Hostname: page-component-8448b6f56d-cfpbc Total loading time: 0 Render date: 2024-04-24T04:33:09.655Z Has data issue: false hasContentIssue false
  • English
  • Français

Effects of international climate policy for India: evidence from a national and global CGE model

Published online by Cambridge University Press:  06 June 2014

Matthias Weitzel ,
Joydeep Ghosh ,
Sonja Peterson  and
Basanta K. Pradhan
Matthias Weitzel
Affiliation:
Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany. Tel: (+49) 431 8814-580. E-mail: matthias.weitzel@ifw-kiel.de
Joydeep Ghosh
Affiliation:
Institute of Economic Growth (IEG), University of Delhi Enclave, Delhi, India. E-mail: jghosh@iegindia.org
Sonja Peterson
Affiliation:
Kiel Institute for the World Economy, Kiel, Germany. E-mail: sonja.peterson@ifw-kiel.de
Basanta K. Pradhan
Affiliation:
Institute of Economic Growth (IEG), University of Delhi Enclave, Delhi, India. E-mail: basanta@iegindia.org
Get access Rights & Permissions [Opens in a new window]

Abstract

In order to significantly reduce global carbon emissions, it is necessary also to control CO2 emissions in fast growing emerging economies such as India. The question is how the Indian economy would be affected by including the country in an international climate regime. In this analysis we soft-link a global and a single-country computable general equilibrium model in order to be able to capture distributional issues as well as international repercussions. We analyze different options of transferring revenues from domestic carbon taxes and international transfers to different household types and the effects of different assumptions on exchange rates on transfer payments. Our results show (i) that welfare effects can differ significantly for different household types, which is generally ignored in analyses with global models, and (ii) that these effects are significantly influenced by international price repercussions and by accounting for transfers from international permit sales which is generally ignored in single-country models.

