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GTAP Resource #1500

"The Welfare Consequence of Emission Trading with Pre-existing Taxes"
by Pant, Hom, Vivek Tulpule and Brian Fisher

It is generally accepted that permit trading minimises the economic burden of emission restriction, nationally and internationally. However, this conclusion is based on an analysis that does not take into account the existence of other taxes on commodities that emit greenhouse gases, such as petrol and other fuel taxes.
In this paper, we use a stylised model to show that with pre-existing taxes (subsidies) on greenhouse gas emitting commodities countries that trade in emissions permits may loose from the trading relative to independent abatement; and permit trading does not necessarily minimize the economic burden for a given level of emission reduction. These results call for harmonization of taxes on GHG emitting commodities. In the absence of such reforms, a tax/subsidy scheme can be introduced to remedy these problems.

Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Version: 1
Created: Pant, H. (5/1/2004)
Updated: Pant, H. (5/1/2004)
Visits: 2,147
No keywords have been specified.

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