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Effects of international climate policy for India: evidence from a national and global CGE model

Published online by Cambridge University Press:  06 June 2014

Matthias Weitzel ,
Joydeep Ghosh ,
Sonja Peterson  and
Basanta K. Pradhan
Matthias Weitzel
Affiliation:
Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany. Tel: (+49) 431 8814-580. E-mail: [email protected]
Joydeep Ghosh
Affiliation:
Institute of Economic Growth (IEG), University of Delhi Enclave, Delhi, India. E-mail: [email protected]
Sonja Peterson
Affiliation:
Kiel Institute for the World Economy, Kiel, Germany. E-mail: [email protected]
Basanta K. Pradhan
Affiliation:
Institute of Economic Growth (IEG), University of Delhi Enclave, Delhi, India. E-mail: [email protected]
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Abstract

In order to significantly reduce global carbon emissions, it is necessary also to control CO2 emissions in fast growing emerging economies such as India. The question is how the Indian economy would be affected by including the country in an international climate regime. In this analysis we soft-link a global and a single-country computable general equilibrium model in order to be able to capture distributional issues as well as international repercussions. We analyze different options of transferring revenues from domestic carbon taxes and international transfers to different household types and the effects of different assumptions on exchange rates on transfer payments. Our results show (i) that welfare effects can differ significantly for different household types, which is generally ignored in analyses with global models, and (ii) that these effects are significantly influenced by international price repercussions and by accounting for transfers from international permit sales which is generally ignored in single-country models.

Type
Research Article
Information
Environment and Development Economics , Volume 20 , Special Issue 4: Climate Change Mitigation and Adaptation in Developing and Transition Countries , August 2015 , pp. 516 - 538
Copyright
Copyright © Cambridge University Press 2014 

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