IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v71y2024icp582-593.html
   My bibliography  Save this article

Threatening the Poor? The economic impacts of carbon border adjustment mechanism on developing countries

Author

Listed:
  • Lin, Boqiang
  • Zhao, Hengsong

Abstract

It is highly necessary to conduct a more detailed assessment of the economic impacts caused by the Carbon Border Adjustment Mechanism (CBAM), especially for numerous developing countries. This study utilizes the input-output (IO) model to evaluate the inequality consequence of CBAM. Results indicate that 1) the overall impact of output decline and production cost increase on non-OECD countries is greater than that on OECD countries; 2) regionally, African countries experience a more severe output decline, while Asian countries see a higher increase in production costs. Apart from BRICS, other developing countries demonstrate low reduction efficiency; 3) a refund mechanism based on historical emission responsibility results in larger benefits for the LDCs. Conversely, green innovation contribution and emission reduction efforts primarily benefit developed economies and large developing countries. We recommend 1) prioritizing assessments for developing countries before designing cross-border climate policy; 2) considering both fairness and efficiency when designing a refund mechanism.

Suggested Citation

  • Lin, Boqiang & Zhao, Hengsong, 2024. "Threatening the Poor? The economic impacts of carbon border adjustment mechanism on developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 582-593.
    • Handle: RePEc:eee:streco:v:71:y:2024:i:c:p:582-593
    DOI: 10.1016/j.strueco.2024.09.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X24001346
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2024.09.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Consoli, Davide & Marin, Giovanni & Marzucchi, Alberto & Vona, Francesco, 2016. "Do green jobs differ from non-green jobs in terms of skills and human capital?," Research Policy, Elsevier, vol. 45(5), pages 1046-1060.
    2. Simone Borghesi & Chiara Franco & Giovanni Marin, 2020. "Outward Foreign Direct Investment Patterns of Italian Firms in the European Union's Emission Trading Scheme," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(1), pages 219-256, January.
    3. repec:hal:spmain:info:hdl:2441/2vteelu0n785l82j764n6ul273 is not listed on IDEAS
    4. Perdana, Sigit & Vielle, Marc, 2022. "Making the EU Carbon Border Adjustment Mechanism acceptable and climate friendly for least developed countries," Energy Policy, Elsevier, vol. 170(C).
    5. Marin, Giovanni & Vona, Francesco, 2019. "Climate policies and skill-biased employment dynamics: Evidence from EU countries," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    6. Borghesi, Simone & Cainelli, Giulio & Mazzanti, Massimiliano, 2015. "Linking emission trading to environmental innovation: Evidence from the Italian manufacturing industry," Research Policy, Elsevier, vol. 44(3), pages 669-683.
    7. Khan, Jamal & Li, Yuan & Girardin, Eric, 2022. "Is a clash coming when trade and climate meet at the border? The impact of the EU's carbon border adjustment on China's belt and road initiative," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 112-124.
    8. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.
    9. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2016. "The Strategic Value of Carbon Tariffs," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 28-51, February.
    10. Cantore, Nicola & Clara, Michele & Lavopa, Alejandro & Soare, Camelia, 2017. "Manufacturing as an engine of growth: Which is the best fuel?," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 56-66.
    11. Borghesi, Simone & Vercelli, Alessandro, 2003. "Sustainable globalisation," Ecological Economics, Elsevier, vol. 44(1), pages 77-89, February.
    12. Bellora, Cecilia & Fontagné, Lionel, 2023. "EU in search of a Carbon Border Adjustment Mechanism," Energy Economics, Elsevier, vol. 123(C).
    13. Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages 97-110.
    14. Lin, Boqiang & Zhao, Hengsong, 2023. "Evaluating current effects of upcoming EU Carbon Border Adjustment Mechanism: Evidence from China's futures market," Energy Policy, Elsevier, vol. 177(C).
    15. Alice Pirlot, 2022. "Carbon Border Adjustment Measures: A Straightforward Multi-Purpose Climate Change Instrument?," Journal of Environmental Law, Oxford University Press, vol. 34(1), pages 25-52.
    16. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
    17. Calì, Massimiliano & Cantore, Nicola & Marin, Giovanni & Mazzanti, Massimiliano & Nicolli, Francesco & Presidente, Giorgio, 2023. "Energy prices and the economic performance of firms in emerging countries," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 357-366.
    18. Tarr, David G. & Kuznetsov, Dmitrii E. & Overland, Indra & Vakulchuk, Roman, 2023. "Why carbon border adjustment mechanisms will not save the planet but a climate club and subsidies for transformative green technologies may," Energy Economics, Elsevier, vol. 122(C).
