The Environmental and Economic Impact of the Carbon Tax in Australia

Sam Meng (), Mahinda Siriwardana () and Judith McNeill ()

Environmental & Resource Economics, 2013, vol. 54, issue 3, 313-332

Abstract: To fulfil its emission reduction target pledged in the Copenhagen accord, the Australian Government has determined to introduce a carbon tax from July 1st 2012. This paper simulates the effects on the environment and on the economy of a carbon tax of A$23 per tonne of carbon dioxide proposed by the government with, and without, a compensation policy. We employ a computable general equilibrium model with an environmentally extended Social accounting matrix. According to the simulation results, the carbon tax can cut emissions effectively, but will cause a mild economic contraction. Because the price signal is intact, the proposed compensation plan has little impact on emission cuts while significantly mitigating the negative effect of a carbon tax on the economy. Copyright Springer Science+Business Media B.V. 2013

Keywords: Carbon tax; CGE modelling; Environmental effects; Macro-economy (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (79)

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DOI: 10.1007/s10640-012-9600-4

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