Predicted Distributional Impacts of Climate Change Policy on Employment

Abstract

Efforts to reduce emissions to counter climate change are expected to have both costs and
benefits, and these effects are likely to be unevenly distributed across the population. We
examined the potential distributional impacts on employment in New Zealand from using
different mitigation options (“pathways”) designed to achieve net zero emissions of long-lived
gases and to reduce biogenic methane emissions by 24-47% by 2050. For the analysis, we
developed the Distributional Impacts Microsimulation for Employment (DIM-E). DIM-E uses
results from a computable general equilibrium (CGE) model, C-PLAN, to estimate which
industries, workers and jobs are expected to be most affected by different options to achieve
these reductions. Overall, our results are similar to those from previous research in that the net
employment effects are predicted to be relatively small, though some industries will be more
affected than others. Moreover, the top net negative and top net positive industries ranked
fairly consistently across the four time periods and across the different pathways that were
analysed. On the net positive side, transport industries tended to dominate the industry
rankings, and in later periods, some agriculture industries also tended to rank highly (e.g., Dairy
Cattle Farming and Sheep/Beef Farming). On the net negative side, various manufacturing
industries tended to dominate the top ranks, though oil and gas extraction was also consistently
ranked. We also found that very few groups of workers were negatively affected (in terms of the
number of worker-jobs) by any of the proposed pathways especially over the long term.

Keywords: Environmental Economics, Climate Change Mitigation, Distributional Impacts of Employment

JEL Classification: J01, Q52, R11