    19. repec:hal:cesptp:halshs-04331408 is not listed on IDEAS
    20. Zhong, Jiarui & Pei, Jiansuo, 2022. "Beggar thy neighbor? On the competitiveness and welfare impacts of the EU's proposed carbon border adjustment mechanism," Energy Policy, Elsevier, vol. 162(C).
    21. Aaron Cosbey & Susanne Droege & Carolyn Fischer & Clayton Munnings, 2019. "Developing Guidance for Implementing Border Carbon Adjustments: Lessons, Cautions, and Research Needs from the Literature," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 3-22.
    22. repec:spo:wpmain:info:hdl:2441/2vteelu0n785l82j764n6ul273 is not listed on IDEAS
    23. Christoph Böhringer & Jan Schneider & Emmanuel Asane-Otoo, 2021. "Trade in Carbon and Carbon Tariffs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 669-708, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amendola, Marco, 2025. "Winners and losers of the EU carbon border adjustment mechanism. An intra-EU issue?," Energy Economics, Elsevier, vol. 142(C).
    2. Chen, Zhe-Yi & Zhao, Lu-Tao & Cheng, Lei & Qiu, Rui-Xiang, 2025. "How does China respond to the Carbon Border Adjustment Mechanism? An approach of global trade analysis," Energy Policy, Elsevier, vol. 198(C).
    3. Jia, Zhijie & Wu, Rongxin & Liu, Yu & Wen, Shiyan & Lin, Boqiang, 2024. "Can carbon tariffs based on domestic embedded carbon emissions reduce more carbon leakages?," Ecological Economics, Elsevier, vol. 220(C).
    4. Clora, Francesco & Yu, Wusheng & Corong, Erwin, 2023. "Alternative carbon border adjustment mechanisms in the European Union and international responses: Aggregate and within-coalition results," Energy Policy, Elsevier, vol. 174(C).
    5. Perdana, Sigit & Vielle, Marc, 2022. "Making the EU Carbon Border Adjustment Mechanism acceptable and climate friendly for least developed countries," Energy Policy, Elsevier, vol. 170(C).
    6. Aliénor Cameron & Marc Baudry, 2023. "The case for carbon leakage and border adjustments: where do economists stand?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 435-469, July.
    7. Deng, Yirui & Yin, Mengjuan & Xu, Xiaofeng & Yu, Lean & Gao, Guowei & Ma, Li, 2024. "How to develop global energy-intensive sectors in the presence of carbon tariffs?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    8. Sigit Perdana & Marc Vielle, 2023. "Carbon border adjustment mechanism in the transition to net-zero emissions: collective implementation and distributional impacts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 299-329, July.
    9. Dy, Kenneth Bicol & Yang, Han, 2025. "Global emissions and international trade: Quantifying the impact of carbon border adjustments," Energy Economics, Elsevier, vol. 145(C).
    10. Lydgate, Emily & Winters, L. Alan, 2025. "The UK's border carbon leakage trilemma," Energy Policy, Elsevier, vol. 198(C).
    11. Susanne Droege & Carolyn Fischer, 2020. "Pricing Carbon at the Border: Key Questions for the EU," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(01), pages 30-34, April.
    12. Carattini, Stefano & Kim, Giseong & Melkadze, Givi & Pommeret, Aude, 2024. "Carbon taxes and tariffs, financial frictions, and international spillovers," European Economic Review, Elsevier, vol. 170(C).
    13. Ambec, Stefan & Esposito, Federico & Pacelli, Antonia, 2024. "The economics of carbon leakage mitigation policies," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    14. Wang, Junbo & Ma, Zhenyu & Fan, Xiayang, 2023. "We are all in the same boat: The welfare and carbon abatement effects of the EU carbon border adjustment mechanism," MPRA Paper 118978, University Library of Munich, Germany.
    15. Jebeli, Hossein & Chen, Y.-H. Henry & Johnston, Craig & Paltsev, Sergey & Tremblay, Marie-Christine, 2025. "Impacts of border carbon adjustments on the Canadian economy," Energy Economics, Elsevier, vol. 141(C).
    16. Chu, Long & Do, Thang Nam & Le, Thi Ha Lien & Ho, Quoc Anh & Dang, Khoi, 2024. "Carbon border adjustment mechanism, carbon pricing, and within-sector shifts: A partial equilibrium approach to Vietnam's steel sector," Energy Policy, Elsevier, vol. 193(C).
    17. Jakob, Michael, 2021. "Climate policy and international trade – A critical appraisal of the literature," Energy Policy, Elsevier, vol. 156(C).
    18. Mörsdorf, George, 2022. "A simple fix for carbon leakage? Assessing the environmental effectiveness of the EU carbon border adjustment," Energy Policy, Elsevier, vol. 161(C).
    19. George Mörsdorf, 2021. "A Simple Fix for Carbon Leakage? Assessing the Environmental Effectiveness of the EU Carbon Border Adjustment," ifo Working Paper Series 350, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    20. Yang, Changjiang & Yan, Xiaoxuan, 2023. "Impact of carbon tariffs on price competitiveness in the era of global value chain," Applied Energy, Elsevier, vol. 336(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:71:y:2024:i:c:p:582-593. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.