December 1, 2008

Marginal Abatement Costs and Marginal Welfare Costs for Greenhouse Gas Emissions Reductions: Results from the EPPA Model.

by Jennifer Morris, Sergey Paltsev and John Reilly

- This paper explores the basic characteristics of MAC and marginal welfare cost (MWC) curves, deriving them using the MIT Emissions Prediction and Policy Analysis (EPPA) model. The authors find that, depending on the method used to construct them, MACs are affected by policies abroad. They are also dependent on policies in place in the past and depend on whether they are CO2-only or include all GHGs. Further, ACs are, in general, not closely related to MWCs and therefore should not be used to derive estimates of welfare change.

Morris, J., S. Paltsev and J. Reilly (2008). "Marginal Abatement Costs and Marginal Welfare Costs for Greenhouse Gas Emissions Reductions: Results from the EPPA Model." Joint Program Report Series, Report 164, Nov 2008.