A Numerical Investigation of the Potential for Negative Emissions Leakage
Niven Winchester, Sebastian Rausch
American Economic Review · 2013 · Volume 103 · Issue 3
Abstract
Emissions restrictions in one region may decrease emissions elsewhere (negative leakage), as increased demand for capital and labor to abate emissions in constrained regions may reduce output in unconstrained regions. We investigate leakage in computable general equilibrium (CGE) models under alternative fossil fuel supply elasticity values and factor mobility assumptions. We find that fossil fuel supply elasticities must be equal or close to infinity to generate net negative leakage. As empirical estimates for fossil fuel supply elasticities are less than 1, we conclude that leakage estimates from CGE models are unlikely to be negative.
Keywords
Climate, Natural Disasters, Global Warming, Environmental Economics: Government Policy
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