Modelling the Costs of Environmental Policy

'In this book, Rob Dellink shows he is a skillful applied modeller of environment-economy interactions. The DEAN model that is developed is innovative in its treatment of environmental resources, careful in its dynamic structure, yet simple in its basic set up. Importantly, the model codes (GAMS) are freely accessible on the Internet. The book also includes three stylized models that will prove to be a great help for students who want to understand the basics of environmental policy analysis in general equilibrium models. The full DEAN model, on the other hand, will be more useful to advanced researchers who want to develop their own simulations. The book is also valuable in its own right, as it presents a fine examination of various environmental policies and their economic consequences.' - Reyer Gerlagh, Vrije Universiteit, Amsterdam, the Netherlands 'Extending economic models to include environmental emissions and environmental policy is now commonplace. Yet, the linking is often ad hoc and based on peculiar assumptions. In this book, Rob Dellink shows how emissions and emission reduction policies for five different environmental issues can be included in a forward-looking computable general equilibrium model, building emissions into production and consumption functions. At the technical level the book is superb and stands out for its exact specification of how this is done.' - Richard S.J. Tol, Hamburg University, Germany, Free University Amsterdam, The Netherlands and Carnegie Mellon University, US This important new book enhances our understanding of the dynamic interactions between economic activity, economic growth, pollution abatement and environmental policy. It addresses one main policy problem: how can the direct and indirect costs of environmental policy for multiple pollutants be properly assessed in an applied model? Using an original methodology, the author constructs a multi-sectoral dynamic applied general equilibrium model. This new integrated model greatly improves the empirical analysis of the dynamic reactions of economic agents to pollution control, explicitly taking into account the direct and indirect effects of abatement on the economy and the environment. The author goes on to apply the model to study the costs of various environmental policies including climate change, acidification, eutrophication, smog formation and the dispersion of fine dust. He finds that if environmental policies can be implemented simultaneously and in a cost-effective manner, the economic costs of these policies can be effectively limited through a combination of economic restructuring and adopting technical abatement measures. Modelling the Costs of Environmental Policy will prove essential and enlightening reading for scholars, students and researchers of environmental and resource economics, environmental policy and economic modelling.