Greenhouse gas (GHG) emissions are widely acknowledged to be responsible for much of the global warming in the past century. A number of approaches have been proposed to mitigate GHG emissions. Since the burning of fossil-based fuels is an important source of GHGs, the policies on GHG-mitigation encourage the replacement of fossil-based energy with biomass energy. However, a large-scale development of biomass energy may lead to changes in agricultural land use, which are important sources of GHG emissions, and therefore undermine the effectiveness of GHG-mitigation policies. In this research, I analyze the impacts of GHG-mitigation policies on five types of agricultural land (cropland, managed forestry land, pasture land, un-managed forestry land, and un-managed grassland) as well as carbon stored in such land during the 21st century. The scholars in the MIT Joint Program of Science and Policy on Global Change use the Integrated Global Systems Model (IGSM) to simulate changes in climate in response to GHG-mitigation policies, while the researchers at the U. S. Marine Biological Laboratory (MBL) apply the Terrestrial Ecosystem Model (TEM) to simulate land productivities. Based on the predictions of land characteristics affecting land-use decisions, I develop an econometric model to predict the land use affected by climate, GHGs, and tropospheric ozone at the grid-cell scale of 0.5 * 0.5 longitude by latitude. I use the Emissions Prediction and Policy Analysis (EPPA) model to capture the regional land use driven by economic forces. Then, I develop the downscaling methods to link these two land-use effects. I conduct this research in two scenarios: in the baseline, I assume that there are no policies to mitigate GHG emissions during the 21st century; in the policy scenario, I assume that there are specific policies to limit GHG emissions during the 21st century. I confirm the hypothesis that biomass-energy production would lead to the conversion of the five types of agricultural land, and the carbon stored in such land would decrease; the GHG-mitigation policies, leading to more production of biomass energy and conversion of agricultural land, would cause an even more severe loss of the carbon stored in agricultural land. Although the GHG-mitigation policies would generally reduce the atmospheric GHG emissions by using more energy from biomass, such endeavors would be partly counteracted by the landuse conversion as a result of large-scale production of biomass energy.

To incorporate market and non-market effects of climate change into a computable general equilibrium (CGE) model, we begin with the basic data that supports CGE models, the Social Accounting Matrix (SAM). We identify where environmental damage appears in these accounts, estimate the physical loss, and value the loss within this accounting structure. Our approach is an exercise in environmental accounting, augmenting the standard national income and product accounts to include environmental damage. Examples of applying the approach in two areas are provided: air pollution health effects and economy-atmosphere-land-agriculture interactions.
We estimate market and non-market effects of air pollution on human health for the U.S. for the period from 1970 to 2000. The pollutants include tropospheric ozone, nitrogen dioxide, sulfur dioxide, carbon monoxide, and particulate matter. The health effects from exposure to air pollution are integrated into the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the economy that has been widely used to study climate change policy. Benefits of air pollution regulations in USA rose steadily from 1975 to 2000 from $50 billion to $400 billion (from 2.1% to 7.6% of market consumption). We also estimate the economic burden of uncontrolled levels of air pollution over that period. In another case study, we examine the health-related economic benefits and costs of policy actions for China. We found that economic burden of uncontrolled levels of air pollution is lower that in the U.S. because of lower wage rates but macroeconomic impact is bigger than in the U.S. (in 2000 the economic burden in the USA is 4.7% of market consumption, in China - it is 10% of market consumption).
For assessing the impacts of environmental change on vegetation (crop productivity, forest productivity, pasture), we have augmented the EPPA model by further disaggregating the agricultural sector. This allows us to simulate economic effects of changes in yield (i.e., the productivity of cropland) on the regional economies of the world, including impacts on agricultural trade. We examine multiple scenarios where tropospheric ozone precursors are controlled or not, and where greenhouse gas emissions are abated or not. In general, a change in food consumption is smaller than a change in agriculture yield due to resource reallocation from or to the rest of the economy.

This paper investigates the potential for a carbon tax to induce R&D, and for the consequent induced technical change (ITC) to lower the macroeconomic cost of abating carbon emissions. ITC is modelled within a general equilibrium simulation of the U.S. economy by the effects of emissions restrictions on the level and composition of aggregate R&D, the accumulation of the stock of knowledge, and the industry-level reallocation and substitution of intangible services derived therefrom. Contrary to other authors, I find that ITC's impact is large, positive and dominated by the latter "substitution effect," which mitigates most of the deadweight loss of the tax.

The determination of long-term goals for climate policy, or of near-term mitigation effort, requires a shared conception among nations of what is at stake. Unfortunately, because of different attitudes to risk, problems of valuing non-market effects, and disagreements about aggregation across rich and poor nations, no single benefit measure is possible that can provide commonly accepted basis for judgment. In response to this circumstance, a portfolio of estimates is recommended, including global variables that can be represented in probabilistic terms, regional impacts expressed in natural units, and integrated monetary valuation. Development of such a portfolio is a research task, and the needed program of work suggested.