Type
Research Article
Information
Environment and Development Economics , Volume 20 , Special Issue 4: Climate Change Mitigation and Adaptation in Developing and Transition Countries , August 2015 , pp. 516 - 538
Copyright
Copyright © Cambridge University Press 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Babiker, M., Gurgel, A., Paltsev, S., and Reilly, J. (2009), ‘Forward-looking versus recursive-dynamic modeling in climate policy analysis: a comparison’, Economic Modelling 26: 1341–1354.Google Scholar
Baumol, W.J. and Oates, W.E. (1971), ‘The use of standards and prices for protection of the environment’, Swedish Journal of Economics 73(1): 42–54.Google Scholar
Boccanfuso, D., Estache, A., and Savard, L. (2011), ‘The intra-country distributional impact of policies to fight climate change: a survey’, Journal of Development Studies 47(1): 97–117.Google Scholar
Böhringer, C. and Rutherford, T.F. (2002), ‘Carbon abatement and international spillovers: a decomposition of general equilibrium effects’, Environmental and Resource Economics 22(3): 391–417.Google Scholar
Boyce, J., Riddle, M., and Brenner, M.D. (2005), ‘A Chinese sky trust? Distributional impacts of carbon charges and revenue recycling in China’, PERI Working Paper No. 97, Political Economy Research Institute, University of Massachusetts at Amherst, MA.Google Scholar
Bussolo, M. and O'Connor, D. (2001), ‘Clearing the air in India: the economics of climate policy with ancillary benefits’, OECD Development Centre Working Paper No. 182, OECD, Paris.Google Scholar
Corong, E.L. (2008), ‘Tariff reductions, carbon emissions, and poverty: an economy-wide assessment of the Philippines’, ASEAN Economic Bulletin 25(1): 20–31.Google Scholar
den Elzen, M.G.J, Hof, A.F., Beltran, A.M., Grassi, G., Roelfsema, M., van Ruijven, B., van Vliet, J. and van Vuuren, D.P. (2011), ‘The Copenhagen Accord: abatement costs and carbon prices resulting from the submissions’, Environmental Science & Policy 14(1): 28–39.CrossRefGoogle Scholar
Fisher-Vanden, K.A., Shukla, P.R., Edmonds, J.A., Kim, S.H., and Pitcher, H.M. (1997), ‘Carbon taxes and India’, Energy Economics 19(3): 289–325.Google Scholar
GOI (Government of India) (2010a), ‘Communication of India's domestic mitigation actions’, [Available at] http://unfccc.int/files//cop_15/copenhagen_accord/application/pdf/indiacphaccord_app2.pdf.Google Scholar
GOI (Government of India) (2010b), ‘Jawaharlal Nehru National Solar Mission’, Resolution No. 5/14/2008-P&C, Ministry of New and Renewable Energy, Delhi.Google Scholar
GOI (Government of India) (2011), Low Carbon Strategies for Inclusive Growth: An Interim Report, Delhi: Planning Commission.Google Scholar
Höhne, N., den Elzen, M.G.J., and Weiss, M. (2006), ‘Common but differentiated convergence (CDC): a new conceptual approach to long-term climate policy’, Climate Policy 6(2): 181–199.Google Scholar
Johansson, D.J.A., Lucas, P.L., Weitzel, M., et al. . (in press), ‘Multi-model comparison of the economic and energy implications for China and India in an international climate regime’, Mitigation and Adaptation Strategies for Global Change .Google Scholar
Jorgenson, D.W., Slesnick, D.T., Wilcoxen, P.J., Goettle, R.J., and Ho, M.S. (2011), ‘The distributional impact of climate policy’, B.E. Journal of Economic Analysis & Policy 10(2): 1935–1682.Google Scholar
Klepper, G., Peterson, S., and Springer, K. (2003), ‘DART97: a description of the multi-regional, multi-sectoral trade model for the analysis of climate policies’, Kiel Working Paper No. 1149, Kiel Institute for the World Economy, Kiel.Google Scholar
Liang, Q.-M. and Wei, Y.-M. (2012), ‘Distributional impacts of taxing carbon in China: results from the CEEPA model’, Applied Energy 92: 545–551.Google Scholar
McKibbin, W., Shackleton, R., and Wilcoxen, P. (1999a), ‘What to expect from an international system of tradable permits for carbon emissions’, Resource and Energy Economics 21(3–4): 319–346.Google Scholar
McKibbin, W., Ross, M., and Shackleton, R. (1999b), ‘Emissions trading, capital flows and the Kyoto Protocol’, Energy Journal 20(Special Issue): 287–334.CrossRefGoogle Scholar
Murthy, N.S., Panda, M., and Parikh, K. (2007), ‘CO2 emission reduction strategies and economic development in India’, Margin: Journal of Applied Economic Research 1(1): 85–119.CrossRefGoogle Scholar
Narayanan, B.G. and Walmsley, T.L. (2008), Global Trade, Assistance, and Production: The GTAP 7 Data Base, West Lafayette, IN: Center for Global Trade Analysis, Purdue University.Google Scholar
OECD (2012), OECD Environmental Outlook to 2050: The Consequences of Inaction, Paris: Organisation for Economic Co-operation and Development.Google Scholar
Ojha, V.P. (2009), ‘Carbon emissions reduction strategies and poverty alleviation in India’, Environment and Development Economics 14(3): 323–348.Google Scholar
Ojha, V.P., Pal, B.D., Pohit, S., and Roy, J. (2009), ‘Social accounting matrix for India’, [Available at] http://ssrn.com/abstract=1457628.Google Scholar
Oladosu, G. and Rose, A. (2007), ‘Income distribution impacts of climate change mitigation policy in the Susquehanna River basin economy’, Energy Economics 29(3): 520–544 Google Scholar
Pradhan, B.K. and Ghosh, J. (2012a), ‘The impact of carbon taxes on growth, emissions and welfare in India’, IEG Working Paper No. 315, Institute of Economic Growth, Delhi.Google Scholar
Pradhan, B.K. and Ghosh, J. (2012b), ‘Carbon taxes vs productivity shocks: a comparative analysis of the costs in a CGE framework for India’, IEG Working Paper No. 317, Institute of Economic Growth, Delhi.Google Scholar
Pradhan, B.K. and Roy, P.K. (2003), The Well Being of Indian Households: MIMAP-India Survey Report, New Delhi: Tata-McGraw Hill.Google Scholar
Rao, N.D. (2012), ‘Kerosene subsidies in India: when energy policy fails as social policy’, Energy for Sustainable Development 16(1): 35–43.Google Scholar
Rausch, S., Metcalf, G.E., Reilly, J.M., and Paltsev, S. (2010), ‘Distributional implications of alternative U.S. greenhouse gas control measures’, B.E. Journal of Economic Analysis & Policy 10(2).Google Scholar
Shukla, P. and Dhar, S. (2011), ‘Climate agreements and India: aligning options and opportunities on a new track’, International Environmental Agreements 11(3): 229–243.Google Scholar
Shukla, P., Dhar, S., and Mahapatra, D. (2008), ‘Low-carbon society scenarios for India’, Climate Policy 8(S1): S156–S176.Google Scholar
Sundaram, K. and Tendulkar, S.D. (2003), ‘Poverty among social and economic groups in India in the 1990s’, Economic and Political Weekly 38 (50): 5263–5276.Google Scholar
Tavoni, M. (2010), Assessing the Climate Pledges of China and India: How Much Do They Bite?, FEEM Policy Brief 03.2010, Milan: Fondazione Eni Enrico Mattei.Google Scholar
UNDESA (2011), World Population Prospects: The 2010 Revision, New York: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat.Google Scholar
van Heerden, J., Gerlagh, R., Blignaut, J., Horridge, M., Hess, S., Mabugu, R. and Mabugu, M. (2006), ‘Searching for triple dividends in South Africa: fighting CO2 pollution and poverty while promoting growth’, Energy Journal 27(2): 113–141.Google Scholar
van Ruijven, B.J., Weitzel, M., den Elzen, M.G.F., Hof, A.F., van Vuuren, D.P., Peterson, S. and Narita, D. (2012), ‘Emission allowances and mitigation costs of China and India resulting from different effort-sharing approaches’, Energy Policy 46: 116–134.Google Scholar
Weitzel, M. (2010), ‘Including renewable electricity generation and CCS into the DART model’, [Available at] http://www.ifw-members.ifw-kiel.de/publications/including-renewable-electricity-generation-and-ccs-into-the-dart-model.Google Scholar
Weitzel, M., Hübler, M., and Peterson, S. (2012a), ‘Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment’, Energy Economics 34(S2): S198–S207.Google Scholar
Weitzel, M., Ghosh, J., Peterson, S., and Pradhan, B.K. (2012b), ‘Effects of international climate policy for India: evidence from a national and global CGE model’, Kiel Working Paper No. 1810, Kiel Institute for the World Economy, Kiel.Google Scholar
World Bank (2012), World Development Indicators, Washington, DC: World Bank.Google Scholar
Yusuf, A.A. and Resosudarmo, B. (2007), ‘On the distributional effect of carbon tax in developing countries: the case of Indonesia’, Working Paper in Economics and Development Studies No. 200705, Padjadjaran University, Indonesia.Google Scholar
Supplementary material: PDF

Weitzel Supplementary Material

Appendix

Download Weitzel Supplementary Material(PDF)
PDF 74.8 KB