Advanced Search
MyIDEAS: Login

The Regional Economic Effects of a Reduction in Carbon Emissions and An Evaluation of Offsetting Policies in China

Contents:

Author Info

  • Anping Chen

    (School of Economics Jinan University)

  • Nicolaas Groenewold

    (Business School, University of Western Australia)

Abstract

China has promised to cut CO2 emissions per unit of GDP 40-50% by 2020. It is almost certain that the reduction in emissions will have negative effects on the economy; moreover, the effects are likely to differ across regions, given that there is considerable heterogeneity among Chinese regions. These differential regional impacts will affect regional disparities, which are already very substantial and the source of great concern at the highest policy levels. Yet, very little analysis of them has yet been carried out. We help fill this gap by building a small theoretical model involving two regions designed to capture some of the features of the Chinese economy. We incorporate the right to emit CO2 as a factor of production with the national level of permitted emissions set by the national government. The model is solved numerically based on a parameterisation using Chinese data to simulate the effects on the regions of the carbon-reduction. We find that a reduction has regionally differentiated effects on key variables such as income, welfare and output. We also explore the effects of offsetting policies that may be undertaken by governments at both regional and national levels to ameliorate the effects of the carbon reduction. We find that the effects of standard fiscal policies (both regional and national) depend crucially on whether one or both regions are targeted. Welfare changes are often in the opposite direction to output changes. Boosts to productive capacity do better in terms of output but also have “perverse” welfare effects.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.business.uwa.edu.au/__data/assets/pdf_file/0007/2157973/12-14-The-Regional-Economic-Effects-of-a-Reduction-in-Carbon-Emissions.pdf
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Brendan Doran)
Download Restriction: no

Bibliographic Info

Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 12-14.

as in new window
Length: 84 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:uwa:wpaper:12-14

Contact details of provider:
Postal: 35 Stirling Highway, Crawley, W.A. 6009
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/economics
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Fleisher, Belton M. & Li, Haizheng & Zhao, Min Qiang, 2008. "Human Capital, Economic Growth, and Regional Inequality in China," IZA Discussion Papers 3576, Institute for the Study of Labor (IZA).
  2. Whalley, John & Zhang, Shunming, 2007. "A numerical simulation analysis of (Hukou) labour mobility restrictions in China," Journal of Development Economics, Elsevier, vol. 83(2), pages 392-410, July.
  3. Silva, Emilson C. D. & Caplan, Arthur J., 1997. "Transboundary Pollution Control in Federal Systems," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 173-186, October.
  4. Costas Hadjiyiannis & Panos Hatzipanayotou & Michael S. Michael, 2009. "Public Pollution Abatement, Regional Capital Mobility, and Tax Competition," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 703–719, January.
  5. Petchey, Jeffrey, 1995. "Resource Rents, Cost Differences and Fiscal Equalization," The Economic Record, The Economic Society of Australia, vol. 71(215), pages 343-53, December.
  6. Petchey, Jeffrey & Shapiro, Perry, 2000. "The Efficiency of State Taxes on Mobile Labour Income," The Economic Record, The Economic Society of Australia, vol. 76(234), pages 285-96, September.
  7. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  8. Philip D. Adams, 2007. "Insurance against Catastrophic Climate Change: How Much Will an Emissions Trading Scheme Cost Australia?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(4), pages 432-452, December.
  9. Caplan, Arthur J. & Silva, Emilson C.D., 2005. "An efficient mechanism to control correlated externalities: redistributive transfers and the coexistence of regional and global pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 68-82, January.
  10. Nicolaas Groenewold & Alfred J. Hagger & John R. Madden, 2001. "Competitive Federalism: A Political-Economy General Equilibrium Approach," Economics Discussion / Working Papers 01-10, The University of Western Australia, Department of Economics.
  11. Silva, Emilson C.D. & Yamaguchi, Chikara, 2010. "Interregional competition, spillovers and attachment in a federation," Journal of Urban Economics, Elsevier, vol. 67(2), pages 219-225, March.
  12. Zhang, ZhongXiang, 2000. "Can China afford to commit itself an emissions cap? An economic and political analysis," Energy Economics, Elsevier, vol. 22(6), pages 587-614, December.
  13. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, vol. 81(2), pages 500-513, December.
  14. Klepper, Gernot & Peterson, Sonja, 2006. "Emissions trading, CDM, JI, and more : the climate strategy of the EU," Open Access publications from Kiel Institute for the World Economy info:hdl:10419/3814, Kiel Institute for the World Economy.
  15. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
  16. Fisher-Vanden, Karen & Ho, Mun S., 2007. "How do market reforms affect China's responsiveness to environmental policy?," Journal of Development Economics, Elsevier, vol. 82(1), pages 200-233, January.
  17. H. Spencer Banzhaf & B. Andrew Chupp, 2010. "Heterogeneous Harm vs. Spatial Spillovers: Environmental Federalism and US Air Pollution," NBER Working Papers 15666, National Bureau of Economic Research, Inc.
  18. Nicolaas Groenewold & Alfred Hagger & John Madden, 2003. "Interregional transfers: A political-economy CGE approach," Papers in Regional Science, Springer, vol. 82(4), pages 535-554, November.
  19. Brun, J. F. & Combes, J. L. & Renard, M. F., 2002. "Are there spillover effects between coastal and noncoastal regions in China?," China Economic Review, Elsevier, vol. 13(2-3), pages 161-169.
  20. Beladi, Hamid & Frasca, Ralph, 1996. "Regional pollution and multinational firms," Ecological Economics, Elsevier, vol. 17(2), pages 117-125, May.
  21. Petchey, Jeffrey D, 1993. "Equalisation in a Federal Economy with Inter-state Migration," Australian Economic Papers, Wiley Blackwell, vol. 32(61), pages 336-54, December.
  22. Aunan, Kristin & Berntsen, Terje & O'Connor, David & Persson, Therese Hindman & Vennemo, Haakon & Zhai, Fan, 2007. "Benefits and costs to China of a climate policy," Environment and Development Economics, Cambridge University Press, vol. 12(03), pages 471-497, June.
  23. Garbaccio, Richard F. & Ho, Mun S. & Jorgenson, Dale W., 1999. "Controlling carbon emissions in China," Environment and Development Economics, Cambridge University Press, vol. 4(04), pages 493-518, October.
  24. Rosendahl, Knut Einar, 2008. "Incentives and prices in an emissions trading scheme with updating," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 69-82, July.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:12-14

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brendan Doran).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.