IDEAS home Printed from https://ideas.repec.org/p/eep/tpaper/tp201604t5.html
   My bibliography  Save this paper

Economic Impacts of a Carbon Tax in an Integrated ASEAN

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.eepsea.org/pub/tr/Ditya-Nurdianto-Technical-%20Report-Dec2010.pdf
    File Function: First version, 2016
    Download Restriction: no

    References listed on IDEAS

    as
    1. Patuelli, Roberto & Nijkamp, Peter & Pels, Eric, 2005. "Environmental tax reform and the double dividend: A meta-analytical performance assessment," Ecological Economics, Elsevier, vol. 55(4), pages 564-583, December.
    2. Scott McDonald & Yontem Sonmez, 2004. "Augmenting the GTAP Database with Data on Inter-Regional Transactions," Working Papers 2004009, The University of Sheffield, Department of Economics, revised Aug 2004.
    3. Luc Savard, 2010. "Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 43-59.
    4. Richard Green, 2008. "Carbon Tax or Carbon Permits: The Impact on Generators Risks," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 67-90.
    5. Steve Sorrell, 2009. "The Rebound Effect: Definition and Estimation," Chapters,in: International Handbook on the Economics of Energy, chapter 9 Edward Elgar Publishing.
    6. Defourny, Jacques & Thorbecke, Erik, 1984. "Structural Path Analysis and Multiplier Decomposition within a Social Accounting Matrix Framework," Economic Journal, Royal Economic Society, vol. 94(373), pages 111-136, March.
    7. Warr, Peter G., 2005. "Food policy and poverty in Indonesia: a general equilibrium analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 4), pages 1-23.
    8. Fujii, Tomoki & Roland-Holst, David, 2007. "How Does Vietnam's Accession to the World Trade Organization Change the Spatial Incidence of Poverty?," WIDER Working Paper Series 012, World Institute for Development Economic Research (UNU-WIDER).
    9. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 421-443, August.
    10. Sothea OUM, 2009. "Income Distribution and Poverty in a CGE Framework: A Proposed Methodology," Working Papers d021, Economic Research Institute for ASEAN and East Asia (ERIA).
    11. Sorrell, Steve & Dimitropoulos, John, 2008. "The rebound effect: Microeconomic definitions, limitations and extensions," Ecological Economics, Elsevier, vol. 65(3), pages 636-649, April.
    12. Iwan J. Azis, 2000. "Simulating economy-wide models to capture the transition from financial crisis to social crisis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(2), pages 251-278.
    13. Arief Anshory Yusuf & Budy P. Resosudarmo, 2007. "On the Distributional Effect of Carbon Tax in Developing Countries: The Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200705, Department of Economics, Padjadjaran University, revised Aug 2007.
    14. Brannlund, Runar & Ghalwash, Tarek & Nordstrom, Jonas, 2007. "Increased energy efficiency and the rebound effect: Effects on consumption and emissions," Energy Economics, Elsevier, vol. 29(1), pages 1-17, January.
    15. Warr, Peter G., 2005. "Food Policy And Poverty: A General Equilibrium Analysis For Indonesia," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 139296, Australian Agricultural and Resource Economics Society.
    16. Louis Kaplow & Steven Shavell, 2002. "On the Superiority of Corrective Taxes to Quantity Regulation," American Law and Economics Review, Oxford University Press, vol. 4(1), pages 1-17, January.
    17. William A. Pizer, 2006. "The Evolution of a Global Climate Change Agreement," American Economic Review, American Economic Association, vol. 96(2), pages 26-30, May.
    18. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    19. Gilbert E. Metcalf, 2009. "Cost Containment in Climate Change Policy: Alternative Approaches to Mitigating Price Volatility," NBER Working Papers 15125, National Bureau of Economic Research, Inc.
    20. Smith, Alasdair & Venables, Anthony J., 1988. "Completing the internal market in the European Community : Some industry simulations," European Economic Review, Elsevier, vol. 32(7), pages 1501-1525, September.
    21. Corbett Grainger & Charles Kolstad, 2010. "Who Pays a Price on Carbon?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(3), pages 359-376, July.
    22. A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
