Assessing the employment impacts of environmental and natural resource policy

This paper provides an introductory guide for environmental and resource economists to methods of assessing the impact of environmental and natural resource policy on employment. It examines five basic approaches to evaluating the effect of a policy action on employment: 1) supply and demand analysis of the affected sector; 2) partial equilibrium analysis of multiple markets; 3) fixed-price, general equilibrium simulations (input-output (I-O) and social accounting matrix (SAM) multiplier models); 4) non-linear, general equilibrium simulations (Computable General Equilibrium (CGE) models); and 5) econometric estimation of the adjustment process, particularly time series analysis. The basic modeling structure and data requirements for each of these approaches are described. Simple examples of their application to evaluation of environmental and natural resource policy are developed and the relative merits and applicability of each are discussed.