ASEAN Economic community and climate change

Ditya A Nurdianto and Budy Resosudarmo

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper analyzes the benefits and losses associated with cooperation among ASEAN members in mitigating their CO2 emission, particularly by implementing a uniform carbon tax across ASEAN. To achieve this goal, this paper uses a multi-country CGE model for ASEAN, known as the Inter-Regional System of Analysis for ASEAN (IRSA-ASEAN) model. This study finds that the implementation of a carbon tax scenario is an effective means of reducing carbon emissions in the region. However, this environmental gain could come at a cost in terms of GDP contraction and reduction in social welfare, i.e. household income. Nevertheless, Indonesia and Malaysia can potentially gain from the implementation of a carbon tax as it counteracts price distortions due to the existence of heavy energy subsidies in these two countries.

Keywords: climate change; computable general equilibrium model; ASEAN; regional economics (search for similar items in EconPapers)
JEL-codes: O21 O57 Q54 Q56 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014
New Economics Papers: this item is included in nep-ene, nep-env and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2014-24

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