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Economical evaluation of externalities using partial equilibrium model

Author

Listed:
  • Strokov, A.

    (Center for agricultural and food policy at Russian Presidential Academy of National Economy (RANEPA), Moscow, Russia)

  • Ternovsky, D.

    (Center for agricultural and food policy at Russian Presidential Academy of National Economy (RANEPA), Moscow, Russia)

  • Potashnikov, V.

    (Center of economic modelling of energy sector and ecology at Russian Presidential Academy of National Economy (RANEPA), Moscow, Russia)

  • Potapova, A.

    (Center for agricultural and food policy at Russian Presidential Academy of National Economy (RANEPA), Moscow, Russia)

Abstract

Our research investigation shows the possible pathways of natural resource economy with respect of externalities. We analyzed the development of agricultural and forestry products' export from Russia to China, and the externalities were evaluated as greenhouse gas emissions. We developed five scenarios of Russian economic development until 2030 and 2050 on terms of domestic improvements in soy, rapeseed and corn production, wood production, increase of exports to China. After applying the partial equilibrium model we introduced a correct measure of possible profit by a monetary value of emitted greenhouse gas. In contrast to previous research instead of carbon tax we suggest a measure of social cost of carbon. Our estimates show that it could be effective at 68 USD per 1 metric ton of CO2 equivalent. This method was supposed to evaluate correctly the economic loss from extensive development of forestry and agriculture, taking into account monetary evaluation of externalities. Our results showed that extracting natural resources should be balanced by appropriate ecological programs. This could include but should not be limited to conservation of some part of the territory, which will help to decrease overall GHG emissions, and improve the balance of emissions with respective carbon sequestr on abandoned (conserved) land, which here will be an additional indicator of reducing negative externalities.

Suggested Citation

  • Strokov, A. & Ternovsky, D. & Potashnikov, V. & Potapova, A., 2020. "Economical evaluation of externalities using partial equilibrium model," Journal of the New Economic Association, New Economic Association, vol. 48(4), pages 113-136.
    • Handle: RePEc:nea:journl:y:2020:i:48:p:113-136
    DOI: 10.31737/2221-2264-2020-48-4-5
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    References listed on IDEAS

    as
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    4. Robert E. Kohn, 1986. "The Limitations of Pigouvian Taxes as a Long-Run Remedy for Externalities: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(3), pages 625-630.
    5. Petr Havlík & Hugo Valin & Aline Mosnier & Michael Obersteiner & Justin S. Baker & Mario Herrero & Mariana C. Rufino & Erwin Schmid, 2013. "Crop Productivity and the Global Livestock Sector: Implications for Land Use Change and Greenhouse Gas Emissions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 442-448.
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    More about this item

    Keywords

    sustainable development; export of food; export of wood; greenhouse gas emissions; welfare;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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