Oregon Greenhouse Gas Reduction Policies: The Economic and Fiscal Impact Challenges

24 Pages Posted: 27 Aug 2009

See all articles by Randall J. Pozdena

Randall J. Pozdena

QuantEcon, Inc.

Eric Fruits

International Center for Law & Economics (ICLE); Portland State University; Economics International Corp.

Date Written: September 2008

Abstract

Policy initiatives to regulate greenhouse gas emissions are fast becoming a dominant feature of regional public policy. The initiatives commonly involve setting goals to reduce emissions below a baseline or business-as-usual level. The Western Climate Initiative is one such program, and has been subscribed to by Oregon and 10 other western states and provinces. Specifically, the WCI identifies emissions reduction targets and identifies cap-and-trade mechanisms as a way to achieve emissions reduction targets. The paper first describes the nature of the WCI emissions goals and the cap-and-trade policy approach that is part of the Initiative. The paper then goes on to conduct an empirical investigation of the relationships among economic output, energy use and carbon dioxide emissions, and the links to the State's economic and fiscal condition. Absent adoption of low cost/high effectiveness technological innovations, the cost to the Oregon economy of meeting the WCI emissions curtailment goal are large. Oregon's economic growth to 2020 would be approximately cut in half, and gross output per capita would be reduced by 20 percent relative to the baseline case. State and local revenues would be reduced by about 13 percent, relative to the baseline case.

Keywords: economic impacts, Western Climate Initiative, cap-and-trade

JEL Classification: K32, O11, O38

Suggested Citation

Pozdena, Randall J. and Fruits, Eric, Oregon Greenhouse Gas Reduction Policies: The Economic and Fiscal Impact Challenges (September 2008). Available at SSRN: https://ssrn.com/abstract=1461785 or http://dx.doi.org/10.2139/ssrn.1461785

Randall J. Pozdena

QuantEcon, Inc. ( email )

P.O. Box 280
Manzanita, OR 97130
United States

Eric Fruits (Contact Author)

International Center for Law & Economics (ICLE) ( email )

2117 NE Oregon St.
Suite 501
Portland, OR 97232
United States

HOME PAGE: http://laweconcenter.org/

Portland State University ( email )

United States

HOME PAGE: http://web.pdx.edu/~fruits/

Economics International Corp. ( email )

4318 NE Royal Court
Portland, OR 97213
United States
503-928-6635 (Phone)

HOME PAGE: http://www.econinternational.com/

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