew Center on Global Climate Change
ii
Table of Contents
Executive Summary ......................................................................................................... iii
1. Introduction.................................................................................................................. 1
2. Policy considerations ................................................................................................... 4
3. Marginal abatement cost ........................................................................................... 11
4. The impacts of mitigation policy .............................................................................. 14
5. Economic mechanisms............................................................................................... 25
6. Model comparisons .................................................................................................... 33
7. Induced technical change .......................................................................................... 37
8. Consumption and leisure choices ............................................................................. 43
9. Longer-term considerations: Banking and Beyond 2020....................................... 48
a. Banking ................................................................................................................. 48
b. Emissions policy after 2020.............................................................................