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Double Dividend of Low-carbon Growth in Mexico: A Dynamic General Equilibrium Assessment

Gissela Landa Rivera, Frédéric Reynès (), Ivan Islas, François-Xavier Bellock and Fabio Grazi
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Ivan Islas: Instituto Nacional de Ecología y Cambio Climático
François-Xavier Bellock: Agence Française de Développement
Fabio Grazi: Agence Française de Développement

No 2015-09, Sciences Po publications from Sciences Po

Abstract: This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transit ional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican “Climate Change Law”, and assesses alternative policy scenarios, ach reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy if successful will succeed in reducing CO2 e missions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high eco nomic costs. Under full redistribution of carbon tax revenues, a double dividend arises and t he policy is beneficial both in terms of GDP and CO2 emissions reduction

Keywords: Energy; Low carbon emission; Mexican economy (search for similar items in EconPapers)
JEL-codes: Q3 Q4 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-ene and nep-env
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