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Economic Impacts of a Carbon Tax in an Integrated ASEAN

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  • Ditya Agung Nurdianto

    (The Australian National University)

Abstract

The establishment of an ASEAN Economic Community in 2015 has been on the agenda for quite some time. One issue that recently emerged is the climate change issue in which each member of ASEAN needs to respond. The main goal of this study is to analyze the benefits and losses of cooperation among ASEAN members in mitigating their carbon dioxide (CO2) emission, particularly by implementing a uniform carbon tax across ASEAN. To achieve this goal, this study develops a multi-country computable general equilibrium (CGE) for ASEAN, known as the Inter-Regional System of Analysis for ASEAN (IRSA-ASEAN) model. An ASEAN Social Accounting Matrix (ASEAN-SAM) consisting of Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam is constructed as the main database for this CGE. This study finds that the implementation of a carbon tax scenario is an effective means of reducing carbon emissions in the region. However, this environmental gain could come at a cost in terms of gross domestic product (GDP) contraction and reduction in social welfare, i.e. household income. Nevertheless, Indonesia and Vietnam can still gain from the implementation of a carbon tax depending on how revenues generated from the carbon tax are redistributed.

Suggested Citation

  • Ditya Agung Nurdianto, 2016. "Economic Impacts of a Carbon Tax in an Integrated ASEAN," EEPSEA Special and Technical Paper tp201604t5, Economy and Environment Program for Southeast Asia (EEPSEA), revised Apr 2016.
    • Handle: RePEc:eep:tpaper:tp201604t5
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    File URL: http://www.eepsea.org/pub/tr/Ditya-Nurdianto-Technical-%20Report-Dec2010.pdf
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    1. Effendi, Yuventus & Resosudarmo, Budy, 2020. "Development of Renewable Energy in ASEAN Countries: Socio-economic and Environmental Impacts," Conference papers 333229, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Yuventus Effendi & Budy P. Resosudarmo, 2022. "Socio-economic and environmental impact of intended decarbonisation policies in the East Asian region," Departmental Working Papers 2022-03, The Australian National University, Arndt-Corden Department of Economics.
    3. Yuventus Effendi & Budy P. Resosudarmo, 2022. "Development of renewable electricity in ASEAN countries: socio-economic and environmental impacts," Asia-Pacific Journal of Regional Science, Springer, vol. 6(1), pages 247-266, February.

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    Keywords

    ASEAN; climate change; CGE; carbon tax;
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