This paper presents the first study of the economic impacts of a carbon tax on an environmentally delineated, sub-national area. The study is based on a 32-sector computable general equilibrium model of the Susquehanna River Basin (SRB) of the US. A special feature of the analysis is that it incorporates changes in prices of traded goods facing the focal region as a result of the imposition of a tax imposed globally. The results show that a tax of $16.96 per ton of carbon could have rather negligible negative impacts on the SRB economy as a whole, but that the negative impacts on its energy industries could be sizeable. Also, several sensitivity tests on closure rules and key parameter values indicate that the results are rather robust.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics