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...revealing the economic implications of environmental policy |
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In this project, Nic Rivers and I developed a CGE model of the Canadian economy and calibrated it to CIMS. We then assessed some tax shifting and revenue recycling scenarios. We find a strong double dividend at low carbon prices but a weaker double dividend at higher emission prices. |
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For this project, we sat back and asked some interesting questions about the implications of transitioning Canada to a low carbon future by mid-century. We first contemplated Canada's emission reduction objective, which is linked the stock of atmospheric carbon, then asked what targets were technically and economically feasible for Canada in 2020 and 2050, and then assessed the policies and emission reduction pathways to get Canada to those targets. We found that significant long-term reductions can be cost-effectively archived, but Canada needs to get going if economic costs are to be minimized and emission reductions maximized. And of course, there will be transitional impacts on regions, sectors and groups that will have to be addressed. But this does not mean policy stringency should be relaxed, but rather compensatory income polices are central to effective climate policy.
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Some sectors are likely to be disproportionably impacted by air and climate change emission constraints. The cement sector is one such industry. We conducted modelling with MKJA on the economic implication of the Federal Government’s Regulatory Framework for Air Emissions. We find the cement sector is challenged to cost-effectively meet the objectives. Barriers exist that could be removed, however, including enabling the use of more waste fuels and allowing the additional of supplementary cementing materials. Removing these barriers seems to make sense both economically and environmentally. |
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The role of revenue recycling and tax shifting in Canadian climate policy |
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In-House Economic Consultant to the NRTEE |
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Assessing the costs of the regulatory framework: An economic implications analysis for the cement sector
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Research supported by: |
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Supported by: |
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Research supported by: |
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Recent projects…. |
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Environmental Economics and Regulatory Development in Canada and China |
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EnviroEconomics briefed a Chinese delegation on environmental economics applied to regulatory development in Canada. The authority of China’s government to get things done via fiat seems to bode well for environmental management in the country, despite the trajectory of pollution and growth. Another interesting observation is the need for thinking on instrument choice. Gas taxes are a good example, where taxes are not applied due to concerns over distributional impacts on farmers, who account for over 50% of the labour force. We discussed that perhaps engine taxes or congestion pricing could hold some promise for improving air quality. |