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ASEAN Economic community and climate change

Author

Listed:
  • Ditya A Nurdianto
  • Budy P Resosudarmo

Abstract

This paper analyzes the benefits and losses associated with cooperation among ASEAN members in mitigating their CO2 emission, particularly by implementing a uniform carbon tax across ASEAN. To achieve this goal, this paper uses a multi-country CGE model for ASEAN, known as the Inter-Regional System of Analysis for ASEAN (IRSA-ASEAN) model. 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 GDP contraction and reduction in social welfare, i.e. household income. Nevertheless, Indonesia and Malaysia can potentially gain from the implementation of a carbon tax as it counteracts price distortions due to the existence of heavy energy subsidies in these two countries.

Suggested Citation

  • Ditya A Nurdianto & Budy P Resosudarmo, 2014. "ASEAN Economic community and climate change," Departmental Working Papers 2014-24, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2014-24
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    More about this item

    Keywords

    climate change; computable general equilibrium model; ASEAN; regional economics;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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