Transboundary environmental policy effects: Markets and emission leakages

Annegrete Bruvoll and Taran Fæhn ()
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Annegrete Bruvoll and Taran Fæhn: Statistics Norway, http://www.ssb.no/english/research/
Authors registered in the RePEc Author Service: Annegrete Bruvoll ()

Discussion Papers from Research Department of Statistics Norway

Abstract: According to the Environmental Kuznets Curve (EKC) literature, several mechanisms within rich economies, including increased willingness to conduct abatement policies, contribute to reduce environmental problems. Unilateral environmental policies in open economies may affect other countries negatively through trade inter-linkages. A relocation of dirty production and environmental pressure to economies with laxer abatement regimes can be one of many explanations to the apparent EKCs for rich countries. Further, the economic costs of national abatement policies may to some extent be shared with foreigners, both through lower demand for imports and through market share losses for foreign competitors producing cleaner products. In this paper, we quantify the effects of endogenous carbon tax policy in a rich and open economy, Norway, by means of a CGE model. We find that the environmental benefits fall and the economic costs rise when a global rather than a national perspective is employed.

Keywords: Climate policy; Dynamic CGE Model; Endogenous Policy; Environmental Kuznets Curve; Pollution leakage (search for similar items in EconPapers)
JEL-codes: D58 O11 Q25 Q28 Q48 (search for similar items in EconPapers)
Date: 2004-08
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