Unemployment effects of climate policy

This paper models the unemployment effects of restrictions on greenhouse gas emissions, embodying two of the most significant types of short-term economic imperfections that generate unemployment: sectoral rigidities in labor mobility and sectoral rigidities in wage adjustments. A labor policy is also analyzed that would reduce the direct negative economic effects of the emissions restrictions.The politics of limiting greenhouse gas emissions are often dominated by relatively short-term considerations. Yet the current economic modeling of emissions limitations does not embody economic features that are likely to be particularly important in the short term, in particular, the politically sensitive unemployment rate. Moreover, only a few of these studies also consider policies that would offset the negative direct economic effects of emissions restrictions. For plausible estimates of the parameters, the model shows that, with the labor market imperfections, if there were no offsetting policies, the reductions in GNP in the U.S. in the first 10 years after emissions restrictions were imposed would be as much as 4%. However, if there were two policies, instead of just one: a counteracting labor market policy, as well as the emissions restrictions, the negative direct economic effects could be completely eliminated.     

Mitigation and Adaptation Strategies for Global Change

Mitigation and Adaptation Strategies for Global Change -     

Influence of Methodology and Assumptions on Reported National Carbon Flux Inventories: An Illustration from the Canadian Forest Sector

The Intergovernmental Panel on Climate Change (IPCC) has developed guidelines to standardize the international reporting of greenhouse gas emissions and removals by signatory nations of the UN Framework Convention on Climate Change. With regard to forest sector carbon fluxes, the IPCC guidelines require only that those fluxes directly associated with human activities (i.e., harvesting and land-use change) be reported. In Canada, the Carbon Budget Model of the Canadian Forest Sector (CBM-CFS2) has been used to assess carbon fluxes from the entire forest sector. This model accounts for carbon fluxes associated with both anthropogenic and natural disturbances, such as wild fires and insects. We combined model results for the period 1985 to 1989 with additional data to compile seven different national carbon flux inventories for the forest sector. These inventories incorporate different system components under a variety of seemingly plausible assumptions, some of which are encouraged refinements to the default flux inventory described in the IPCC guidelines. The resulting estimated net carbon fluxes varied from a net removal of 185,000 kt carbon per year of the inventory period to a netemission of 89,000 kt carbon per year. Following the default procedures in the IPCC guidelines, while using the best available national data, produced an inventory with a net removal of atmospheric carbon. Adding the effect of natural disturbances to that inventory reversed the sign of the net flux resulting in a substantial emission. Including the carbon fluxes associated with root biomass in the first inventory increased the magnitude of the estimated net removal. The variability of these results emphasizes the need for a systems approach in constructing a flux inventory. We argue that the choice of which fluxes to include in the inventory should be based on the importance of these fluxes to the overall carbon budget and not on the perceived ease with which flux estimates can be obtained. The results of this analysis also illustrate two specific points. Even those Canadian forests which are most free from direct human interactions—forests in which no commercial harvesting occurs—are not in equilibrium, and their contribution to national carbon fluxes should be included in the reported flux inventory. Moreover, those forest areas that are subject to direct management are still substantially impacted by natural disturbances. The critical effect of inventory methodology and assumptions on inventory results has important ramifications for efforts to “monitor” and “verify” programs aimed at mitigating global carbon emissions.