Incorporating environmental benefits in general equilibrium policy assessments

Non-market valuation and computable general equilibriumanalysis are two of the primary tools used to evaluate environmentalpolicies. The former is used to measure the environmental gains andthe latter to measure the market-side costs. One of the main insightsof general equilibrium theory is that different economic activitieshave important linkages. It follows that the same logic can beapplied to the non-market factors which are often the focus ofenvironmental policy -- that their value and changes in their valueaffect and can be affected by other parts of the economy.Nevertheless, efforts to develop benefit estimates and cost estimatestypically proceed as if they are separable. This seminar focuses onrecent research that explores the interaction of the non-marketbenefits and the market-based costs of environmental policy. I willdiscuss two specific applications of this idea. The first focuses onmeasuring the excess burden of environmental taxation. The second onthe role of congestion effects for models of recreational demand