| Greenhouse Gas Mitigation as a Structural Change and Policies that Offset Its Depressing Effects (2006) | |||||||||||||||
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| MIT Joint Program the Science and Policy Global Change Greenhouse Gas Mitigation Structural Change and Policies that Offset Its Depressing Effects Mustafa Babiker and Richard Eckaus Report July The MIT Joint Program the Science and Policy Global Change organization for research independent policy analysis and public education global environmental change seeks provide leadership understanding scientific economic and ecological aspects this difficult issue and combining them into policy assessments that serve the needs ongoing national and international discussions this end the Program brings together interdisciplinary group from two established research centers MIT the Center for Global Change Science CGCS and the Center for Energy and Environmental Policy Research CEEPR These two centers bridge many key areas the needed intellectual work Additional essential areas are covered other MIT departments collaboration with the Ecosystems Center the Marine Biology Laboratory MBL Woods Hole and short and long term visitors the Program The Program involves sponsorship and active participation industry government and non profit organizations inform processes policy development and implementation climate change research needs focus improving the prediction those variables that are most relevant economic social and environmental effects turn the greenhouse gas and atmospheric aerosol assumptions underlying climate analysis need related the economic technological and political forces that . The current economic modeling of emissions limitations does not embody economic features that are likely to be particularly important in the short term, yet the politics of limiting greenhouse gas emissions are often dominated by relatively short term considerations. Moreover, only a few of these studies also consider policies that would offset the negative direct economic effects of those restrictions. This paper models the effects of restrictions on greenhouse gas emissions while embodying two of the most significant types of short term economic imperfections: sectoral rigidities in labor mobility and sectoral rigidities in wage adjustments. A labor policy is also analyzed that would reduce the direct negative economic effects of emissions restrictions. For plausible estimates of the parameters, the model shows that with the labor market imperfections, if there were no offsetting policies, there would be as much as 4 per cent reductions in GNP in the U.S. in the first ten years after emissions restrictions were imposed. However, if there were two policies, instead of just one: a counteracting labor market policy, as well as the emissions restrictions, the negative direct economic effects could be completely eliminated.. This study received funding from the MIT Joint Program on the Science and Policy of Global Change, which is supported by a consortium of government, industry and foundation sponsors. | |||||||||||||||
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