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Double DividendEnvironmental Taxes and Fiscal Reform in the United States$
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Dale W. Jorgenson, Richard J. Goettle, Mun S. Ho, and Peter J. Wilcoxen

Print publication date: 2014

Print ISBN-13: 9780262027090

Published to MIT Press Scholarship Online: September 2014

DOI: 10.7551/mitpress/9780262027090.001.0001

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(p.261) 7 Externalities
Double Dividend

Dale W. Jorgenson

Richard J. Goettle

Mun S. Ho

Peter J. Wilcoxen

The MIT Press

This chapter generalizes the mathematics of IGEM's accounting for environmental externalities and their relationships to the broader economy. It then describes the development of the accounting framework specific to greenhouse gas (GHG) emissions. Emissions coefficients for GHG's are developed from the U.S. EPA's annual inventory. These coefficients and their projected trends are designed to support both the reporting and policy needs of a particular analysis. With the focus on GHG emissions, the chapter offers an overview of marginal abatement cost (MAC) schedules (curves) and their development from a structured set of IGEM simulations for use in reduced-form policy experiments. The chapter discusses the integration of IGEM's MAC curves with abatement opportunities that are new and external to IGEM's economic foundations, providing a comprehensive scheme for analyzing market-based emissions reduction policies. Finally, the chapter describes the effects on IGEM's MAC schedules of updated emissions data, altered policy and baseline calibration targets, and sector- and time-varying substitution elasticities.

Keywords:   environmental externalities, emissions accounting, emissions coefficients, emissions intensity, marginal abatement costs, reduced-form analysis, model calibration effects, non-constant elasticities

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