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A Policy Model for Climate Change in California

Abstract California's ‘Scoping Plan’ to reduce greenhouse gas emissions relies on vehicle emissions standards, low carbon fuels, and renewable electricity, as well as a regional cap-and-trade system and other market-based instruments. The process has been guided by a computable general equilibrium (CGE) model, the Environmental Dynamic Revenue Analysis Model (E-DRAM). The model shows that the Scoping Plan measures will result in net benefits for the state economy, measured in gross state product (industrial output), employment, and personal income. Most of the benefits result from reduced energy costs. Despite aggregate net benefits, individual industrial sectors gain or lose differentially.