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Towards a low carbon growth in Mexico: Is a double dividend possible? A dynamic general equilibrium assessment

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  • Landa Rivera, Gissela
  • Reynès, Frédéric
  • Islas Cortes, Ivan
  • Bellocq, François-Xavier
  • Grazi, Fabio

Abstract

This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transitional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican “Climate Change Law”, and assesses alternative policy scenarios, each reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy would reduce CO2 emissions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high economic costs. Under full redistribution of carbon tax revenues, a double dividend arises: the policy appears beneficial both in terms of GDP and CO2 emissions reduction.

Suggested Citation

  • Landa Rivera, Gissela & Reynès, Frédéric & Islas Cortes, Ivan & Bellocq, François-Xavier & Grazi, Fabio, 2016. "Towards a low carbon growth in Mexico: Is a double dividend possible? A dynamic general equilibrium assessment," Energy Policy, Elsevier, vol. 96(C), pages 314-327.
    • Handle: RePEc:eee:enepol:v:96:y:2016:i:c:p:314-327
    DOI: 10.1016/j.enpol.2016.06.012
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    1. Barker, Terry & Ekins, Paul & Foxon, Tim, 2007. "The macro-economic rebound effect and the UK economy," Energy Policy, Elsevier, vol. 35(10), pages 4935-4946, October.
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    Cited by:

    1. Bulavskaya, Tatyana & Reynès, Frédéric, 2018. "Job creation and economic impact of renewable energy in the Netherlands," Renewable Energy, Elsevier, vol. 119(C), pages 528-538.
    2. Reynès, Frédéric, 2019. "The Cobb–Douglas function as a flexible function," Mathematical Social Sciences, Elsevier, vol. 97(C), pages 11-17.
    3. He, Pinglin & Sun, Yulong & Niu, Hanlu & Long, Chengfeng & Li, Shufeng, 2021. "The long and short-term effects of environmental tax on energy efficiency: Perspective of OECD energy tax and vehicle traffic tax," Economic Modelling, Elsevier, vol. 97(C), pages 307-325.
    4. Le Treut, Gaëlle & Lefèvre, Julien & Lallana, Francisco & Bravo, Gonzalo, 2021. "The multi-level economic impacts of deep decarbonization strategies for the energy system," Energy Policy, Elsevier, vol. 156(C).
    5. Barragán-Beaud, Camila & Pizarro-Alonso, Amalia & Xylia, Maria & Syri, Sanna & Silveira, Semida, 2018. "Carbon tax or emissions trading? An analysis of economic and political feasibility of policy mechanisms for greenhouse gas emissions reduction in the Mexican power sector," Energy Policy, Elsevier, vol. 122(C), pages 287-299.
    6. Miria A. Pigato, 2019. "Fiscal Policies for Development and Climate Action," World Bank Publications - Books, The World Bank Group, number 31051, December.
    7. repec:hal:spmain:info:hdl:2441/11505qn4ak95irt0cafaeim81j is not listed on IDEAS
    8. Acosta-Pazmiño, Iván P. & Rivera-Solorio, C.I. & Gijón-Rivera, M., 2021. "Scaling-up the installation of hybrid solar collectors to reduce CO2 emissions in a Mexican industrial sector from now to 2030," Applied Energy, Elsevier, vol. 298(C).
    9. He, Pinglin & Zhang, Shuhao & Wang, Lei & Ning, Jing, 2023. "Will environmental taxes help to mitigate climate change? A comparative study based on OECD countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1440-1464.
    10. Renner, Sebastian & Lay, Jann & Greve, Hannes, 2018. "Household welfare and CO2 emission impacts of energy and carbon taxes in Mexico," Energy Economics, Elsevier, vol. 72(C), pages 222-235.

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