Olga Kiuila

Expected effects of the ecological tax reform for the Polish economy

Abstract This study presents an assessment of possible consequences of ecological tax reform for the Polish economy. Computable general equilibrium model has been used. The model calibrated for the base year 1995 provides results for the year 2005. Six different scenarios have been considered. Final results confirm both theoretical and practical implications of the ecological tax reforms experiences in Western European countries. The reform is the most favorable when it is based on the concept of shifting tax burden from labor force or households’ income to environmental pollution. Long-run effects of the proposed tax reform in Poland would not slow down the economic growth. The reform, however, has to be implemented as a package of changes in the entire tax system. Such comprehensive reform could even contribute to economic growth of the Polish economy.

Can transition economies implement a carbon tax and hope for a double dividend? The case of Estonia

This article presents a simulation of the impact of the carbon tax reform on the Estonian economy using a computable general equilibrium model. Nine different scenarios have been considered. The long-term results of the proposed tax reform should not hamper the countrys economic development, provided that the appropriate tax option is used. The reform has to be implemented as a package of changes in the entire tax system.

Economic and environmental effects of unilateral climate actions

Unilateral climate policy can be detrimental to global climate protection. Our objective is to provide insight into such a policy, to quantify the risk of carbon leakage, and to investigate the effects related to potential anti-leakage measures. We analyze existing definitions of carbon leakage and propose an alternative, rigorous one, which is different in three respects. The definition is then tested using computable general equilibrium analysis of the global economy and decomposition analysis. We identify a list of parameters that affect not only the magnitude but also the sign of the carbon leakage rate. Manipulating elasticities of substitution suggests that carbon leakage can be either positive or negative. Computable general equilibrium models, which are widely applied, including by the European Commission in this area, should be transparent, and their assumptions call for careful validation. We find that emission limits are properly distributed between sectors covered by the European Union Emissions Trading System and other sectors for the first commitment period (ended in 2012) but not for the second one (ending in 2020), where the target for the non-trading sectors should be reduced relative to the target for the trading sectors in order to equlize marginal abatement costs.

Economic repercussions of sulfur regulations in Poland

Abstract Using applied general equilibrium techniques, it is possible to compute alternative equilibria for different policy regimes and to assess impacts of the changes. We have used these techniques to verify economy-wide effects of SO 2 emission reduction in Poland according to international sulfur agreement. Simulation results suggest that future emission reduction may have a positive effect on Polish economic indicators. We should not be afraid of a slump in emitting sectors. Some sectors may increase their SO 2 emission and abate it afterwards, rather than decrease their emission at once. The poor households may even gain because their welfare effect will be positive.

Interactions between trade and environmental policies in the Czech Republic

The Czech Republic is obliged to implement pollution charges in accordance with the EU environmental policy. The charges may affect international competitiveness of the country, since they are applied to the domestically produced, but not to the imported commodities. We investigate how such environmental taxation of six main pollutants affects the Czech competitiveness. Using computable general equilibrium modeling with bottom-up approach, we consider a small-open economy with endogenous unemployment and ten types of taxes. A distinction between taxes on products and taxes on production is essential for analysis of a fiscal policy. Emissions reduction is possible in our model either through substitution with less polluting inputs, or a reduction of output, or through technical abatement. The last channel for emission reduction is ignored by other studies. The results show that the imports should not be affected by the tax reform, except for coal. Exports will increase in the non-energy-intensive and the biomass industries, but it will decrease in the chemical, the coal, and the metal industries. The overall effect on the trade balance is slightly negative. We conclude that investments in energy-saving technologies are necessary in order to preserve international competitiveness.

Economic modelling of sulphur regulations in Poland

This study presents an assessment of the possible consequences of reducing the emission of sulfur dioxide in Poland according to international sulfur agreement. A computable general equilibrium model was used for this purpose. The model, calibrated for 1995, provides results for year 2010 which suggest that future emission reductions may have positive effects on Polish economic indicators. We should not fear an economic slump in the emitting sectors. Some sectors may increase their sulfur dioxide emissions initially and abate them later, rather than decrease their emissions at once. Poor households may gain, because the welfare effect on them will be positive.

Taxing air pollutants and carbon individually or jointly: results from a CGE model enriched by an emission abatement sector

ABSTRACT We analyse the separate and collective impacts of emissions taxation to understand the internalisation effects of externalities. The analysis is carried out using a static computable general equilibrium model, with unemployment, bottom-up abatement technologies represented by a step function, and detailed emission coefficients. Environmental and health external costs are quantified using the ExternE’s Impact Pathway Approach. Emissions, as a result of environmental taxation, fall through reduced output, production factor substitution, and increased end of pipe abatement activity. The analysis shows that a full internalisation of environmental externalities can result in modest overall economic and environmental welfare gains. There are, however, differences in terms of employment and output, depending on what combination of taxes are applied, which sectors are covered, and how fiscal revenues are redistributed. Air quality benefits range from €35–75 per ton of CO2 abated. Total environmental benefits always exceed GDP loss and the associated welfare loss.