This new tool could improve economic analysis of sub-national climate policies in the US

Empowered by the Paris Agreement and a lack of national leadership on climate policy in the United States, state and local governments are leading on their own climate initiatives. California, New York and Colorado have set ambitious greenhouse gas emission and renewable energy targets for 2030. Just last week, Massachusetts introduced sweeping climate legislation targeting net zero emissions by 2050.

As these environmental and energy policies move ahead, experts need to invest in economic data and tools that allow them to conduct robust economic analysis, to better inform policymakers, stakeholders and the public on how to design robust alternative climate and energy policies.

To target this capacity need, Environmental Defense Fund collaborated with Thomas F. Rutherford (University of Wisconsin-Madison), Andrew Schreiber (United States Environmental Protection Agency) and Christoph Böhringer (University of Oldenburg) to launch a project  to build a subnational economic model framework for climate and energy policies in North America.

An Open-Source tool emerges

An important byproduct of the first phase of this project is the Wisconsin National Data Consortium (WiNDC), an open-source data and modeling framework for the U.S. WiNDC is comprised of regional (state-level) social accounting matrices and a calibrated static multi-regional, multi-sectoral computable general equilibrium model that runs on the constructed dataset. This tool, the technical details of which can be found in a peer-review article about its development, makes it possible to conduct analysis of environmental and energy regulations as well as trade policies taken both at the subnational level and at the national level.

A forthcoming paper investigating the potential economic and environmental impacts from the imposition of a carbon adder on New York Independent System Operator’s energy market is the first to utilize the WiNDC accounts in a state-level analysis of climate and energy policies. The study finds that the carbon adder—a carbon tax equal to marginal environmental damages from carbon emissions not already covered under existing policies—gives the “right” price signal for New York’s power generation to turn into a greener one.

In another paper by Balistreri, et al. (2018) “The Impact of the 2018 Trade Disruptions on the Iowa Economy,” WiNDC is used to analyze the state-level impacts of the 2018 tariffs on a wide range of Chinese imports ranging from agriculture and manufactured goods on the state of Iowa. The authors examined the overall gross state product impacts, as well as lost labor income and tax revenue due to additional tariffs.

WiNDC’s aim is to meet the demand for more robust evidence-based regional analysis of environmental and energy regulations. It provides an easy-access, open-source platform for all stakeholders to conduct analyses of environmental and energy regulations taking place at both state and federal levels. The open-source nature aims to encourage further collaboration within the research community and development of this valuable resource.

WiNDC is a powerful and unique tool that could give states the opportunity to design their own climate policies in the light of their economic and environmental objectives and help them align with policies implemented by other states that are increasing economic and environmental efficiency.

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