Volume 14: Low Carbon Cities and Urban Energy Systems: Part III

Development of an interactive enviro-economic equilibrium model for Guangdong Province, China Mengyu Zhai, Guohe Huang, Yongping Li



China is facing tremendous multiple pressures of reducing carbon emissions, developing economy and improving people’s lives. The implementation of economic/environmental policies is considered as a powerful tool for the nation’s macroeconomic regulation and optimal allocation of resources. The objective of this paper is to develop an interactive enviro-economic equilibrium (IEEE) model to analyze the compound effects of provincial policy on other provinces within both regional and national contexts, and investigate the interactions among different taxes on relevant social-economic and environmental systems. In detail, a CGE-based multi-dimensional policy modelling is initiated for the analysis of inter-provincial interdependences under the interference of Guangdong’s policy. A factorial Guangdong CGE is initiated for statistically quantifying the interactive effects of carbon, production and income taxes on Guangdong’s GDP, social welfare and total carbon emissions. It is found that imposing carbon tax on one province will also reduce the carbon emissions of other provinces, while lowering production tax and income tax will promote the carbon emissions of other provinces. Production tax is always more significant than other taxes on relevant SEE issues. The significant contribution to GDP and carbon emissions is production tax, and the significant contribution to social welfare is production tax. Meanwhile, in terms of GDP and carbon emissions, there exist an interaction between production tax and carbon tax; and in terms of social welfare, there exist an interaction between income tax and production tax.

Keywords Computable general equilibrium, factorial analysis, interactive effects, environmental policy, carbon mitigation, income/production taxes

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