    23. Dilip Ratha & William Shaw, 2007. "South-South Migration and Remittances," World Bank Publications, The World Bank, number 6733.
    24. Otto, Vincent M. & Löschel, Andreas & Reilly, John, 2008. "Directed technical change and differentiation of climate policy," Energy Economics, Elsevier, vol. 30(6), pages 2855-2878, November.
    25. Jaafar, Abdul Hamid & Al-Amin, Abul Quasem & Siwar, Chamhuri, 2008. "A CGE Analysis of the Economic Impact of Output-Specific Carbon Tax on the Malaysian Economy," MPRA Paper 10210, University Library of Munich, Germany.
    26. Plassmann, Florenz, 2005. "The advantage of avoiding the Armington assumption in multi-region models," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 777-794, November.
    27. Cororaton, Caesar B. & Corong, Erwin, 2009. "Philippine agricultural and food policies: Implications for poverty and income distribution," Research reports 161, International Food Policy Research Institute (IFPRI).
    28. Devarajan, Shantayanan & Go, Delfin S. & Robinson, Sherman & Thierfelder, Karen, 2009. "Tax policy to reduce carbon emissions in south Africa," Policy Research Working Paper Series 4933, The World Bank.
    29. Christoph Böhringer & Carsten Vogt, 2003. "Economic and environmental impacts of the Kyoto Protocol," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 475-496, May.
    30. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    31. Mizobuchi, Kenichi, 2008. "An empirical study on the rebound effect considering capital costs," Energy Economics, Elsevier, vol. 30(5), pages 2486-2516, September.
    32. Morgenstern, Richard, 1995. "Environmental Taxes: Dead or Alive?," Discussion Papers dp-96-03, Resources For the Future.
    33. Budy P. Resosudarmo & Djoni Hartono & Ditya A. Nurdianto, 2008. "Inter-Island Economic Linkages and Connections in Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 56, pages 297-327, December.
    34. Heinz Welsch, 1996. "The carbon tax game: Differential tax recycling in a two-region general equilibrium model of the European community," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(2), pages 356-377, September.
    35. Morgenstern, Richard D., 1995. "Environmental Taxes: Dead or Alive?," Discussion Papers 10595, Resources for the Future.
    36. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-948, July.
    37. Caesar B. Cororaton & Erwin L. Corong, 2006. "Agriculture-sector Policies and Poverty in the Philippines: a Computable General-Equilibrium (CGE) Analysis," Working Papers MPIA 2006-09, PEP-MPIA.
    38. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
    39. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
    40. Scott McDonald & Sherman Robinson & Karen Thierfelder, 2007. "Globe: A SAM Based Global CGE Model using GTAP Data," Departmental Working Papers 14, United States Naval Academy Department of Economics.
    41. Warwick McKibbin & Peter Wilcoxen & Wing Thye Woo, 2008. "China Can Grow And Still Help Prevent The Tragedy Of The Co2 Commons," CAMA Working Papers 2008-14, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    42. Strand, Jon, 2010. "Taxes and caps as climate policy instruments with domestic and imported fuels," Policy Research Working Paper Series 5171, The World Bank.
    43. Jan I. Haaland, 1990. "Assessing the Effects of EC Integration on EFTA Countries: the Position of Norway and Sweden," Journal of Common Market Studies, Wiley Blackwell, vol. 28(4), pages 379-400, June.
    44. Pyatt, Graham & Round, Jeffrey I, 1977. "Social Accounting Matrices for Development Planning," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(4), pages 339-364, December.
    45. Harrison, Glenn W & Rutherford, Thomas F & Wooton, Ian, 1989. "The Economic Impact of the European Community," American Economic Review, American Economic Association, vol. 79(2), pages 288-294, May.
    46. Verde, Stefano & Tol, Richard S. J., 2009. "The Distributional Impact of a Carbon Tax in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(3), pages 317-338.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    ASEAN; climate change; CGE; carbon tax;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:eep:tpaper:tp201604t5. 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: (Arief Anshory yusuf). General contact details of provider: http://edirc.repec.org/data/eepsesg.html .

    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.