A climate convention and the Norwegian economy: A CGE assessment

Abstract

Using a multisector computable general equilibrium (CGE) model, the paper studies the impact of a climate convention on the Norwegian economy. A wide range of implications are discussed, including main macroeconomic indicators, economic growth, the market for energy, and the impact on emissions of other pollutants than CO2. Utilizing the consumer expenditure survey data base, we also assess the impact of the reform on the distribution of welfare in the regional, socioeconomic and income dimensions. The results indicate that a climate convention will not dramatically reduce economic growth and welfare in Norway. CO2 emissions will decrease, as will other emissions to air. Contrary to popular opinion, there are no particular impacts on redistribution in any of the dimensions studied.