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Economic effects of differentiated climate action

Author

Listed:
  • Leszek Kąsek

    () (World Bank)

  • Olga Kiuila

    () (University of Warsaw, Faculty of Economic Sciences)

  • Krzysztof Wójtowicz

    () (UPolish Ministry of Economy, Strategy and Analyses Department)

  • Tomasz Żylicz

    () (University of Warsaw, Faculty of Economic Sciences)

Abstract

We analyze existing definitions of carbon leakage and provide a new rigorous one. This is then tested using computable general equilibrium analysis for unilateral carbon dioxide abatement programs in the EU. Our model of the global economy is disaggregated into three regions. The analysis includes a decomposition of change in carbon emission. While some anti-leakage measures reduce carbon leakage significantly, some of them are less effective. We identified a list of parameters which affect not only the magnitude but also the sign of carbon leakage rate. Manipulating with elasticities of substitution in production function suggests that in reaction to the unilateral action of the EU, the other regions may both increase or decrease their carbon emissions. Even though we are positive about computable general equilibrium models’ application in this policy area, their policy simulations cannot be directly treated as policy recommendations without a careful validation of their assumptions.

Suggested Citation

  • Leszek Kąsek & Olga Kiuila & Krzysztof Wójtowicz & Tomasz Żylicz, 2012. "Economic effects of differentiated climate action," Working Papers 2012-12, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2012-12
    as

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    File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP78.pdf
    File Function: First version, 2012
    Download Restriction: no

    References listed on IDEAS

    as
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    3. Habla, Wolfgang & Winkler, Ralph, 2013. "Political influence on non-cooperative international climate policy," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 219-234.
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    Cited by:

    1. Olga Kiuila & Krzysztof Wójtowicz & Tomasz Żylicz & Leszek Kasek, 2016. "Economic and environmental effects of unilateral climate actions," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 21(2), pages 263-278, February.
    2. Jan Hagemejer & Zbigniew Żółkiewski, 2013. "Short-run impact of the implementation of EU climate and energy package for Poland: computable general equilibrium model simulations," Bank i Kredyt, Narodowy Bank Polski, vol. 44(3), pages 237-260.

    More about this item

    Keywords

    CO2 abatement; CGE models; EU climate policy; decomposition analysis;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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