TY - JOUR
T1 - Carbon taxes and the double dividend hypothesis in a recursive-dynamic CGE model for Spain
JF - Economic Systems Research
Y1 - 2019
A1 - Jaume Freire-González
A1 - Ho, Mun S.
AB - A carbon tax is potentially a policy that can reduce CO2 emissions and mitigate climate risks, at lowest economy-wide costs. We develop a dynamic CGE model for Spain to assess the economic and environmental effects of a carbon tax, and test the double dividend (DD) hypothesis. We simulate the impact of three carbon taxes: €10, €20 and €30 per ton of CO2. For each tax, four ‘revenue recycling’ scenarios are examined: a reduction of taxes on capital, on labor, on value-added tax, and a scenario in which revenues are not recycled. We find a DD for taxes of €10/ton and lower, within five to seven years of implementation. We estimate an annual CO2 emissions reduction of around 10% with this tax. Under some circumstances, the DD can be achieved for a tax of €20/ton. In any case, recycling revenues to cut pre-existing taxes reduces costs of imposing carbon taxes.
VL - 31
UR - https://www.tandfonline.com/doi/full/10.1080/09535314.2019.1568969
IS - 2
ER -