AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Fiscal Costs of Climate Change
AEA Papers and Proceedings
vol. 110,
May 2020
(pp. 107–12)
Abstract
This paper explores the fiscal consequences of climate change. The analysis considers climate change impacts on (i) the cost of existing government services (e.g., disaster assistance) and (ii) the need for publicly provided anticipatory adaptation (e.g., sea walls). These channels are integrated into the COMET, a dynamic general equilibrium climate-economy model with distortionary taxation and government expenditures. The main result is that accounting for fiscal impacts may increase the welfare benefits of efficient climate policy by up to 30 percent. Business-as-usual climate change may necessitate increases in income tax rates and elevate the marginal cost of raising public funds.Citation
Barrage, Lint. 2020. "The Fiscal Costs of Climate Change." AEA Papers and Proceedings, 110: 107–12. DOI: 10.1257/pandp.20201082Additional Materials
JEL Classification
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
- E62 Fiscal Policy
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- Q56 Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth