IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2012-046.html

The Economic Implications of Introducing Carbon Taxes in South Africa

Author

Listed:
  • Theresa Alton
  • Channing Arndt
  • Rob Davies
  • Faaiqa Hartley
  • Konstantin Makrelov
  • James Thurlow
  • Dumebi Ubogu

Abstract

South Africa is considering introducing carbon taxes to reduce greenhouse gas emissions. We evaluate potential impacts using a dynamic economy-wide model linked to an energy sector model. Simulation results indicate that a phased-in carbon tax that reaches US$30 per ton of CO2 by 2022 achieves the ambitious national emissions reductions targets set for 2025. Relative to a baseline with free disposal of CO2, constant world prices and no change in trading partner behaviour, the preferred tax scenario reduces national absorption and employment by 1.2 and 0.6 per cent, respectively, by 2025.

Suggested Citation

  • Theresa Alton & Channing Arndt & Rob Davies & Faaiqa Hartley & Konstantin Makrelov & James Thurlow & Dumebi Ubogu, 2012. "The Economic Implications of Introducing Carbon Taxes in South Africa," WIDER Working Paper Series wp-2012-046, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2012-046
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/wp2012-046.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin L. Weitzman, 2011. "Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(2), pages 275-292, Summer.
    2. James Heintz & Dorrit Posel, 2008. "Revisiting Informal Employment And Segmentation In The South African Labour Market," South African Journal of Economics, Economic Society of South Africa, vol. 76(1), pages 26-44, March.
    3. repec:wbk:wbpubs:6014 is not listed on IDEAS
    4. Devarajan Shantayanan & Go Delfin S & Robinson Sherman & Thierfelder Karen, 2011. "Tax Policy to Reduce Carbon Emissions in a Distorted Economy: Illustrations from a South Africa CGE Model," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-24, February.
    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. Erero Jean Luc, 2020. "The effects of illicit cigarette trade in South Africa: A CGE analysis," Journal of Economics and Management, Paradigm, vol. 40(2), pages 5-35, June.
    2. Jessika A. Bohlmann & Roula Inglesi-Lotz & Heinrich R. Bohlmann, 2022. "Carbon Tax and its Impact on South African Households," Working Papers 202248, University of Pretoria, Department of Economics.
    3. Florian Landis & Peter Heindl, 2019. "Renewable Energy Targets in the Context of the EU ETS: Whom do They Benefit Exactly?," The Energy Journal, , vol. 40(6), pages 129-170, November.
    4. Rulof Petrus Burger & Lodewicus Charl Coetzee & Carl Friedrich Kreuser & Neil Andrew Rankin, 2017. "Income and Price Elasticities of Demand in South Africa: An Application of the Linear Expenditure System," South African Journal of Economics, Economic Society of South Africa, vol. 85(4), pages 491-514, December.
    5. Erero Jean Luc, 2019. "Impact of excise tax on the South African economy: A dynamic CGE approach," Journal of Economics and Management, Paradigm, vol. 37(3), pages 23-44, September.
    6. Qiao-Mei Liang & Qian Wang & Yi-Ming Wei, 2013. "Assessing the Distributional Impacts of Carbon Tax among Households across Different Income Groups: The Case of China," Energy & Environment, , vol. 24(7-8), pages 1323-1346, December.
    7. Lumengo Bonga-Bonga & Jean Luc Erero, 2019. "The Impact of the Dividend Tax in South Africa: A Dynamic CGE Model Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(2), pages 185-208.
    8. Alberto Gago & Xavier Labandeira & Xiral L pez Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    9. Partnership for Market Readiness, 2016. "Modeling the Impact on South Africa’s Economy of Introducing a Carbon Tax," World Bank Publications - Reports 25762, The World Bank Group.
    10. Yıldıran, Nezihe & Akyol, İzem Azra & Işık, Mehmet Ali, 2025. "Harnessing solar energy: Feasibility assessment of 75 MW solar PV plant in a community in South Africa," Renewable Energy, Elsevier, vol. 253(C).
    11. Zhang, Da & Rausch, Sebastian & Karplus, Valerie J. & Zhang, Xiliang, 2013. "Quantifying regional economic impacts of CO2 intensity targets in China," Energy Economics, Elsevier, vol. 40(C), pages 687-701.
    12. Lumengo Bonga-Bonga & Jean Luc Erero & Rangan Gupta, 2016. "Impact of Activity Tax in the Property-Owning and Subletting of Fixed Property Sectors on the South African Economy: A CGE Analysis," Journal of Real Estate Literature, Taylor & Francis Journals, vol. 24(2), pages 345-357, January.
    13. Qian Wang & Qiao-Mei Liang, 2015. "Will a carbon tax hinder China’s efforts to improve its primary income distribution status?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(8), pages 1407-1436, December.
    14. Rulof Petrus Burger & Lodewicus Charl Coetzee & Carl Friedrich Kreuser & Neil Andrew Rankin, 2017. "Income and Price Elasticities of Demand in South Africa: An Application of the Linear Expenditure System," South African Journal of Economics, Economic Society of South Africa, vol. 85(4), pages 491-514, December.
    15. Fant, Charles & Adam Schlosser, C. & Strzepek, Kenneth, 2016. "The impact of climate change on wind and solar resources in southern Africa," Applied Energy, Elsevier, vol. 161(C), pages 556-564.

    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. Alton, Theresa & Arndt, Channing & Davies, Rob & Hartley, Faaiqa & Makrelov, Konstantin & Thurlow, James & Ubogu, Dumebi, 2012. "The Economic Implications of Introducing Carbon Taxes in South Africa," WIDER Working Paper Series 046, World Institute for Development Economic Research (UNU-WIDER).
    2. repec:unu:wpaper:wp2012-46 is not listed on IDEAS
    3. Alton, Theresa & Arndt, Channing & Davies, Rob & Hartley, Faaiqa & Makrelov, Konstantin & Thurlow, James & Ubogu, Dumebi, 2014. "Introducing carbon taxes in South Africa," Applied Energy, Elsevier, vol. 116(C), pages 344-354.
    4. Stern, Nicholas, 2018. "Public economics as if time matters: Climate change and the dynamics of policy," Journal of Public Economics, Elsevier, vol. 162(C), pages 4-17.
    5. Pycroft, Jonathan & Vergano, Lucia & Hope, Chris & Paci, Daniele & Ciscar, Juan Carlos, 2011. "A tale of tails: Uncertainty and the social cost of carbon dioxide," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 5, pages 1-29.
    6. Simon Levin & Anastasios Xepapadeas, 2021. "On the Coevolution of Economic and Ecological Systems," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 355-377, October.
    7. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    8. Alain Quinet, 2019. "What Value Do We Attach to Climate Action? [Quelle valeur donner à l’action pour le climat ?]," Post-Print hal-05304423, HAL.
    9. Nelson, Tim & Pascoe, Owen & Calais, Prabpreet & Mitchell, Lily & McNeill, Judith, 2019. "Efficient integration of climate and energy policy in Australia’s National Electricity Market," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 178-193.
    10. Bergquist, Ann-Kristin & Cole, Shawn A. & Ehrenfeld, John & King, Andrew A. & Schendler, Auden, 2019. "Understanding and Overcoming Roadblocks to Environmental Sustainability: Past Roads and Future Prospects," Business History Review, Cambridge University Press, vol. 93(1), pages 127-148, April.
    11. Fei Teng & Frank Jotzo, 2014. "Reaping the Economic Benefits of Decarbonization for China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(5), pages 37-54, September.
    12. Kemp-Benedict, Eric, 2014. "Shifting to a Green Economy: Lock-in, Path Dependence, and Policy Options," MPRA Paper 60175, University Library of Munich, Germany.
    13. Devin Michelle Bunten & Matthew E. Kahn, 2014. "The Impact of Emerging Climate Risks on Urban Real Estate Price Dynamics," NBER Working Papers 20018, National Bureau of Economic Research, Inc.
    14. Frederick Ploeg, 2021. "Carbon pricing under uncertainty," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(5), pages 1122-1142, October.
    15. James Heintz & Lynda Pickbourn, 2012. "The Determinants of Selection into Non-agricultural Self-employment in Ghana," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 181-209, May.
    16. Chanel, Olivier & Chichilnisky, Graciela, 2013. "Valuing life: Experimental evidence using sensitivity to rare events," Ecological Economics, Elsevier, vol. 85(C), pages 198-205.
    17. Patrick Bolton Patrick & Després Morgan & Pereira da Silva Luiz Awazu & Samama Frédéric & Svartzman Romain, 2020. "“Green Swans”: central banks in the age of climate-related risks [Le « Cygne Vert » : les banques centrales à l’ère des risques climatiques]," Bulletin de la Banque de France, Banque de France, issue 229.
    18. de Bruin, Kelly & Yakut, Aykut Mert, 2024. "Efficiency–equity trade-off in the Irish carbon tax: A CGE investigation of mixed revenue recycling schemes," Economic Modelling, Elsevier, vol. 134(C).
    19. Erten, Bilge & Leight, Jessica & Tregenna, Fiona, 2019. "Trade liberalization and local labor market adjustment in South Africa," Journal of International Economics, Elsevier, vol. 118(C), pages 448-467.
    20. Chen, Anping & Groenewold, Nicolaas, 2015. "Emission reduction policy: A regional economic analysis for China," Economic Modelling, Elsevier, vol. 51(C), pages 136-152.
    21. Fischer, Carolyn & Fox, Alan K., 2011. "On the Scope for Output-Based Rebating in Climate Policy," Conference papers 332056, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    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:unu:wpaper:wp-2012-046. 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: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    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.