GTAP Resources: Resource Display
| GTAP Resource #4090 |
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"Efficiency or Equity? Simulating the Carbon Emission Permits Trading Schemes in China Based on an Inter-Regional CGE Model" by Tang, Weiqi and Libo Wu Abstract China is pursuing the application of market based instruments for energy conservation and carbon emission reduction. Evaluating the efficiency and equity impacts of a Cap-and-Trade system and a carbon tax system are definitely needed for identifying appropriate policy tools in China’s rapid changing social, economic and regional context. In this paper, we established an Inter-Regional CGE model, which enabled us to investigate regional economic performances in China, and inter-regional economic interactions as well. With the model, we simulated economic output and social welfare impacts, on national and regional level, of climate policies including carbon taxation, mandatory regional emission constraints (without emission trading possibility) and cap-&-trade scheme. The simulation results indicated that under carbon taxation, a marginal abatement cost (MAC) of 165 Yuan/t CO2 for 20% emission reduction, and will lead to 3.18% decrease in total output and 2.54% decrease in total welfare of China. Under mandatory regional emission constraints, economic and welfare effects of emission reduction are sensitive to allocation of emission permits. For 20% emission reduction, the scenario of allocation according to benchmark regional emission level reveals a loss of 3.24% for total output and 2.58% for welfare respectively; when the permits are allocated according to benchmark regional output, the output and welfare losses would be 3.36% and 3.82% respectively; and when the permits are allocated according to benchmark regional welfare level, the output and welfare losses would be as high as 3.56% and 4.48%. Comparatively, under Cap-and-Trade scheme, total output and welfare losses for 20% emission reduction would converge to 3.2% and 2.5%, regardless of allocation of the tradable emission permits. Since emission permits are valuable under a Cap-and-Trade scheme, alternating its allocation could affect regional income, and thus affect regional welfare. Fro... |
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- Model validation and sensitivity analysis - Climate change policy - Asia (East) |
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Public Access  GTAP Resource 4090 (880.3 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 1:05:45 PM
