The impact of a carbon tax on the Susquehanna River Basin economy

This paper presents the first study of the economic impacts of a carbon tax on an environmentally delineated, sub-national area. The study is based on a 32-sector computable general equilibrium model of the Susquehanna River Basin (SRB) of the US. A special feature of the analysis is that it incorpo rates changes in prices of traded goods facing the focal region as a result of the imposition of a tax imposed globally. The results show that a tax o f $16.96 per ton of carbon could have rather negligible negative impacts on the SRB economy as a whole, but that the negative impacts on its energy in dustries could be sizeable. Also, several sensitivity tests on closure rule s and key parameter values indicate that the results are rather robust. (C) 1999 Elsevier Science B.V. All rights reserved.