Economic impact analysis of 2050 emissions targets : A dynamic Computable General Equilibrium analysis

A report for the Ministry for the Environment.

We use a dynamic Computable General Equilibrium (CGE) model of the New Zealand economy, split into 111 industries, to investigate a range of potential scenarios and 2050 targets. CGE models have been widely used in New Zealand and overseas for climate change analysis. Our model allows us to explore the inevitable trade-offs involved with adjusting to a lower-emissions future. We examine how the economy changes in response to the imposition of various emissions targets – and hence carbon prices – under a range of scenarios that consider innovation in energy, transport and agriculture, along with increased rates of net sequestration from forestry.