IDEAS home Printed from https://ideas.repec.org/a/spr/envpol/v17y2015i1p131-156.html
   My bibliography  Save this article

On the distributional impact of a carbon tax in developing countries: the case of Indonesia

Author

Listed:
  • Arief Yusuf
  • Budy Resosudarmo

    ()

Abstract

This paper, using a computable general equilibrium model with highly disaggregated household groups, analyses the distributional impact of a carbon tax in a developing economy. Indonesia, one of the largest carbon emitters among developing countries, is utilized as a case study in this paper. The result suggests that, in contrast to most industrialised country studies, the introduction of a carbon tax in Indonesia is not necessarily regressive. The structural change and resource reallocation effect of a carbon tax is in favour of factors endowed more proportionately by rural and lower income households. In addition, the expenditure of lower income households, especially in rural areas, is less sensitive to the price of energy-related commodities. Revenue-recycling through a uniform reduction in the commodity tax rate may reduce the adverse aggregate output effect, whereas uniform lump-sum transfers may enhance progressivity. Copyright Society for Environmental Economics and Policy Studies and Springer Japan 2015

Suggested Citation

  • Arief Yusuf & Budy Resosudarmo, 2015. "On the distributional impact of a carbon tax in developing countries: the case of Indonesia," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(1), pages 131-156, January.
  • Handle: RePEc:spr:envpol:v:17:y:2015:i:1:p:131-156
    DOI: 10.1007/s10018-014-0093-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10018-014-0093-y
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James M. Poterba, 1991. "Is the Gasoline Tax Regressive?," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 145-164 National Bureau of Economic Research, Inc.
    2. Brannlund, Runar & Nordstrom, Jonas, 2004. "Carbon tax simulations using a household demand model," European Economic Review, Elsevier, vol. 48(1), pages 211-233, February.
    3. Arndt, Channing, 1996. "An Introduction to Systematic Sensitivity Analysis via Gaussian Quadrature," GTAP Technical Papers 305, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Ditya Nurdianto & Budy Resosudarmo, 2011. "Prospects and challenges for an ASEAN energy integration policy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 103-127, June.
    5. Liu, Jing & Arndt, Channing, 2004. "Parameter Estimation and Measures of Fit in A Global, General Equilibrium Model," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 626-649.
    6. repec:oup:revage:v:28:y:2006:i:3:p:370-377. is not listed on IDEAS
    7. Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche 0343, CIRPEE.
    8. Ferreira Filho, Joaquim Bento de Souza & Horridge, Mark Jonathan, 2006. "Economic Integration, Poverty and Regional Inequality in Brazil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 60(4), February.
    9. Kirk Hamilton & Grant Cameron, 1994. "Simulating the Distributional Effects of a Canadian Carbon Tax," Canadian Public Policy, University of Toronto Press, vol. 20(4), pages 385-399, December.
    10. Caesar B. Cororaton & John Cockburn, 2006. "WTO, Trade Liberalization, and Rural Poverty in the Philippines: Is Rice Special?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 370-377.
    11. Callan, Tim & Lyons, Sean & Scott, Susan & Tol, Richard S.J. & Verde, Stefano, 2009. "The distributional implications of a carbon tax in Ireland," Energy Policy, Elsevier, vol. 37(2), pages 407-412, February.
    12. Brenner, Mark & Riddle, Matthew & Boyce, James K., 2007. "A Chinese sky trust?: Distributional impacts of carbon charges and revenue recycling in China," Energy Policy, Elsevier, vol. 35(3), pages 1771-1784, March.
    13. Ojha, Vijay P., 2009. "Carbon emissions reduction strategies and poverty alleviation in India," Environment and Development Economics, Cambridge University Press, vol. 14(03), pages 323-348, June.
    14. Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
    15. Philip D. Adams & J. Mark Horridge & Brian R. Parmenter, 2000. "MMRF-GREEN: A Dynamic, Multi-Sectoral, Multi-Regional Model of Australia," Centre of Policy Studies/IMPACT Centre Working Papers op-94, Victoria University, Centre of Policy Studies/IMPACT Centre.
    16. Erwin L. Corong, 2008. "Tariff Reduction, Carbon Emissions and Poverty: An Economy-Wide Assessment for the Philippines," EEPSEA Research Report rr2008012, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jan 2008.
    17. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
    18. Pearson, Ken & Channing Arndt, 2000. "Implementing Systematic Sensitivity Analysis Using GEMPACK," GTAP Technical Papers 474, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    19. Leach, Andrew J., 2009. "The welfare implications of climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 151-165, March.
    20. Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Working Papers 2005-07, CEPII research center.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cabalu, Helen & Koshy, Paul & Corong, Erwin & Rodriguez, U-Primo E. & Endriga, Benjamin A., 2015. "Modelling the impact of energy policies on the Philippine economy: Carbon tax, energy efficiency, and changes in the energy mix," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 222-237.
    2. van Ruijven, Bas J. & O’Neill, Brian C. & Chateau, Jean, 2015. "Methods for including income distribution in global CGE models for long-term climate change research," Energy Economics, Elsevier, vol. 51(C), pages 530-543.
    3. repec:eee:rensus:v:78:y:2017:i:c:p:61-71 is not listed on IDEAS
    4. Gevrek, Z.Eylem & Uyduranoglu, Ayse, 2015. "Public preferences for carbon tax attributes," Ecological Economics, Elsevier, vol. 118(C), pages 186-197.

    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:spr:envpol:v:17:y:2015:i:1:p:131-156. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.