Abstract

http://ssrn.com/abstract=738544
 
 

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A Discrete-Continuous Choice Model of Climate Change Impacts on Energy


Erin T. Mansur


Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Robert O. Mendelsohn


Yale University - Department of Forestry & Environmental Science

Wendy Morrison


Texas A&M University

March 14, 2005

Yale SOM Working Paper No. ES-43

Abstract:     
This paper estimates a multinomial discrete-continuous fuel choice model of both households and firms in order to determine the sensitivity of national energy demand to climate change. We find that consumers switch from natural gas, oil, and other fuels to electricity as climate warms and that overall energy demand - especially electricity demand - increases. The model implies that warming will increase American energy expenditures, resulting in welfare damages that increase as temperatures rise. Increases in electricity expenditures for cooling are partially offset by reductions in expenditures on other fuels for heating. Given a five degree Celsius increase in temperature by 2100, we predict an annual welfare loss of $40 billion, borne primarily by residential customers.

Number of Pages in PDF File: 48

Keywords: climate change, energy demand

JEL Classification: Q25, Q41

working papers series


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Date posted: June 8, 2005  

Suggested Citation

Mansur, Erin T. and Mendelsohn, Robert O. and Morrison, Wendy, A Discrete-Continuous Choice Model of Climate Change Impacts on Energy (March 14, 2005). Yale SOM Working Paper No. ES-43. Available at SSRN: http://ssrn.com/abstract=738544

Contact Information

Erin T. Mansur (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
603 646 2398 (Phone)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert O. Mendelsohn
Yale University - Department of Forestry & Environmental Science ( email )
New Haven, CT 06520
United States
Wendy Morrison
Texas A&M University ( email )
College Station, TX 77843
United States
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