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Carbon emissions reduction strategies and poverty alleviation in India*

Published online by Cambridge University Press:  01 June 2009

VIJAY P. OJHA
VIJAY P. OJHA*
Affiliation:
Shri Ram College of Commerce, University of Delhi, Delhi – 110007, India. Email: [email protected]
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Abstract

This paper, based on a computable general equilibrium model of the Indian economy, shows that a domestic carbon tax policy that recycles carbon tax revenues to households imposes heavy costs in terms of lower economic growth and higher poverty. However, the decline in economic growth and rise in poverty can be minimized if the emissions restriction target is modest, and carbon tax revenues are transferred exclusively to the poor. India's participation in an internationally tradable emission permits regime with grandfathered emissions allocation is preferable to any domestic carbon tax option, provided the world market price of emission permits remains low. Even better would be if India participated in a global system of tradable emission permits with equal per capita emission entitlements. India would then be able to use the revenues garnered from the sale of surplus permits to speed up its economic growth and poverty reduction and yet keep its per capita emissions below the 1990 per capita global emissions level.

Type
Research Article
Information
Environment and Development Economics , Volume 14 , Issue 3 , June 2009 , pp. 323 - 348
Copyright
Copyright © Cambridge University Press 2008

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