Distributional Impacts of Carbon Pricing Policies under Paris Agreement: Inter and Intra-Regional Perspectives

Maksym Chepeliev (), Israel Osorio Rodarte and Dominique van der Mensbrugghe ()

GTAP Working Papers from Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University

Abstract: While bringing multiple benefits for the environment, achievement of the stringent global greenhouse gas emissions reduction target, like the one outlined in the Paris Climate Agreement, is associated with significant implementation costs and could impact different dimensions of human well-being, including welfare, poverty and distributional aspects. In this paper, we analyze the poverty and distributional impacts of different carbon pricing mechanisms consistent with reaching the Paris Agreement targets. We link a global recursive dynamic computable general equilibrium model ENVISAGE with the GIDD microsimulation model and explore three levels of mitigation effort and five carbon pricing options (trade coalitions). Results suggest that while there is a higher incidence of poverty in all scenarios, mainly driven by lower economic growth, Nationally Determined Contribution (NDC) policies result in progressive income distribution at the global level. Such progressivity is caused not only by lower relative prices of food versus non-food commodities, but also by a general decline in skill wage premia.

Date: 2021
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env, nep-int and nep-reg
Note: GTAP Working Paper No. 88
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Distributional impacts of carbon pricing policies under the Paris Agreement: Inter and intra-regional perspectives (2021)
Working Paper: Distributional Impacts of Carbon Pricing Policies under Paris Agreement: Inter and Intra-Regional Perspectives (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:gta:workpp:6194

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