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Economics of environmental policy in Turkey: A general equilibrium investigation of the economic evaluation of sectoral emission reduction policies for climate change

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  • Telli, Çagatay
  • Voyvoda, Ebru
  • Yeldan, Erinç

Abstract

Research on climate change has intensified on a global scale as evidence on the costs of global warming continues to accumulate. Confronted with such evidence, the European Union set in late 2006 an ambitious target to reduce its greenhouse gas emissions, by 2020, to 20% below the level of 1990; and invited the rest of the developed economies and the developing world to take part with the Kyoto Protocol. Turkey is the only country that appears in the Annex-I list of the United Nations' Rio Summit and yet an official target for CO2 emission reductions has still not been established. Thus, as part of its accession negotiations with the EU, Turkey will likely to face significant pressures to introduce its national plan on climate change along with specific emission targets and the associated abatement policies. Given this motivation, we utilize a computable general equilibrium model for Turkey to study the economic impacts of the intended policy scenarios of compliance with the Kyoto Protocol and we report on the general equilibrium effects of various possible environmental abatement policies in Turkey over the period 2006-2020. The model is in the Walrasian tradition with 10 production sectors and a government operating within an open macroeconomy environment. It accommodates flexible production functions, imperfect substitution in trade and open unemployment. We focus on CO2 emissions and distinguish various basic sources of gaseous pollution in the model. Our results suggest that the burden of imposing emission control targets and the implied abatement costs could be quite high, and that there is a need to finance the expanded abatement investments from scarce domestic resources. Policies for environmental abatement via carbon and/or increased energy taxes further suffer from very adverse employment effects. This suggests that a first-best policy would necessarily call for a simultaneous reduction on the existing tax burden on producers elsewhere together with introduction of environmental taxes.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 30 (2008)
Issue (Month): 2 ()
Pages: 321-340

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Handle: RePEc:eee:jpolmo:v:30:y:2008:i:2:p:321-340

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Web page: http://www.elsevier.com/locate/inca/505735

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References

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  1. Goulder, Lawrence H. & Parry, Ian W. H. & Williams III, Roberton C. & Burtraw, Dallas, 1999. "The cost-effectiveness of alternative instruments for environmental protection in a second-best setting," Journal of Public Economics, Elsevier, vol. 72(3), pages 329-360, June.
  2. Parry, Ian & Goulder, Lawrence & Williams III, Roberton, 1997. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Discussion Papers dp-97-18-rev, Resources For the Future.
  3. Boratav, Korkut & Turel, Oktar & Yeldan, Erinc, 1996. "Dilemmas of structural adjustment and environmental policies under instability: Post-1980 Turkey," World Development, Elsevier, vol. 24(2), pages 373-393, February.
  4. Lise, Wietze, 2006. "Decomposition of CO2 emissions over 1980-2003 in Turkey," Energy Policy, Elsevier, vol. 34(14), pages 1841-1852, September.
  5. Ian W.H. Parry & Wallace E. Oates, 2000. "Policy analysis in the presence of distorting taxes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(4), pages 603-613.
  6. Kumbaroglu, Gurkan Selcuk, 2003. "Environmental taxation and economic effects: a computable general equilibrium analysis for Turkey," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 795-810, November.
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Citations

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Cited by:
  1. World Bank, 2013. "Turkey Green Growth Policy Paper : Towards a Greener Economy," World Bank Other Operational Studies 16088, The World Bank.
  2. Halicioglu, Ferda, 2009. "An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey," Energy Policy, Elsevier, vol. 37(3), pages 1156-1164, March.
  3. Mahmood, Arshad & Marpaung, Charles O.P., 2014. "Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case," Energy Policy, Elsevier, vol. 67(C), pages 87-103.
  4. Akın Olçum, Gökçe & Yeldan, Erinç, 2013. "Economic impact assessment of Turkey's post-Kyoto vision on emission trading," Energy Policy, Elsevier, vol. 60(C), pages 764-774.
  5. Xia, X.H. & Huang, G.T. & Chen, G.Q. & Zhang, Bo & Chen, Z.M. & Yang, Q., 2011. "Energy security, efficiency and carbon emission of Chinese industry," Energy Policy, Elsevier, vol. 39(6), pages 3520-3528, June.

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